Good day and welcome to the First Quarter 2025 Paymentus Holdings Earnings Conference Call. This call is being recorded. All participants are currently in listen mode only. There will be an opportunity to ask questions following management's prepared remarks. At this time, I will now turn the call over to Scott Eckstein, Investor Relations. Thank you, operator. Good afternoon. Welcome, and thank you for joining the webcast to review our First Quarter 2025 Results. Our earnings release documents are available on the investor relations section of the paymentus.com website. They include the earnings presentation that we'll make reference to during this webcast. This webcast is being recorded. I hope everyone's had a chance to review those documents. Our Founder and CEO, Dushyant Sharma, will make some opening comments before Sanjay Kalra, our CFO, discusses the details of the first quarter 2025 and our guidance. Following our prepared remarks, we'll take questions. Let me just remind you that we may make forward-looking statements in the meaning of the Private Securities Litigation Reform Act of 1995, and we refer to non-GAAP financial measures during the webcast. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause our actual results to materially differ from those expectations are detailed in our earnings materials and our SEC filings that are available on both the SEC's and our websites. Information about non-GAAP financial measures, including reconciliations to its GAAP, can also be found in our earnings materials that are available on our website. With that, I'd like to turn the webcast over to Dushyant Sharma. Dushyant? Thanks, Scott. Paymentus has started 2025 on a strong footing with excellent results, including year-over-year growth in revenue, contribution profit, and adjusted EBITDA. This performance continues to be driven by our strong sales momentum and higher transaction activity from both new and existing clients. Based on our outperformance in the first quarter, our strong pipeline, bookings and backlog at the end of the quarter, and the continued momentum in all growth areas of our business, we are feeling good about the remainder of 2025 and beyond. Despite the macro environment, we find ourselves in a very fortunate situation where we are serving an important part of the non-discretionary essential domestic economy. Let me provide a real-world example. For a typical household, just to be able to cook, you need water, electricity, and gas. These bills are fundamental, and you need to pay for these services. They're not optional. Just this segment alone gets us to about half of our business. Similarly, you need to pay for a phone, for your rent, mortgage, and taxes. Likewise, if you have a home, car, or life insurance, to maintain coverage, you need to pay for those bills. You can go down the line of our verticals and realize that it is a privilege to be serving an essential side of the domestic economy with a differentiated and scaled technology platform and ecosystem like Paymentus. From a go-to-market standpoint, we could not ask for a better value proposition that our platform and ecosystem provides our clients, which is reducing their cost to serve while helping them improve the experience for their customers. This value proposition resonates in all economic cycles, particularly because we are a critical service for revenue collections for the businesses we serve. Taking into consideration our value proposition, resulting in a continued market momentum along with the enormous span of non-discretionary bills, I continue to believe that our best is yet to come, and we are indeed just getting started. Turning now to our first quarter results, revenue was $275.2 million, an increase of 48.9% year-over-year, driven largely by increased clients and transactions. Contribution profit was $87.6 million, up 26.3% year-over-year. Adjusted EBITDA, which is a significant financial metric for us, was $30 million, an increase of 51.3% year-over-year. Adjusted EBITDA margin was 34.2% in the quarter. It's a new record. You will note that over 50% of our year-over-year growth in contribution profit dropped to our bottom line. This is a key aspect of our business model that we have pointed out on previous calls, which is our proven ability to consistently expand our operating leverage without sacrificing growth or innovation. As we sit here today, it feels great to reaffirm our CAGR model for our primary metrics of 20% top-line revenue growth and 20%-30% bottom-line adjusted EBITDA growth. As is evident from our first quarter results, we outperformed our CAGR model by a wide margin for both top-line and the bottom line. This is reflected in our updated guidance that Sanjay will cover shortly. As a reminder, this CAGR model is for our primary metrics of revenue and adjusted EBITDA only and should not be confused with the secondary metrics such as contribution profit and OpEx. As we have been doing quite successfully to date, we will continue to use our strong operating leverage to calibrate contribution profit and OpEx as necessary to achieve these longer-term targets. In addition to these results, we exited the first quarter with strong bookings and a solid implementation backlog. The multi-year commitments under our typical agreements from these bookings continue to give us confidence in our ability to achieve our CAGR model beyond 2025. Our solid execution during the quarter once again allowed us to surpass the Rule of 40 and doing so by a wide margin at 61%. As we have shared previously at Paymentus, our goal remains to continue delivering high-quality earnings alongside solid top-line growth. Now I'll review some of our key first quarter business highlights and accomplishments. During the first quarter, we signed clients in various industry verticals, including utilities, government agencies, telecommunications, banking and credit unions, insurance, and educational institutions, among others. We believe this broad mix of new clients shows the diversity of the businesses and the multiple industry verticals our platform can support. In addition, we signed several new channel partners in various industry verticals to deepen our partner ecosystem. These verticals include property management, education, banking, and credit unions. Our diverse and ever-expanding partner network continues to complement our direct go-to-market strategy. At the same time, we continue to focus on onboarding our considerable backlog. Our onboarding enhancements, incremental investments, as well as constantly improving face-to-face client engagement, continue to drive these efforts. During the quarter, we onboarded clients across multiple verticals, namely utilities, healthcare, telecommunications, property management, insurance, government services, banking, and credit unions. With that, let me turn it over to Sanjay to review our financial results in greater detail. Thanks, Dushyant, and thank you all for joining us today. Before I discuss our first quarter results and outlook, I'd like to remind everyone that the financial results I'd be referring to include non-GAAP financial measures. Our Q1 press release and earnings presentation includes reconciliations of these non-GAAP financial measures to their corresponding GAAP measures. Both of these are available on our website. Turning to slide five, we started off the year with another quarter of very strong financial results driven by higher transaction activity from both new and existing billers. We believe these results continue to demonstrate the resiliency, stability, and strength of our business. Our first quarter 2025 results came in stronger than we anticipated, with revenues of $275.2 million, contribution profit of $87.6 million, and adjusted EBITDA of $30 million. On the Rule of 40 basis, we came in at 61%, which we are quite pleased with. I'll discuss the drivers of our outperformance and the strong business momentum behind them shortly. These strong results enabled us to once again exit the quarter with a much stronger cash position and allowed us the flexibility to allocate capital with a continuous focus on long-term growth that also contributed to robust bookings and backlog. Now, let's review our first quarter financials in more detail. As I mentioned earlier, first quarter 2025 revenue was $275.2 million, up 48.9% year-over-year. This growth was largely driven by the launch of new billers over the past year, as well as increased same-store sales from existing billers. We also processed a higher level of transactions during the first quarter, with this number reaching $173.2 million, up 28% year-over-year. Our average revenue per transaction increased to $1.59 compared to $1.37 in the prior year. This was mainly due to the biller mix, or more specifically, the large enterprise billers that we launched during the second half of 2024 with higher average payment amounts. This is now the second full quarter where we are seeing the benefits of these large enterprise customers. The first quarter guidance we provided did consider some of this upside into account, but as you can see, it still exceeded our expectations. First quarter 2025 contribution profit increased to $87.6 million, up 26.3% year-over-year. This increase also reflects the launch of new billers and higher transactions from existing billers. Contribution margin was 31.8% for the first quarter compared to 33.4% last quarter and 37.5% in the prior year period. The year-over-year reduction reflects the mix of large, higher-volume enterprise billers in our growing customer base. This change in contribution profit was offset substantially by a year-over-year reduction in operating expense margin, which resulted in a record adjusted EBITDA margin of 34.2%. This is consistent with our continued focus on profitability, which I will elaborate on shortly. Contribution profit per transaction for the quarter was $0.51, similar to the prior year period, demonstrating our ability to expand market share without sacrificing comparable contribution profit per transaction. As we have noted before, variables that are outside of our control, such as an increase in the average payment amount or changes in the payment mix, can affect contribution profit on a quarter-to-quarter basis. Therefore, we treat this as a secondary metric, while our gross revenue and adjusted EBITDA remain primary metrics for us. First quarter 2025 adjusted gross profit was $72.6 million, up 25.9% year-over-year. That was in line with the contribution profit growth. As we anticipated, first quarter 2025 non-GAAP operating expenses increased 13% year-over-year to $45.5 million. This increase was primarily due to higher research and development expenses, as well as sales and marketing expenses. Again, these increases were planned and mainly driven by increased hiring and agency fees for business from our resellers and partners in order to enhance our technical strengths and convert our strong pipeline into bookings. We expect to make similar investments throughout the year as we continue to execute our go-to-market strategy. These expectations are already incorporated in our guidance, which I'll review in more detail shortly. First quarter 2025 non-GAAP net income was $17.6 million or $0.14 per share, compared to non-GAAP net income of $11.8 million or $0.09 per share in the prior year period. This reflects a non-GAAP tax rate of 25%, which is based on current expectation of our long-term projected tax rate and is reflected in our 2025 guidance. First quarter 2025 adjusted EBITDA rose 51.3% to $30 million compared to $19.8 million in the prior year period. Adjusted EBITDA also represented a record 34.2% of contribution profit compared to 28.6% in the prior year period. We believe this stronger adjusted EBITDA margin demonstrates the inherent operating leverage we have in the business. Note that approximately 56% of our year-over-year growth in contribution profit fell to the bottom line. Related to this, once again, we also exceeded the Rule of 40 for the quarter, coming in at 61. This is a measure we take seriously, and our team here monitors it very closely. Now, I'll discuss our balance sheet and liquidity position on slide six. We ended the first quarter with total cash and cash equivalents of $249.6 million compared to $209.4 million at the end of 2024. The $40.2 million sequential increase was primarily comprised of $50.4 million of cash generated from operations, offset by $10.2 million cash used in investing and financing activities, primarily capitalized software. The company does not have any debt. Free cash flow generated during the quarter was a record $41.1 million. This was primarily driven by strong adjusted EBITDA in the quarter and also extracting cash from working capital by reducing our accounts receivable balances, demonstrating that our working capital is fairly liquid and can be converted to cash quickly if needed. Driving organic growth continues to be our primary focus. Having said that, our strong cash position enables us to maintain financial flexibility to keep room for working capital investments as we scale. In addition to this, our ample liquidity allows us to explore attractive M&A opportunities that may arise in order to expand our growth prospects. Our Days Sales Outstanding at the end of the first quarter was 33 compared to 43 at the end of the prior quarter, much better than we expected. Working capital at the end of the first quarter was approximately $280.5 million, an increase of approximately 6.2% sequentially. We had $128.8 million diluted shares outstanding during the first quarter compared to $128.7 million diluted shares outstanding during the prior quarter. Now, I'll turn to our Q2 2025 and revised full year 2025 guidance for revenue, contribution profit, and adjusted EBITDA on slide seven. Before discussing full year guidance, I want to mention that we are continuing to follow the same prudent approach to guidance that we followed during all of 2024, which has proven very successful for us. As reflected on the slide, for Q2 2025, we expect revenues in the range of $255 million-$260 million, contribution profit in the range of $89.5 million-$91.5 million, and adjusted EBITDA in the range of $28 million-$30 million. On the Rule of 40 basis for the second quarter of 2025, our guidance implies a range of 48-52. For the full year 2025, we now expect revenues in the range of $1.075 billion-$1.09 billion, an increase of 3.1% from midpoint of our prior guidance, and now representing 24.2% year-over-year growth at the midpoint. Contribution profit in the range of $363 million-$369 million, up 1.1% from midpoint of our previous guidance. Adjusted EBITDA in the range of $118 million-$122 million, up 5.3% from the midpoint of our previous guidance, and now representing 27.4% year-over-year growth at the midpoint. Our non-GAAP tax rate of 25%. On the Rule of 40 basis, our guidance implies a range of 49-51 for the full year 2025. During our past few earning calls, we provided long-term growth targets for both revenue and adjusted EBITDA, our two primary financial metrics. We stated that our goal was to grow revenue at approximately 20% annually and to grow adjusted EBITDA dollars between 20%-30% annually. The full year 2025 guidance we have provided today is consistent with these long-term targets. Regarding contribution profit and operating expenses, which we consider secondary financial metrics, we plan to actively manage our operating expenses, dialing them up or down as necessary depending on how contribution profit is trending throughout the year to enable us to remain a Rule of 40 company on an annual basis and also over long term. We managed this quite well throughout all of 2024, as well as for the first quarter of 2025. Based on our success to date, we believe we are well suited to keep managing this in the current year, given our strong operating leverage. In summary, we started 2025 on a solid footing, reporting strong first quarter results. Throughout the past several quarters, we have consistently demonstrated our ability to generate strong revenue, contribution profit, adjusted EBITDA, cash, and bookings growth. This enabled us to end the first quarter with a substantial backlog. Given our solid footing and strong visibility, we continue to believe we are well positioned for further growth in 2025. Thank you, everyone, for your attention today. Now I'll turn it back to Dushyant for final remarks before we open up the call for questions. Thanks, Sanjay. In closing, we started off 2025 with the same momentum that we had throughout all of 2024, which allowed us to deliver year-over-year growth in revenue, contribution profit, and adjusted EBITDA for the first quarter. We also ended the quarter with strong bookings and backlog, which continues to support our positive outlook for the rest of 2025 and beyond. During the quarter, we paid close attention to the consumer and business payment trends in our vast network across multiple verticals, and we continue to see encouraging trends with no slowing down of any kind. I want to reaffirm that we believe, based on the size of the opportunity ahead of us, we are just getting started and our best is yet to come. This belief is based on five factors. First, we service the non-discretionary side of the domestic U.S. economy. Second, we have a great technology platform and an ecosystem that continues to scale processing for hundreds of millions of payments. Third, as exciting as these numbers are, including our record EBITDA margin this quarter, they only tell part of the story. A lot of our long-term innovation framework that is currently in our expense run rate does not yet provide the additional top line and margin expansion opportunities that we expect will occur in outer years. This includes interchange monetization, meaning converting part of the interchange from a cost center to a revenue center, artificial intelligence, and other product investments we continue to make for increasing our TAM, including within our own customer base. Fourth, we have a big customer base and a partner ecosystem, along with a sizable portion of U.S. households and businesses that are already using our platform on a regular basis, giving us an ever-growing distribution network for our future innovative product offerings and a possibility of a perpetual growth engine. Fifth, we have a phenomenal team of dedicated professionals helping us achieve our long-term vision. It is very humbling to reflect on these and other dimensions that we believe set a stage for a very bright future ahead for Paymentus. On that note, I also want to thank all of my team members for their continued efforts and dedication to our company's success. That concludes our prepared remarks. I'll now open the lineup for questions. If you would like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove that question, please press star followed by two. Again, to ask a question, it is star one. Our first question is from Dave Koning with Baird. Your line is now open. Yeah. Hey, guys. Thank you. Nice job again. I guess for my first question, transaction growth for many quarters now has been in a nice 25%-35% range. It was 28% this quarter. How much of that is new clients growing, and how much is same-store sales, existing clients? Has that changed much the last couple of quarters and into this quarter? Hey, Dave, thanks for the question. Appreciate it. Interesting trends which we are seeing since past many quarters, I would say the business is growing nicely in both the growth vectors, i.e., the new customers going live and the same-store sales. I would say at this point, the year has just begun, and these trends are changing over time as we are onboarding a lot of customers in various different verticals. As the business expands more and diversifies more, these trends overall could change, and they could move around quarter to quarter. I think at this point, the growth from new implementations over the last year, I would say, is a bigger piece than same-store sales. Same-store sales are also growing nicely and in all the verticals. I won't be able to quantify both of them separately, but I would say both of them are growing at a very good pace, and they are very comparable to the growth we've seen in the past. The customer mix we have in our pipeline and backlog today gives us a good feeling and good assessment based on their transaction history that a similar trend should continue, and we feel very good about where we are. Okay. That sounds great. I guess my second question, net revenue, contribution profit, you're guiding up sequentially, which is very normal. Gross revenue has been up for many, many quarters in a row, but you're guiding that down sequentially. Maybe what's the dynamic there that we would have gross revenue actually come down? Is there something not recurring in the gross part of the revenue line? Dave, let me begin by explaining our large enterprise customers. This is kind of, I'll call it a different segment of our customers who have just started since 2024. In Q3, we onboarded these large customers, and we have not seen a full cycle, i.e., a full four-quarter cycle of these customers to understand the dynamic carefully that how their growth patterns will be. They are a significant part of our trend. What is unknown to us is that the growth which we are seeing in those in the last two and a half quarters, which are behind us, is that growth mainly because of seasonality in their business, or is it primarily due to the advantage these large enterprise customers are getting because of our platform, which is giving them an opportunity to scale beyond than what we and they were originally expecting? I think we need kind of four-quarters history or a run rate to assess that. We were actually in a very similar position just three months before, or I would say two months before when we were guiding for Q1, and we still exceeded that expectation. We are kind of taking a very similar stance in guiding for Q2. We are taking our original expectations which we had, i.e., in Q3 of 2024, that what would be the run rate for Q2 of this quarter. If that exceeds, or said differently, if that follows the trend what we saw in the last quarter and the quarter before, there might be an upside to revenue. We have taken a prudent posture in terms of how we should guide. We just want to keep our head straight, Dave, and we want to march and execute and perform. We do not want to count our chickens before they hatch. That is the strategy. You are absolutely right. Based on seasonality, the CP is going to go up in Q2 compared to Q1, which is incorporated in our guidance. The revenue uplift may happen if the trend continues. If not, the impact on CP will not be as significant, I think. We factor that in our guidance. Gotcha. Great job, guys. Thank you. Thank you, Dave. Thank you. Our next question is from Andrew Polkowitz with JPMorgan. Your line is now open. Hey, good afternoon, guys. Thank you for taking my question. First question, I wanted to ask, you spoke to the consumers of your clients being very durable and in very durable categories. I was curious if you've noticed any change in sale cycles or pace of implementation with customers that are to be onboarded given the incremental macro uncertainty over the past month or so. We're not seeing any change to speak of. In fact, as I called it out in the opening remarks, that we have been watching the trends in Q1 very carefully, both for the consumers on our platform but as well as our business payers. We're not seeing any changes there. In terms of the implementation speed, as we talked about, we seem to be doing well there as well. All the investments we have made, but also the face-to-face interactions, especially with large enterprise clients, actually continues to help us there. We are not seeing any, and our pipelines are looking strong and bookings were good. Okay. That's helpful. Just my one follow-up on Sanjay. You mentioned that you have liquidity for M&A if necessary. I was curious what types of deals would be attractive to you guys, whether it is just for further distribution. You mentioned the partner channel already, or if there are capabilities you would want to add to your platform. Thank you, guys. I will say M&A opportunity is something which is kind of our secondary objective, if I call. We have got a good organic business, and organic growth is doing really well based on our bookings and pipeline and implementation base. Our cash is going at a decent level. In fact, this was a record quarter to generate $41 million in free cash flow. We are proud of it. Now, this cash is giving us a situation that, okay, how do we invest it? M&A is not something which is our primary objective. Again, I'll point out that is something we will only do if something great comes to us. As you know, we get a lot of books to take a look at. Nothing has intrigued us yet. We want to make the right decision for the shareholders of the company. As far as an opportunity provides us a right return on the investment and it makes sense for longer term, we will do it. By the way, currently, there is no need for us to do any M&A. There is no feature missing. There is no vertical which we want to acquire. There's nothing predetermined. There is no set criteria of what we are going after. We just are trying to see what makes sense and could be accretive to our shareholders. I would say it's too early to get into what kind of M&A it will be. We are just being cognizant of what's going on in the market, and we will do the right decision if a right opportunity comes. As of now, no certain criteria is set. I think the main reason—this is Dushyant—the main reason Sanjay wanted to call this out, and we talked about calling this out in the opening remarks, is that I think it's quite humbling to be in a position where we have, if I may say it this way, a quarter of a billion dollars in the bank account, and we are generating cash. Frankly, we are in a strong position where our platform itself is driving the growth of our business organically, and we don't need to do anything. That allows us to be very selective, as Sanjay talked about. All right. right. Very clear. Thank you again, and congrats in the quarter. Thank you. Our next question is from John Davis with Raymond James. Your line is now open. Hey, good afternoon, guys. Sanjay, obviously, I think the thing that stuck out the most this quarter is the free cash flow. I think it's about 50% more than you generated in all of 2024. You called out, I think, some change in working capital. Any other comments there? Is there a way we should think about free cash flow conversion as a percentage of adjusted income or EBITDA? That really stuck out as being really strong in the quarter. Just curious what's driving how we should think about it to the balance of 2025. John, thanks for the question. I think it's interesting to see that over time, we have been increasing our working capital every quarter. If you look at the trend of, say, at least just last eight quarters, right? We've got EBITDA cash generation as well. Cash fluctuates quarter to quarter. I mean, this is the first time we've seen our cash-to-EBITDA ratio actually exceed 100%. We would like to see that every quarter, but it's not going to be possible to have it every quarter. To set the expectation, I think the right thing to think about is that in one full year, we will generate cash, and we will generate decent cash after paying taxes. As you know, our tax rate is close to 25%. The right way to think about it is that our EBITDA, if you take out the cap software, which is kind of getting consistent now every quarter to quarter, I think that should be the right way to think about the cash flow. Working capital needs are not easy to estimate because we are scaling the business, and the scale could happen in a way that our working capital may be needed. We are in a great position, very favorable position to have enough liquidity that we can fund the working capital. I won't be able to give you a precise formula, John, to estimate our free cash flow conversion every quarter. I would say it can fluctuate quarter to quarter. I think this quarter, we've done a wonderful job. Although I would like to continue the same trend every quarter, there are no guarantees of that. I suggest look at it on an annual basis and spread it evenly if that makes sense. If I may say, actually, one of the— Sorry. John, I was just going to add one more point to this. One of the things which is getting even more exciting for us as a team here is that as the business is scaling and we're generating more EBITDA dollars, and as Sanjay pointed out, our cap software remains fairly consistent. Although we continue to make investments, as I pointed out, I think more of our EBITDA dollars are going to the cash line. Yeah. I mean, if I may add, our business anyway has a strong operating leverage on the P&L, but I think the operating leverage on cash should get better in our view, subject to what working capital cash is needed every quarter. Okay. No, that's helpful. I want to follow up on Dave's question between the spread of kind of gross profit or sorry, gross revenue and contribution profit. Obviously, gross revenue has been growing well in excess of contribution profit over the last several quarters. If I look, the guide in the back half of this year implies that they grow more similarly. Actually, I think contribution profits imply to grow a little bit faster than gross revenue in the second half, maybe 100 basis points or so. Based off your comments to Dave's question, I just want to make sure I understand this. It sounds like you guys have a pretty good handle on what you expect from a contribution profit perspective, but the gross revenue is a little bit more. Said another way, your contribution profit guide is maybe less conservative than your gross revenue guide. Anything else to call out there? Obviously, that just means there's a huge gap, and it's narrowing. Is that the right way to think about it going forward? Is it just more conservatism in gross revenue? Any other comments you could add there? Yeah, John, you got a great read on the guidance, and you're absolutely right. I would say what I explained to earlier, Dave's question is the large enterprise customers which are doing really well, they are exceeding our expectations. We just want to keep our head straight and not count that excess of expectations which have been achieved in the last two quarters to continue unless they happen. The interesting part is these enterprise customers, as you know, they get volume discounts. There is a softer margin on them compared to our overall business. Hence, I would say there is more upside on revenue than contribution profit, if that's the way you were interpreting. I think that's absolutely right. We have more opportunity on revenue, I would say. Part of it is prudence on our part, how we've seen and how the business has performed. We just don't want to take any chance once we see a full four-quarter cycle of these large customers. If I may also add— Okay. Of course. John, as part of the overall strategy for us is to continue to bring as many interchange dollars in our P&L as we can as part of market capture, as that will be a long-term plan for us to go after converting part of that expense into a revenue source. Okay. Appreciate all the colors. Thanks, guys. Thank you, John. Our next question is from Matt O'Neill with FT Partners. Your line is now open. Yeah. Hi, John, and thanks for taking my questions. I was curious if you could remind us a little bit historically on potentially some of the virtues of Paymentus in a tougher macro. And so what I'm getting at is, Dushyant, you started the call with some of the defensiveness of the business, right, focusing on utilities and things like phone and insurance payments, etc. Is there a scenario where billers actually seek out Paymentus more so in an economic downturn because using your solutions improves conversion and makes it easier for the ultimate customers to pay their bills and things like that? Is that a good way to think about there potentially actually being an upside here? Thanks. That's a great question, actually. Frankly, we have gone through multiple economic cycles and some events. Even though each event has their own personality, we continue to grow our business in all of those scenarios. Part of the reason is exactly what you called out, that our value proposition on its own is so strong because with our platform, with our ecosystem, our technology and innovation framework, we are able to actually reduce the cost to serve for our clients, especially as the electronic billing adopts and the electronic billing and payment adoption is more mainstream now than it used to be, meaning there are more opportunities for efficiencies to be gained for any enterprise of any size, especially the larger end of the market. They are looking for ways to reduce their cost to serve. That is not about transaction pricing. At this stage, they all know transaction pricing actually is not the biggest cost center for them. It is all the other workflows which take place to actually bring the payment in the door. With our platform, the holistic view of the platform, we are able to solve some of those problems while also improving the customer experience. Combine that with our pricing model, which is we do not charge anything for upfront investments and so on because how well deeply integrated we already are in the billing ecosystem today across all the software industries and the verticals we currently serve. From that perspective, I think our value proposition continues to resonate. In a difficult scenario where there is a downturn, I think when folks are looking for ways to bring their revenues faster in the door and to look for opportunities where more and more customers use more and more efficient and modern channels to make a payment, I think our name comes pretty much right there at the top as one of the strategies to bring that to bear. Thanks, Dushyant. I guess just as a follow-up, have you guys even anecdotally seen any changes in the business, whether it's from your customer's perspective as far as the pipeline or the underlying customers of all the billers you serve? Are there any behavioral changes there? I know your business is almost exclusively driven on a revenue per transaction basis, so the dollar amounts are less impactful, although it does impact the cost side a little bit. Have bills, kind of all else equal, gone up or down or otherwise changed from your observations? We are seeing encouraging trends, actually, all across the board currently. Great. Thanks so much. Thank you, Matt. Our next question is from Andrew Bauch with Wells Fargo. Your line is now open. Hey, guys. Thanks for taking the question. It's Lamar on for Andrew. I have a follow-up on the large enterprise bill. Hey, how are you doing, Dushyant? I have a follow-up on the large enterprise billers. I understand that you guys are being cautious around how they trend and kind of waiting for a full year cycle to gain better visibility and confidence, but it still outperformed your internal expectations again. I guess with another quarter of them under your belt, any early learnings that you may be able to share in relation to these larger billers? Is it fair to say that the sales momentum that you saw with them in 2024, has that sustained or even accelerated into 2025 given the macro uncertainty that we're seeing? Lamar, that's a great question. I will have Sanjay come in on most of the question, but I'll just start by saying that one of the exciting aspects which is giving us as a team a lot of great feeling for 2025 and beyond is exactly the trend we observed. We were expecting certain things from the new customers we are onboarding. And based on the benefit that our platform, our customers are able to enjoy, which is leading to higher adoption of our services, converting more from paper processes to electronic processes, is actually helping increase our TAM even within that same customer base earlier than we were anticipating. Some of those trends are hard to predict until you have gone through the entire cycle. I will have Sanjay comment on the back of it. I'll say that mainly for the same store sales part of your question, Lamar, the trends which we have observed only for, say, two and a half quarters, although, again, I would caveat that that's not representative of how it will happen. It could happen. It may not. The last two and a half quarters, the trends have been fairly decent. They have been pretty much similar to what we see in other parts of the business, whether they are mid-market clients or small clients or large clients. I think they have been pretty much similar in range. The interesting part on this is that these customers are helping us get similar customers or large customers which are in our pipeline as of now. We see good opportunities around the horizon to see good performance in the outer years. One of the interesting pieces of the enterprise customers is, together with giving an opportunity for the pipeline, I think the quality of the feedback which we are getting from the customers is pretty much helping us across the board, even in small-sized clients. I think it is just we have got many household names as well now in our pipeline. That is the additional benefits, I would say. In terms of trends, we are feeling very good about what we have seen so far. Okay. Thanks. Makes sense. Great job on the quarter. Thank you, Lamar. Next question is from Darrin Peller with Wolfe Research. Your line is now open. Hey, guys. Nice job on the quarter here. I think really revisiting your ability to scale into incremental verticals has continued to impress us. Maybe what are the latest trends you're seeing in terms of demand across moving beyond utilities or some of the categories that you've been in for some time and really understanding some of the areas around, obviously, healthcare, insurance, education, even government, I know. What's the latest in terms of what you're seeing the most demand from that's incremental? Where is it resonating? Maybe what are the driving factors of differentiation you're offering that's resonating in those areas more recently? Yeah, it's a great question, Darrin. One of the things I would say is that we wanted to do the exact same analysis of our bookings in Q1 compared to the year-over-year bookings in verticals. We are very excited, actually, to see how well our verticals, not just utilities, which is growing rapidly and continues to do well, as sizable as that is, but all the other verticals you named are doing well as well and growing pretty fast. The primary value proposition actually is what we are noticing is, and what we believe will eventually be the case in our view of the long-term view of the bill payment market. Clients want a platform that is proven, that is tested, that is able to handle, scale, withstand all the complexities and sophistication of the workflows, and is still able to provide the best customer experience. We do not believe the single-purpose use case where a platform is designed for one particular industry offers any more capabilities to a billing company once they reach the mainstream of adoption beyond the initial stage and the early adopters and so on. Once you reach the mainstream, everyone knows that consumers are the same. I'm the same consumer who's paying my phone bill as well as my insurance bill as well as my healthcare bill and my utility bill. And Paymentus, as pervasive as we are getting, we are becoming a more well-known name even for the consumers and the business payers who are using our platform as they go from different places to different places and across the country. Okay. Okay. It sounds like it's a similar value prop at the end of the day, but I mean, I just wonder if that's—yeah. That's what it's great to see. I guess one quick follow-up more on the financial side, Sanjay, would just be just when we talk about the operating leverage in the business, obviously, you guys have shown pretty amazing margin expansion consistently. From your perspective, I mean, just remind us on your maybe longer-term targets, what kind of operating margins you see this business getting to? Is there anything between now and then that might change the types of incremental margin profile and we're seeing on the new business you're adding would be helpful? Thanks, guys. I'll say achieving 34.2% margin in this quarter, which is a record, definitely we are proud of that. While we all would like to march on that path and get even better every quarter, and why not, right? We got a great operating leverage, and the business is scaling. I think it's not proven in our part to talk about how the long-term will shape up. The only guidance we provide for the longer-term vision is our top line, we expect would continue to grow 20% annually, and EBITDA margin dollars would expand between 20-30%. As our latest up-to-date full-year guidance reflects today, at the high end, both of these metrics actually are ahead of these long-term targets. Coming to the EBITDA margin, I would say that's kind of the balancing figure. That's not something which rises. It's the product of our business, and operating efficiency should deliver good results. We dropped more than 50% incremental contribution profit to the bottom line. As new business scales and as far as we spend correctly by calibrating our contribution profit, our OpEx has to be calibrated as you know. That will derive the results. There could be quarters, I would say, Darrin, that we could decide to spend extra and make extra investments in the business as we have to scale and capture more pipeline convertible things. We might have to spend extra at times. That could be in quarters, not overall, I would say. I would say longer term, we have good expectations for EBITDA margin. Can't give a number. Okay. All right. Nice work, guys. Thanks. Thank you, Darrin. Our next question is from Will Nance with Goldman Sachs. Your line is now open. Hey, guys. Appreciate you taking the question. Nice to see some of the channel partnership announcements today. Dushyant, wondering if you could spend some time just giving an update on the channel distribution strategy. What's the makeup of your current kind of go-to-market resources today, and how does the new business kind of distribute across various channels? Appreciate it. Sure. Hey, Will. We are actually the channel partners we called out. The channel partners have become a very important and a strategic part of our go-to-market strategy in conjunction with our direct go-to-market. We are seeing that a combination of direct strategy with channel partners in different verticals, as well as regardless of the size of the customers, it actually does help achieve the type of efficient go-to-market strategy we are seeking as we are scaling the business. Today, if you would have asked us like 10 years ago or eight years ago or even six years ago, channel partner would be a smaller part of our business than it is today. Channel partners continue to add increasing value to our pipeline and the bookings. At the same time, we believe one of the best things we have done is we have remained in all verticals we go after, we have remained active ourselves so that we can learn from the customers, we can learn from the market, we can learn from the pricing and the value proposition strategy and all the different challenges or exciting opportunities that exist and learn from them and, as a result, share with our partners as well and then redefine a go-to-market strategy. That is helping us a lot. Got it. That's super helpful. Just on the large enterprise implementations that you've been referencing on the last couple of calls, I was wondering if you could give any sense for the contribution to revenue and contribution profit from those merchants specifically, just as we think about modeling out the back half of the year and starting to lap those implementations. I would guess that we'll start to see some of the spread between revenue and contribution profit change. If there's anything you could do to maybe put a box around what those merchants are contributing to some of the results right now, that'd be very helpful just in calibrating the model. Thank you. Nice results today. Hey, Will. Thanks. Appreciate the question and appreciate the desire to get that level of granularity of our business. We have decided not to get into that level at this point, given we have only two and a half quarters under our belt. I think once we have full year, we might be able to share some color, but we do not want to get into that level at this point in time. The only thing I can say is that, and what we have shared till date is that large customers definitely get a better pricing. Said differently, their margins are softer than corporate margins. Overall, the operating leverage on the business, if that is considered, it is a very profitable and great business for us. As you have seen, our adjusted EBITDA was record, 34.2%. I think overall, it is accretive. It is definitely accretive to the bottom line. They are adding good cash and good profitability to us, helping us reach better margins. We won't be able to get into the things which you're seeking at this point. Okay. All right. Understood. Appreciate it. Thanks for taking the questions. Thank you, Will.