Good day and welcome to Paymentus' First Quarter 2023 Earnings Call. This call is being recorded and all participants are currently in a listen-only mode. There will be an opportunity to ask questions following management's prepared remarks. At this time, I will now turn the call over to David Hanover, Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Paymentus' first quarter 2023 earnings call. Joining me on the call today is Dushyant Sharma, our Founder and CEO; and Sanjay Kalra, our Chief Financial Officer. Following our prepared remarks, we'll take questions. Our press release was issued after the close of market today and is posted on our website, where this call is simultaneously webcast. The webcast replay of this call and the supplemental slides accompanying this presentation will be available on our company's website under the investor relations link at ir.paymentus.com. Statements made on this webcast include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements use words such as will, believe, expect, anticipate, and similar phrases that reflect future expectations or intent regarding our financial results and guidance, the impact of and our ability to address continued economic uncertainty and inflation, our market opportunities, business strategies, implementation timing, product enhancements, impact from acquisitions, and other matters. These forward-looking statements speak as of today and we undertake no obligation to update them. These statements are subject to risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements, including the risks and uncertainties set forth under the captions, special note regarding forward-looking statements and risk factors in our annual report on Form 10-K for the year ended December 31st, 2022, which we filed with the SEC on March 3rd, 2023, and our quarterly report on Form 10-Q for the quarter ended March 31, 2023, which we expect to file with the SEC shortly and elsewhere in our other filings with the SEC. We encourage you to review these detailed forward-looking statements, Safe Harbor, and risk factor disclosures. In addition, during today's call, we will discuss certain non-GAAP financial measures, specifically, contribution profit, adjusted gross profit, adjusted EBITDA, and adjusted EBITDA margin. These non-GAAP financial measures, which we believe are useful in measuring our performance and liquidity, should be considered in addition to and not as a substitute for or in isolation from GAAP results. We encourage you to review additional disclosures regarding these non-GAAP measures, including reconciliations of the most directly comparable GAAP measures in our earnings press release issued today and the supplemental slides for this webcast, each available on the Investor Relations page of our website. With that, I'd like to turn the call over to Dushyant Sharma, our Founder and CEO. Dushyant?

Thank you, David. As you can see from slide three, we once again had a very successful quarter with top-line growth and adjusted EBITDA ahead of our expectations. Revenue increased 27.1% on a year-over-year basis to reach $148.3 million. Our first quarter adjusted EBITDA was $8.4 million, which was 56.4% higher than Q1 of last year. Contribution profit for the quarter was also higher than we had originally expected at $53.5 million despite the ongoing macro challenges. These numbers are especially exciting to me from a profitability standpoint and demonstrate our continued progress. On a year-over-year basis, our adjusted EBITDA grew by $3 million or 56.4%, which means 50% of incremental contribution profit dollars dropped to the adjusted EBITDA line. We believe this is even more compelling if we factor in the macro environment. Between Q4 and Q1, we had about 400 to 500 basis points of macro and seasonality-related inflationary impact, meaning that on an inflation-neutral basis, we would have expected to drop the vast majority of our contribution profit to adjusted EBITDA as OpEx did not increase on a relative basis. As we continue to make pricing adjustments to address inflation, over time, we believe these adjustments will become a tailwind for us when energy prices move closer to the pre-inflationary levels. We are also encouraged that our core biller business has been growing well and is scaling profitably, again, as more of our incremental revenue dollars drop to adjusted EBITDA. Parallel to this, we continue to make investments in complementary offerings in our instant payment network or IPN, and to small and medium-sized businesses or SMBs. IPN remains an exciting part of our strategy and is growing well. On SMB, we are receiving positive feedback from our partners and seeing encouraging early signs from the SMBs. As a reminder, IPN, which is still under 10% of our overall revenue, is growing faster than our core business, even though IPN and SMB are currently dilutive to our adjusted EBITDA margins. Said differently, Q1 adjusted EBITDA from our core biller business was meaningfully higher than the reported number of 15.7%, taking into consideration the financial impact of the strategic investments we are making to drive our future growth. Key highlights from the quarter, as listed on slide four. From a bookings perspective, we had a very strong quarter, our best ever, which resulted in a strong backlog at the quarter end. This is especially important for us. Having these substantial bookings at the end of the first quarter gives us a great deal of runway to get our clients implemented for revenue recognition in 2024. To add some additional color here, our bookings for the quarter included several large-scale clients across diverse verticals. We expect that most of these new clients will not be affected by inflation once they go live, both regarding how we price these transactions with variable fees and the underlying industry segment itself. These new clients included a large estate agency, a sizable property management company, an extensive healthcare system, multiple large insurance companies, and a large utility. As a reminder, the biggest impact from inflation has been from the energy utilities and not from the other industry verticals. In addition to bookings, we remain laser-focused on onboarding speed and related customer engagement. Our successful client launches in Q4 contributed to our better-than-expected Q1 performance. A subset of these clients also has seasonally higher volumes in Q1 versus other quarters. We are pleased that we were able to get these clients live before Q1 to recognize the benefit. We similarly remained focused on client onboarding during Q1 and are happy with the improving post-pandemic conditions that allow for increased face-to-face large client engagements. We expect these high-touch engagements during the first quarter will lay the groundwork for us to bring additional new clients live in Q2, and we are off to a good start. During the quarter, we expanded our long-term relationship with Oracle by certifying with Oracle Cloud in addition to the on-prem solution. This allows Oracle CIS cloud clients to easily integrate with our platform. We continue to see growth in our Oracle CIS client base. During the quarter, we also expanded our relationship with Guidewire, a software platform for more than 500 property and casualty insurers. As part of this, we have launched an integrated billing center app that is available to Guidewire customers and allows insurance companies to keep pace with a rapidly evolving customer need for a streamlined payment and billing experience. We also completed and launched another implementation of our billing and payment platform for a large municipal utility, adding another state capital to our list of growing customers. Ranked as a top-tier municipal utility in the nation, the city leaders identified three primary objectives for this project: first, to drive more on-time payments; second, to lower customer service costs; and third, to increase customer satisfaction by letting the city's customers pay how, when, and where they want, with innovative payment methods and inclusive payment channels for their entire customer base. We upgraded the city with our platform to achieve all these objectives and position the city well for the future. Let me now touch base on implementation backlog and how it relates to our expected growth trajectory and ability to deliver expanded adjusted EBITDA margins in 2024. From where we sit today, with the strength of the implementation backlog exiting 2024, coupled with Q1 2023 performance, we have a lot of confidence in our ability to deliver growth in 2024. At the same time, our first quarter results also demonstrate our improving ability to deliver incremental adjusted EBITDA margins and dollars to the bottom line. We believe all these factors leave us well positioned to continue growing revenues and to expand profitability even for the next year. In summary, I would reiterate what we said on our last call: we remain very confident regarding the long-term growth prospects of the business. This is especially true given the expanding IP and ecosystem we are building, which we believe allows us to reach a broader total addressable market and leverage the entire spectrum of interchange—from a cost center in our biller business, to interchange-neutral in our IPN business, to interchange being a revenue source in our SMB offering and beyond. We are already off to a good start, as indicated by our first quarter results, and we look forward to updating you on our progress in future calls. Now let me turn it over to Sanjay to review our financial results in greater detail.

Thank you, Dushyant. I am very excited to be a part of Paymentus and thank you all for joining us today. Before I discuss our quarterly results and outlook, I'd like to remind everyone that the financial results I'll be referring to include non-GAAP financial measures. As David mentioned earlier, our Q1 press release and earnings presentation includes reconciliations of non-GAAP financial measures to GAAP that are discussed on this call. Both of these are available on our website. Turning to slide five. For the first quarter of 2023, we delivered solid financial results that were above the top end of our guidance ranges. We believe these results demonstrate the strength of our business, which continues to perform well despite macroeconomic challenges still at play. Our first quarter results included revenue of $148.3 million, contribution profit of $53.5 million, and adjusted EBITDA of $8.4 million. We continue to experience solid business momentum in the first quarter, which drove robust bookings, enabling us to exit the quarter with a solid backlog. Based on our strong quarterly performance and the positive market trends Dushyant mentioned earlier, as well as our expectations for the remainder of 2023, we are modestly raising our full year 2023 revenue, contribution profit, and adjusted EBITDA guidance, which I'll discuss shortly. Now let's review our first quarter financials in more detail. As I mentioned, Q1 revenue was $148.3 million, up 27.1% year-over-year. This growth was largely driven by increased transactions from existing billers, launch of new billers, and increased activity in our Instant Payment Network or IPN business. Transactions grew to $108.5 million in the first quarter, up 23.4% year-over-year. First quarter '23 contribution profit increased to $53.5 million, up 13% year-over-year. Contribution margin was 36.1% for the first quarter compared to 40.6% in the prior year period. Contribution profit per transaction for the quarter was $0.49, down from $0.54 in the prior year period. Contribution profit growth lagged revenue growth primarily due to continued inflation in the utility sector and biller mix with larger billers coming on board. As we've noted in the past, variables outside our control, such as an increase in the average payment amount or changes in the payment mix, can influence contribution profit on a quarterly basis. To offset some of the impact of continuing inflationary conditions, we are currently engaged in active repricing conversations with our customers and are encouraged by what we have already achieved to date. Adjusted gross profit was $43.7 million for the first quarter, up 16.9% year-over-year. Operating expenses increased to $41.1 million, a 13.4% increase year-over-year. The increase is primarily due to increased sales and marketing expenses as we continue to focus resources on our go-to-market strategy. During Q1 '23, we made a change to the employee merit and compensation cycle. In previous years, raises were given on the employees' anniversary, more or less evenly distributed throughout the year. In 2023, all raises were effective from January 1, 2023. Adjusted EBITDA for the first quarter was $8.4 million or 15.7% of contribution profit, up 56.4% compared to $5.4 million or 11.4% of contribution profit in the prior year. This annual growth is a result of our repricing and continued expense management actions. I believe this also demonstrates the inherent operating leverage we have in the business and our ability to adapt to changing market conditions as we continue to grow. Other income was $1.4 million during the first quarter, reflecting increased interest income from our bank deposits and effective cash management. Non-GAAP net income was $2.9 million or $0.02 per share, compared to non-GAAP net income of $3.7 million or an EPS of $0.03 in the prior year, largely due to higher income tax benefit in the prior year. We will now discuss our balance sheet and liquidity position. We ended Q1 with unrestricted cash of $143.6 million compared to $147.3 million at the end of 2022. The $3.7 million decrease is primarily comprised of $4.8 million of cash generated from operations, offset by $8.3 million cash used in investing activities. The company does not have any debt. Our days sales outstanding at the end of Q1 was 46 days, consistent with DSO at the end of 2022. Working capital at the end of Q1 was approximately $181 million, an increase of approximately $3.8 million from the end of 2022. We had 123.3 million shares outstanding at the end of Q1 compared to 123.2 million shares outstanding at the end of 2022. The marginal increase was due to vesting of employee restricted stock units. Now I will share some brief observations since I joined Paymentus as CFO, and then review our updated outlook for Q2 and the full year 2023. Since I joined the company two months ago, my initial focus has been on two main priorities. First, acquainting myself with everything Paymentus does: its business model and diverse operations, our strategy, meeting the entire team, and learning as much as possible about what has transpired since the IPO. And second, doing a deep dive into the financials in order to gain a better understanding of our 2023 budget and 2024 financial goals. On the first point, now that I'm more familiar with the inner workings of the company, I am even more amazed than I was originally by the expanding and compelling opportunities that I believe lie ahead for Paymentus. We are well positioned to capitalize on the attractive industry trends in the end market that we serve. I'm also excited by the depth of talent and experience of my team members and look forward to working with them and contributing to Paymentus' future growth. As I now turn more attention to Paymentus' long-range financial model and targets, I'm also considering how we can best provide investors and analysts with greater color on the performance of our business. This includes evaluating our current KPIs and non-GAAP disclosures. While this process is still underway, one specific metric that has drawn my attention is exit backlog. I believe our new bookings in Q1 demonstrate the robust demand for our technology solutions and our strong exit backlog gives us further confidence and visibility in the growth trajectory for the company. Now I'll turn to our non-GAAP guidance for Q2 '23, beginning on slide six. In Q2 '23, we expect revenues to be in the range of $142 million to $148 million, representing 21% year-over-year growth at midpoint. Contribution profit is expected to range from $54 million to $56 million, which is 13% year-over-year growth at the midpoint. Adjusted EBITDA is projected to be between $8 million to $9 million, representing a growth of 70% year-over-year at the midpoint. Given the progress we have already seen in Q1 and our expectation for the remainder of the year, for the full year 2023, on slide seven, we now expect revenue in the range of $591 million to $606 million, up 2% from the midpoint of our prior guidance. Contribution profit in the range of $225 million to $237 million, also up modestly versus our prior guidance, and adjusted EBITDA to range from $34 million to $38.5 million, representing a 3.6% increase at the midpoint compared to our prior guidance. In summary, we had a strong first quarter, where we continue to build on our solid momentum from 2022, which we have carried into 2023. As a result, we believe we have positioned ourselves well for the balance of 2023. Thank you, everyone, for your attention today. And now I'll turn it back to Dushyant for final remarks before we open up the call for questions.

Thanks, Sanjay. In closing, based on our first quarter results and the strength of our backlog, we believe we are extremely well positioned for the balance of 2023 and into 2024. We also are laser-focused on bringing more and more of these new customers live on our platform to continue to expand profitability and adjusted EBITDA margins. Our strategy remains simple and in this order: first, sign as many clients as possible to grow the network. This includes larger clients. Second, onboard those clients as quickly as possible and simultaneously deliver best-in-class service. And third, improve operating efficiencies and manage costs to drive margin expansion and bring more to the bottom line. I want to take this opportunity to thank each of my colleagues at Paymentus, who worked tirelessly to serve our clients. Thank you. That concludes our prepared remarks. I'll now open the line for questions.

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

Hi. Good afternoon, guys. Dushyant, you talked a lot about the pricing changes that you're going to make headed into this year given inflation. Just curious how those conversations have gone and the unexpected attrition. Obviously, numbers were good, good to see the increase in guidance for the full year. But just curious how these conversations have gone with your customers as you implemented pricing changes that you talked about late last year.

Hey, John, thank you for the question. The conversations are going extremely well, actually. Clients are very understanding, and we are not the only ones discussing the challenges in their vendor network, if you will. So we are seeing positive feedback. Some of the conversations have resulted in actual meaningful pricing increases, which we will continue to deploy throughout the year. One thing I do want to highlight to you and the rest of the analyst community is that as we are seeing the trend, what we are doing now is in our account management function, we are including the pricing discussions as an ongoing framework. We believe that until inflation is completely behind us, we will continue to have these discussions as we are seeing positive trends here.

Okay. That's helpful. And then just quickly on—I think when you set out the initial 2023 outlook, you assumed no incremental new wins in the contribution profit outlook and EBITDA outlook for the full year. You mentioned numerous wins here in the first quarter. So just—have you had to put those into the guide? Or are you still excluding new wins from the guide? Just help us think about where the guide is today versus 90 days ago?

John, this is Sanjay. Thanks for the question. When we guided earlier versus when we are guiding now, the major increase we are seeing is based on the activity from the growth with the existing billers and also increased transactions. We did launch some big billers in Q4 last year, and we have seen decent growth from them as well. So all the growth, including the increased outlook, is coming from these factors we have observed. We have not baked in any significant revenue from the new wins. That remains the same as what we said last time.

Okay. Appreciate the color. Thanks, guys.

Thank you for your question. Our next question comes from Dave Koning with Baird. Please proceed.

Yes. Hey, guys. Thanks and nice quarter. And maybe a couple of questions. My first one, just implementations. I remember that was part of a little bit of the weakness kind of mid-year last year and through the end of last year. You talked about implementations being a little slower. Have those picked up? Are they according to plan? Are they actually maybe ahead of plan now? Or how are you seeing those?

Actually, David, that's a great question. The post-pandemic conditions are now actually helping us a little bit, especially in the large deals. That's where we saw some stretching of the implementation timelines. We are now able to see customers, both in the sales cycle and also in the implementation phase. So those high-touch engagements are giving us a lot of confidence that we will be able to keep within the timelines we anticipate. So the implementation overall is actually on a better footing than where we were last year.

Okay. No, that sounds great. And I guess my second question is a numbers question around the gap between gross and net revenue, really. It was reasonably small in Q4, I think a few percent gap. This quarter, it's about a 14% gap, right? Gross grew 27%, net grew 13%. And next quarter, you're guiding for that gap to be cut in half. Basically, what are the dynamics? I understand the inflation impacts, but what are the dynamics of that gap kind of moving around?

Yes, a great question. The growth of revenue at 27% and the growth of contribution profit at 13% definitely raises a question. So let me outline what we are seeing and what we expect to happen. First of all, both these metrics are likely to converge over time. We see this as a temporary phase. One of the reasons, as we said, is inflation that we are seeing along with seasonality. But we have also started adding larger billers to the mix. Larger billers mean billers with a heavy volume of transactions, where the contribution margin on these is slightly lower than our corporate contribution margins. So, it creates a temporary impact where the contribution margins seem low. But we expect this gap to converge as we scale more, ultimately improving our contribution margin alongside contribution profit dollars. If you look at what we delivered in Q1 and compare it with the guidance of Q2 and the full year guidance, you will see that this gap is already converging. In the outer years, we expect this to converge even more. So, we think it's a temporary phase, and we see it as a great opportunity to scale the business and ultimately achieve a better contribution profit and margin in the long run.

Thanks, guys. Great job.

Thank you. Just a quick point I would add is that even Q1 bookings give us a lot of encouragement in that regard as well.

Thank you for your question. Our next question comes from Jason Kupferberg with Bank of America. Please proceed.

Good afternoon, Dushyant and Sanjay. This is Tyler DuPont on for Jason. Thanks for taking the questions. First, I just want to start by looking at the EBITDA margins. I mean, they came in pretty healthy this quarter. Can you maybe just speak to what, in particular, drove that upside to price and sort of how we should be thinking about margins going through 2023 as well? Is it still the right idea to think about quarterly expansion on a year-on-year basis? And I guess going off that point as well, where are you anticipating the most margin efficiencies to come from throughout the year? Is it mostly G&A or any color there would be helpful?

Yes, Tyler. I'll say that when we guided, we were expecting close to 40% growth year-over-year, and we came in at 56.7%. So we are definitely encouraged by the results. The company's objective is to drop as much as possible the contribution profit dollars we generate to the bottom line. There is significant inherent operating leverage in the business. We don’t really need to spend the money if the contribution profit is increasing. So, I would say that the increase is mainly coming from operating expenses, not increasing in the same line or in the same ratio as the contribution profit is increasing. Overall, I think the operating leverage exists. In the future, where that will come will also be from the same. Right now, we are putting some investments in Q2 in our sales marketing and also in Q3. But over time, we expect that the operating leverage would be more than what we see this year. In fact, for the whole year, you have seen EBITDA up by 27% year-over-year at the midpoint. In Q2, we are seeing good growth there as well. We are encouraged by what we delivered and believe that this growth is going to continue. The contribution profit growth is driven mainly by organic growth and increased transactions from existing billers, and we are also seeing traction on IPN as well.

Okay. That's helpful. Thank you for that. And then just curious, as a follow-up on bookings growth, it looks like you had a pretty robust increase in that and the number of transactions. But maybe if you could just spend a minute or two parsing out how much of that growth was from new versus existing clients and if there is any vertical concentration that's worth mentioning. And then I guess also just jumping through that as well, just sort of how we should think Paymentus is anticipating revenue conversion. Just curious if we should be looking at how we should be thinking about average conversion rates given the current macro backdrop?

I think we have not shared in the past the new versus existing client breakdown. But it is safe to assume that we worked very hard towards the tail end of the year to bring as many customers live as possible to beat our 2022 top line guidance, which we did. We also exited the year with a healthy backlog. We are also seeing some same-store sales, which Sanjay alluded to earlier. So, I think all of those factors are pointing in the right direction. In terms of revenue conversion itself, we will continue to consider whether we can share more information about the backlog and how that converts over time. However, as I've stated before, we are seeing positive trends in the implementation area, especially as we are able to interact with our clients, particularly the large ones, in high-touch engagements that are needed to bring them live.

Okay. Great. Very helpful. Thanks and congrats on the quarter.

Thank you.

Our next question comes from Andrew Estes with Wolfe Research. Please proceed.

Hey guys. It's Andrew on for Darren. Just a few on the strategy side. Can you maybe talk about the Oracle CIS client base and the opportunity that exists within, especially with the updated implementation? And then with regards to the IPN, just remind us where you are with respect to executing on the third horizon of that strategy? Thanks.

Sure. Thank you, Andrew. In terms of Oracle, Oracle is a great partner and has been a great partner. We have been doing a lot of things together with them in the sense that our Oracle customer base continues to grow. This cloud integration actually helps us where an Oracle CIS cloud client finds it very easy to integrate with Paymentus through the certification of the integration we have achieved. So, we are very excited about that. In terms of the IPN itself, look, IPN to us is a multidimensional strategy. First, on its own, we are trying to bring in participants who have been left behind through the platform we built for the billers. So, what I mean by that is the banks and fintechs who wanted to play in the Paymentus space but couldn't get in due to the strength of the services we provide directly to the billers through our platform. With IPN now, we are able to bring those in, and we have tremendous progress there, along with a lot of interest in the market. The second aspect of IPN, which will become clearer as we continue to execute on our strategy, is its role as a very efficient distribution model or channel for us. We have banks, fintechs, and distribution to many businesses through our payment network who could utilize our increasing functional footprint of receivable payment, payables, expense management, and accounting, especially in the SMB space. So, we are very excited about that, and so far, we have seen great progress.

Great. Thanks, Dushyant. Great quarter.

Thank you.

Our next question comes from Tien-Tsin Huang with JPMorgan. Please proceed.

Hey. Thanks. Good afternoon. A lot of the good stuff. I wanted to ask already. I wanted to get a little bit more, maybe, Dushyant, on the SMB push with the payables discussion you had last time as well. Just any surprises there in terms of momentum and start to connect closer to the SMBs?

Yes. Thank you, Tien-Tsin. Good question. I was smiling about the word surprises. We are seeing a lot of positive excitement about the product. It's still early stages, and we are having a lot of discussions early on, receiving positive feedback from the SMBs themselves. Folks are using the product, giving us feedback, and we are seeing a lot of encouraging signs. We believe that the whole SMB strategy, and our approach to build SMB, ensures that all of that functionality is available for enterprise clients as well, especially those who use our receivable capabilities now able to leverage payables and expense management alongside everything that comes with it. I think it gives us a lot of confidence that we are setting ourselves up for a great future ahead. So, that's what I am able to share right now, but we will share more as we see further progress.

Okay. Great. And just my quick follow-up, just to expand or dig deeper into what's going on in the bank partner side, given all the stresses in the banking system and all the turmoil, etcetera, has that—have you noticed any change in terms of existing relationships or even prospective partners on the banking side?

Actually, some of our large bank partners are getting even stronger. So, we are very excited about that. Regarding our bank network overall, we are not seeing any negative changes; we remain just as bullish as we were before about the entire ecosystem of our platform, whether it's on the bank side, credit union side, or the biller side.

Great. Thanks for the update.

Thank you.

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

Hi guys. Appreciate you taking the question. I wanted to maybe follow up on some of the backlog commentary you had Sanjay. It sounded like that was sort of what was catching your eye early on from digging into some of the numbers. I am wondering if there is any kind of quantification or perspective you can give us on kind of how the current level of that compares to maybe a year ago and how that might actually translate towards an acceleration of the topline as we go into 2024?

I appreciate the question. I am a little reluctant at this point to share the numbers. I will be honest. I am very excited about looking at the backlog and other KPIs that I am still trying to understand. Once we develop a good process around them, I will be happy to share them going forward. But I can say qualitatively that the backlog is very robust, and our bookings were solid as well. This gives us a lot of confidence in both this year and the outer-year trajectories, based on how well the implementation goes. We have a strong backlog. I can say that the growth compared to last year has been significant.

Got it. Makes sense.

If I may add, where we sit today, and looking at what we want to achieve next year based on how well we executed against the implementation backlog to bring customers live, especially in Q4, and how hard we worked in Q1 to bring some customers live in Q2, combined with the backlog and early success in Q1, we feel optimistic about our positions relative to 2023 and 2024. When we evaluate the backlog, we exclude all the same-store sales to give a more accurate measure. So, as we factor that in, it's even more impressive given the size of the backlog.

Got it. Makes a lot of sense. I appreciate that. And then I guess as a follow-up question. When you guys think about EBITDA conversion over the next couple of years, obviously, you have had a lot of investment priorities, whether it's the IPN, small business platform, or some of the acquisitions. But when we look at CapEx and capitalized software, it is running around close to 100% of EBITDA. So just wondering how you are thinking about the level of investment in the business, what the outlook is for that, and whether we could see the very strong top-line growth contribute towards more cash flow conversion as we get into 2024.

I would say this is one of the key points to get across. We have always been relatively profitability-centric. Being public has some costs associated with it that challenge some of the profitability metrics we had, along with the macro challenges. But we wanted to communicate that we have the ability to drop a lot of the top-line and contribution profit dollars to the EBITDA line. We are already doing a lot with our core biller business, even excluding the IPN and SMB investments. We feel good about generating more cash conversion in 2024 while also making those investments. We feel good about our current OpEx position.

I appreciate the question. You see $8.4 million in EBITDA, and then in the cash flow, you see $8.1 million for software CapEx, which is the source of your question. However, if you look at our cash flow statement, even though cash might have dropped by around $3.8 million in the quarter, our working capital has increased significantly. So, a lot of cash is now in accounts receivable, which we plan to turn around in the next quarter. We expect cash to increase next quarter. While we do not guide for cash, we are planning for cash to stay neutral or slightly negative, depending on whether software development increases. Overall, all that investment is happening for future growth in projects for which we don’t see revenue yet, and those investments are designed to drive growth. We're on track in terms of managing cash for the whole year.

Got it. Appreciate all the color. Thanks for taking the questions.

Thank you, Will.

Thank you for your questions. There are no further questions waiting at this time. So, I will pass the conference back over to the management team for any closing remarks.

Well, thank you, everyone. Thank you for being here with us today, and have a great day, and stay safe.

Thank you all.

That concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.