All right, let's get started. My name is Tin Jun Huang. I follow payments and IT services at J.P. Morgan, and this is the Paymentus fireside chat. We're happy to take questions at the end and also through the portal. Thank you to the Paymentus team for being here. Dushyant Sharma, CEO, Sanjay Kalra, CFO. Again, thank you both for being here. I always say, like, Dushyant, what, you founded Paymentus in, what, 2004, is what I read? Yeah. Is that? Yes. You've seen a lot from a bill pay perspective, but let's not forget you founded Derivion and sold that as well to Metavante, and we've seen some consolidation recently. I do want to talk about the chessboard and how you're seeing it changing. You just reported not too, too long ago. Maybe for those newer to the story, just a quick commercial on Paymentus and the trends that you're seeing and what you're doubling down on strategically. Sure. First of all, thank you so much for having us. Nice to be here. It's a real pleasure. We are actually, in some ways, we find ourselves in a very fortunate situation where we are serving the non-discretionary side of the U.S. economy. We are a cloud-based technology platform for bill payments. We are disrupting the bill payment space by digitizing and modernizing bill payment experiences for clients of ours in various industries like utilities, insurance, government services, property management, and all the other recurring billing space. We are pretty sizable, actually. If you think about, we processed over 170 million transactions last quarter. Last year, we did over 600 or close to 600 million transactions. Quite a lot of households and businesses we are already interacting with. We feel great about where we are and where we are headed. You have had a series of big beats and raises. You seem to be fairly insulated from the macro and some of the uncertainty out there. Just remind us, you mentioned non-discretionary. We do rank you very highly in terms of the non-discretionary mix relative to our broader coverage. What does that mean for you and visibility and whatnot before we dig into the details? Sure. If you take a step back, and that's one of the things we wanted to accomplish on the earnings call to make sure our investors have a pretty good understanding of who we are serving and how insulated, relatively insulated, we are as a business. If you think about, just to be able to cook your food, you need, in a typical household, you need electricity, gas, and water. That covers almost 50% of our business. If you go further than that, you have telephones, you have mortgage, you have rent, you have insurance premiums to pay if you want to maintain coverage. We feel like we are serving a pretty essential side of the economy. Even during past macroeconomic events, we continue to grow our business. We saw people continue to pay their bills. The trends we are seeing right now, Q1 was all about making sure that we are observing all the trends all across our verticals. We have not seen any slowdown of any kind. In fact, we are seeing encouraging trends. From the pipeline to bookings to then conversion of bookings to revenue, we continue to see the same store sales and encouraging trends there as well. We feel like all aspects of our business we are feeling good about, and visibility remains strong. When you think on the monetization front, Dushyant, or Sanjay, just thinking of the convenience fee versus the absorbed fee, and given what you just described on how non-discretionary it is, yet the benefits of automation and ePay and whatnot, any interesting observations there in terms of how you monetize? We monetize using both approaches, as you said, convenience as well as absorbed. It depends on kind of the relationship, kind of the position the biller prefers to, and we give flexibility as we do the deal. They are not distinguished in a way that they kind of impact our profitability. Both are different methods to pay. Whatever makes sense more to the biller we do it, and both are working well. Yeah. Throughout the earnings season and also early in the tech conference here, we always ask around implementations, timing, and is the backlog converting in a timely way or not. I'm curious for both the backlog and the pipeline, how strategic of a priority is it for billers to modernize their bill pay and consolidate onto Paymentus? How does that rank? What are you seeing on timeline? Sure. First of all, we continue to be encouraged with all the trends we are seeing. I will go to the actual point here. Something I feel like that we do not put two and two together. Bill payments is about actually revenue. As much as it is, if you look at it from a consumer standpoint, it is about receiving the services which are essential. From a supplier standpoint or the billing company's standpoint, the biller's standpoint, it is actually the lifeline. If you are not collecting payments on time, you do not have the ability to pay for the next month your payroll or purchase more electricity or pay your suppliers. It is very important to all the businesses, especially those which are serving millions of or a lot of relative to the size of the business and number of subscribers they are dealing with. It's very important that they're able to collect, collect in time, collect with efficiency and not spending a lot of money, collect in a way that they're not having to answer a whole bunch of phone calls, and collect in a way that they can continue to provide better experiences for their customers. If you think from those priorities perspective, we believe that CFOs and customer service executives, experience executives, they all become extremely friendly towards Paymentus' value proposition. Many times for us, we are just simply saying that we want CFOs to be the biggest champions of our business, not the ones who are challenging the value proposition. As a result, regardless of the season we are in, economic cycle we are in, we continue to see positive trends because it is all about revenue collection, which is very important to CFO. It is all about making sure the customers, when they're interacting and engaging with the company, they continue to have better experience. From that perspective, it is a very important aspect to the business. It is all about revenues. It is bringing the money in the door. Right. Yeah, because I think sometimes us included make that mistake, right, thinking about it as an expense, a cost of goods sold. The revenue collection, of course, is critically important. Just another one I want to hit before we go into some more detail. There are a lot of new payment methods emerging. I know credit and debit, of course, matter. Given new APMs and the macro shifts that are happening, is there any shift in preferences that you're seeing that has some impact on your take rate that we need to consider? I know we learned from that in the summer months with utilities and things like that. How about now, given where we are with uncertainty in macro? I think we, first of all, having more payment options for our customers is a welcome sign. Frankly, getting more and more alternative and advanced payment methods in our network is an opportunity to negotiate better deals. I see. For us, we are like looking at, from our standpoint, interchange or our cost of goods sold, which is primarily centered around interchange, is a vendor expense. We as a company have always looked at it that way. We increasingly look at it that way. Now, as we are looking at more and more payment options emerging, we start to think about how do we negotiate better deals, how do we make sure our take rate continues to improve as we continue to scale the business. Okay. Back to bookings, and you went through very clearly what the strategic benefits are. Who are you taking share from? What's the decision to move to Paymentus? Is there an incumbent that they're not happy with? Is this an old antiquated system that's being replaced? What's moving today? I think it is the number one driver for change is the level of sophistication of the buyer is changing. What used to happen before was, if you go back even 10- 15 years ago, if you did not have web payments or mobile payment, that could be the entree. That while we can provide you a mobile app, or we can give you that kind of experience and so on. A lot of legacy infrastructure got created as a result of that. It was point solutions and so on. Right now, what is happening is the buyer is sophisticated. They have heard the stories. They have seen all the things. They have seen that electronic payment or digital payment could be more expensive if it is not handled well than even the paper payment. A lot of times, it's very important for them to make sure that they are thinking through all the areas of improvement as they are bringing a new provider. In our case, what's working extremely well is that we are no longer targeting legacy providers, per se. We are simply saying everything is legacy infrastructure. Can that be modernized? Can that be modernized in a way that both CFO and rest of the executive team are happy, CFO being a very important part of the equation? Can we actually lower the cost to serve without lowering the transaction fee, which we will be collecting? What we are seeing is many times you're doing deals where customers are actually paying us a little bit more than what they were used to paying or spending on the transaction fee. Because of the completeness of the solution, we are able to garner more support internally because of the savings they will recognize elsewhere. That is sort of what is driving the change. It comes down to these two simple value propositions, the improved experience and lower cost to serve. To your point about what we are replacing, it is really the legacy infrastructure, in-house and legacy providers. The cost to change and to make that switch, is that conversation changing? I know for several quarters, if not years now, you've talked about automating it and improving the timeline to go live and switching. Is that less of a gating factor for switching? Actually, it's a strong gating factor even today. Every customer wants to know what will the life be the moment I sign the agreement, how long it will take me to get live with Paymentus, how much effort it will take, and how much time, and then on top of that, the cost and so on, and then what it will be like the day after, right? What is helping us tremendously is that there is all the investment we have made in automation, but also we have made it a point to communicate very publicly that we are seeing tremendous success. We are able to, even the large enterprise clients who are having big in-house systems, they have moved to Paymentus, and they've gone live sooner than we were thinking, and they're outperforming our expectations, basically the combined expectations in many cases. What that all translates to is a great sales collateral. If the new clients are looking at Paymentus, they're hearing very publicly that Paymentus is doing whatever their biggest concerns were. That's what Paymentus is already addressing, and very publicly so. Then when they look a little bit under the cover, they realize that Paymentus has done a lot of work in automating and being able to implement these large multidimensional conversions without having to, while keeping majority, if not all, of the interfaces of our customers identical. We do all the work on our side, and we do all that through automation. That is what is driving some of that apprehension away. Okay. Can we discuss the, you mentioned it, right, the day after you implement and the outperformance? What can a biller typically see in terms of ePayment performance and maybe disputes? I do not know if there is a way to measure customers' sat on bill pay, but what do you typically see, and how has that changed versus, say, a year ago when I asked you the same question? Yeah, I think what we are seeing is that we are increasingly becoming more focused on making sure that not only the utilization improves of digital channels, meaning more and more customers should use digital channels for payments. In addition to that, even the customers who are used to using the system, are they able to get faster response times? The average handling time is lower. The number of calls to the call center are lower. All of that stuff, when we put it together, I think customers are generally very pleased with, like we have stats where customers will go live and they will see a significant jump. We are reporting that. Our model for some of these large enterprise clients was certain numbers. We were thinking it was seasonality, and we are still not certain until we have the whole year. It looks like that based on the performance and the reach and the simplicity and all the investments we have been making to make the experience simpler, shorter, and better for the end users and the staff for the companies we are serving, it is paying off in some ways. Okay. I think you mentioned it. I think, Sanjay, you've also said, right, when people ask about conservatism and the outlook and the go-forward quarter, that kind of thing, I think that's something that Dushyant said, that you're not ready to call a trend until you see a full year's worth of biller volume. Is that accurate? You think about forecasting and the outlook that you said? Yeah, that is. For all the enterprise clients, especially the ones which we onboarded in Q3 of last year, we want to see at least four quarters of the runway. Based on that, we would rather like to forecast. That's exactly what we did in our guidance when we gave in the previous call for Q2. We did not anticipate the same kind of growth we saw in Q1 and Q4, Q4 of last year and Q1 of this year, because those were exceeding our expectations. We are unable to figure out, is that the seasonality which they had in these two quarters, or is that the consistent trend we should see? Taking a prudent approach is more reasonable given all what's going on. We just want to keep our head straight and keep on executing rather than building an expectation. Without having a history of that, I think that will be more aggressive. Being prudent never hurts. That has been proven philosophy, I would think, on our approach. We want to march on that path. Yeah. I will also simply say that we have a bias, obviously, and we have a desired outcome we are seeking there. We want this to be the victory for the platform. It is very hard to call that without seeing all the trends. Clients are sometimes not very open to telling you exactly whether that is seasonality or that is based on platform outperforming, just because they might be also very pleasantly surprised. They are not sure whether the same trends will continue. Okay. That's fair. Building up in the NRR point of everything we just talked about, same store, new sales implementations, outperformance in the backlog growing through the consumer usage, et cetera, how does that typically build up in your mind? Yeah. NRR, when we look at NRR, is mainly same store sales. Because NRR does not capture any new implementations, but NRR is, I would say, primarily same store sales. There is a modest portion of pricing component also, but that's not as big. When we look at our total growth vectors, apart from same store sales and the pricing change, the biggest growth vector for the company, I would say since the last eight-nine quarters, has been the new implementations. Our bookings are very strong, and our implementation machinery is running at a good rate pace. As the time comes for implementation, the new implementations go live, they are the biggest contributors to our growth. That's consistent. That has been the most rewarding aspect, I think, of our business, because bookings are strong, because pipeline is strong. Pipeline is getting converted to bookings at a great pace as well. All right from the TAM, I would say, which is enormous, which is like around 16-17 billion bills, and we have only 4% share of that in the U.S. We have a huge runway there. Together with the TAM going to the pipeline, bookings, and implementation, everything is moving in the right direction at a great pace. Okay. Any questions before I keep going? I was curious if there's like a specific customer vertical. I was curious if there's a specific customer vertical you're excited about where you're seeing more growth or where within that TAM you're most excited? We are actually, it may sound like a little bit of a cliché, but we are excited about all of the verticals. We did the analysis earlier in the quarter, in Q1, and seeing how well we have done across all verticals versus last year. We are very pleased. If you think about it, our utility business, which is our bread and butter business, has been the core DNA of the company right from the beginning. That has continued to scale extremely well, continues to grow. The other verticals, non-utility verticals, which we talk very much about, they continue to grow, continue to accelerate. Very, very pleased with how well we have been successful in manifesting the sort of destiny we always visualize by our technology platform, that no vertical should be too far for Paymentus or no size of the customer should be too large or too small for us. We have been able to prove all of that, actually. Right now, we have verticals, we have teams, and we have partners who are focused on verticals, not named utility. They are driving tremendous growth in there. We remain very excited. One of the philosophies we have had over the years is we never believed because of watching, and Tin Jun, you have been in this space, and you know that once you have been watching the trends for years and years, you realize that, well, there are 120 million households in the U.S., but there are 16-17 billion bills. One household is getting more than a few number of bills, right? Meaning customers eventually, they are not going to, the end user payers are not going to make that much of a difference between my insurance bill versus my utility bill versus my car payment and so on. They want a similar unified experience. Based on, if you follow that philosophy and go all the way down to the back end, then the buyers of our services are also consumers because they're also paying bills. They're also desirous of the same thing. When Paymentus goes with the model that our platform is unique because it is purpose-built for all verticals, and we have crowdsourced the functionality from all of the verticals and so on. As a result, the platform itself is so much more matured and sophisticated that it meets the requirements for all of the customers. When our clients, prospective clients hear that, and then they hear, "Oh, really? That company signed with you?" Okay, we'll want to call them. Our approach works. We get some beachheads, and then from there, grow the business with greater storytellers. Good question. Yeah, we'll take one. I did have a quick follow-up to that, but go ahead, Andrew. Thank you. I wanted to ask, within the go-to-market, you talked about the importance of direct sales, but also the partner channel, because partners have been an important part of Paymentus' growth story. Just wanted to hear how you balance the two, and maybe what's the optimal mix of sales coming from each channel? Actually, this has been in some ways, the unlocking of the growth algorithm. What you're seeing in the recent past has a lot to do with Paymentus actually figuring out, we all work together, we try to figure out how can we make it somehow financially agnostic, whether we get a deal directly versus we get a deal through our partners. We are pretty much at that stage right now. Profitability of a given deal is very similar to Paymentus due to operating leverage as well as how our sales model works. Therefore, there's no extra incentive or disincentive to do a deal one way or the other. That's one. The second is our direct sales channel is so strong and tied with the entirety of the business that it becomes almost like a life cycle learning of the entire customer journey, and then propagating that to our partner channel. Our partners getting benefit of that leads to better sales productivity. A lot of times, as we all know, partnerships do not work out as well because they are sort of great paper, great advertisement, but not as much productivity. We are seeing the opposite of that. We are seeing a lot of productive partnerships and partners getting excited. Do not think there is any competitive tension between Paymentus the way we have built the culture and the way provably we are seeing that financially the numbers are very similar. Is there a temptation? I know you're way through the rule of 40 and all this stuff, but margins have been good. Is there a temptation to push harder on the direct selling front, given the momentum you have and some of the success you've seen in the pipeline conversion? Always. We are always focused on that, but not at the expense of affecting our profitability. We remain, and Sanjay, you're welcome to comment on it, but we are so focused on profitable growth. There are two parts to it. One is that investors need to know that this management team knows how to think of profitability when we are not in front of investors. When we are delivering results, they're thinking about that we can deliver profitable growth. The second is, I think, as a management team, it's a challenge. It's very easy to go ahead and go to the board and go to your investors and say, "You know what? We are going to bring our EBITDA by certain points, bring down our EBITDA by certain points, and now we're going to grow the business," and so on. I think it's a tougher challenge as a management team from a go-to-market strategy perspective and creativity therein. Can we actually not do that and still grow the business? Can we still accelerate the business? What could we do to our product? What could we do to our implementation process and so on, which will allow us to do that? We will continue to challenge us on that. Yeah. No, I give you credit. As a public company, you found a good rhythm on balancing the growth and the profitability. I think that's definitely worth commenting on. Thank you. Different segments, and is there anything special about the mix of the business coming from different segments? No. We are seeing very, as Sanjay has rightly pointed out on earnings call, that we have some large clients who actually have a different size of the ticket and so on, which affects the actual per unit, how much revenue we're generating. Margin profile is very similar. Sanjay, you want to add? Yeah. When we look at whether it's a large customer or a small customer or any one vertical or two verticals, we don't distinguish them separately compared to our overall business. Our goal is that overall Paymentus is moving in a direction with a corporate goal of growing top line 20% and showing EBITDA 20%-30%. We very well know our operating leverage is very high. When we price the deal, we don't look at that deal itself, but rather the whole company and how that's contributing to the company. When we go into the per transaction matrix, that actually is an output of the whole product and the whole cycle rather than an input. Revenue per transaction may fluctuate, interchange or cost per transaction may fluctuate, but contribution profit per transaction is kind of similar despite growing so significantly. What we are doing is we are getting the benefit of scale without compromising the profitability. That is helping us grow the profitability overall. Like Q1, for example, was a record adjusted EBITDA margin for us, 34.2%. That new record is created. Together with that, we created one more record. Our cash generation was huge this quarter. We have a lot of focus on cash as well. I mean, together with profitability, we want to see that it is eventually converting to cash sitting on the balance sheet. We are not focusing on any one particular metric for a customer, but looking at overall picture. If I may actually add, it's a very positive thing even for clients to see that Paymentus is a well-run, profitable business, is generating cash, because that's how they run their businesses. We are dealing with companies which are very, in many cases, even though a smaller end market for us is still a large enterprise. They might be dealing with 50,000 subscribers, and if you multiply that by $200, this is a sizable business. They run their businesses very profitably, and profitability matters to them as well. Anyone else? Dushyant, I did want to make sure I'm glad we have some time. I want to ask about, we touched upon it briefly last year, just this opportunity to turn interchange from a cost into revenue. You've discussed it as a TAM expansion opportunity. We've seen different players in the ecosystem, especially marketplaces, fintechs that are trying to tap into their merchant network, connect them, and build payments or directory. It feels like you can do that with large enterprises. You're doing the cash money movement anyway. Where are you in that? How big of a priority is that? Does it make sense for you to go faster and do more on the accounts payable side since you have the merchant network already or the billing network already? I think very interesting point there. Let me touch the first one for the interchange, then I'll go to the merchant directory and the payouts and some of those capabilities. In terms of the interchange itself, if you think about from Paymentus' point of view, we always looked at interchange as a vendor expense. We said, "What can we do to improve?" Just like any other business, what can we do while we have great partnership with all the card networks and so on? Ultimately, interchange is a big expense for us. Right now, the key priority for us as a business is to make sure we continue to have as much growth as possible, build as much or capture as much market as possible. Even though, as you know, it is a multi-trillion dollar market, and we have captured only a fraction of that, 3 or 4%, right now under 4% of the market. The goal is to capture as much market as we can. Longer term, what I mean by that is not this year or next year, it is longer than that, is we are working through what are the different parameters we will need to or the dials we will need to turn to convert the interchange from a cost center to a revenue center, which actually is getting very exciting as we start to take a look at that. It becomes a tremendous multiplier, actually, profitability and the retention rates of all the customers, which we already have pretty high, but it becomes pretty interesting. Not yet able to go into all the details of it, but at the high level, I could say it is a combination of partnerships, a combination of different payment methods and so on, a combination of some products and services as well, which we are thinking about. It also is a combination of being able to do money out and some payout transactions. For everyone's benefit, if you think about Paymentus today, we talked about the number of transactions we processed, like last year, close to 600 million transactions. If you just take a step back and ask, "How many households does that represent? How many businesses does that represent of the United States?" The number is pretty big. Paymentus, in addition to building a great business in disrupting bill payment, Paymentus is also building a great distribution network for future products and services to be distributed to all these participants in our network. We have that ability, and that's a big focus for us, but not necessarily the expense run rate is in our numbers, but not the revenue and anything generated yet from. That will come in the future. Okay. Good. Let's do one last question. Thinking about your conversation back to interchange fees and how you view that as a customer cost more than your cost to you, have your customers come back to you and asked you for more of an emphasis on pay by bank to lower their fees on their end? They do, actually. It's a big piece to customers as well. That is why when Tin Jun was asking earlier the question about convenience fee versus absorbed, how many billers absorb the fee and convenience fee. In many ways, we are agnostic, whatever the client decides, whatever they want to do. Interchange is a big expense for everyone. For Paymentus, the way we think about it is that our clients and Paymentus are partners in this together, because both of us, whether it's Paymentus is paying it or a customer is paying it, it is getting paid, and it's still a big expense. Longer term, when we solve the puzzle, it benefits both us and the client. More so Paymentus, of course, because the majority of our revenue we are collecting from our clients is going to the interchange. We get tremendous benefit from that, but also our clients as well. There will be more options for them. Good question. All right. We should probably close it out there. Thank you, Dushyant. Thank you, Sanjay.