Good day, and welcome to the Third Quarter 2024 Paymentus Earnings Conference Call. This call is being recorded. All participants are currently in a listen-only mode. There will be an opportunity to ask questions after the management's prepared remarks. I will now turn the call over to David Hanover, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon. Welcome, and thank you for joining the webcast to review our third quarter 2024 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 references to during this webcast. This webcast is being recorded. I hope everyone has 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 quarter and our guidance. Following our prepared remarks, we'll take questions. Let me just remind you that we may make forward-looking statements within 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 expectations are detailed in our earnings materials and our SEC filings that are available on the website. Information about non-GAAP financial measures, including reconciliations to US GAAP, can also be found in our earnings materials that are available on the website. With that, I'd like to turn the webcast over to Dushyant Sharma. Dushyant?

Thanks, David. We had a phenomenal third quarter and overall, full year 2024 is shaping up to be a great year. As a result of our substantial progress, we are raising our full year 2024 guidance. And before I go into the details for the quarter, and talk about our exciting future, I want to remind you that our long-term CAGR targets for our primary metrics are 20% topline revenue growth, and 20% to 30% adjusted EBITDA growth. These targets remain unchanged even accounting for our outperformance during the third quarter. Going forward, we will refer to these targets as our CAGR model. Our CAGR model is related to our primary metrics only and should not be confused with our secondary metrics, which are contribution profit and OpEx. As we have done quite effectively in the past, we will continue to calibrate CP and OpEx as necessary to achieve our CAGR model due to the very strong operating leverage that is inherent to our business model. Let me now provide a third quarter financial summary. In the third quarter, revenue grew 51.9% year-over-year. At the same time, contribution profit increased by 30.1% to $80 million. Due to our solid execution in calibrating our secondary metrics of CP and OpEx, our adjusted EBITDA grew 58.2% to $24.6 million. And as a result, on a Rule of 40 scale, we saw a sequential increase in the quarter to 61%. Given our third quarter results, and expectations for the full year 2024, as you can see, our performance is well ahead of our CAGR model. Our excellent growth rate during the quarter and how 2024 is shaping up is one of the many exciting dimensions of our business. Another important dimension is the durability of our CAGR model, which we also feel great about. Let me now double-click on our business strategy a bit. As you are looking at our numbers, please note that there is a specific business strategy that is in play here. We want to increase and capture more market share and over time, we want the interchange economy and associated life cycle to flow through our P&L even though interchange today only serves as a cost center for us. This strategy adds to our scale and with this level of scale, it creates tremendous opportunities for modernization and cost reduction. Therefore, longer term, we will work to expand our margins by pursuing products and solutions that offer the ability to convert part of the interchange from a cost center to a revenue center. In other words, we view today's interchange expense as possible TAM from a margin expansion standpoint. To clarify, I'm talking about our longer-term strategy here. As currently, we are mainly focused on market capture, but market capture in a responsible manner where new deals are accretive in both the immediate term and the long term. And indeed, we are capturing market share at a faster pace than ever before as a public company. It's even more impressive when you look at our scale and see 50% plus topline growth. On to our booking activities now. Bookings for this quarter and this year are strong. Our momentum continues to validate our platform and the IPN ecosystem moat combined with an excellent and efficient go-to-market strategy of delivering long-term profitable growth. To provide further detail on bookings, we signed several clients across various industries contributing to our continued momentum. These included diverse clients in verticals such as insurance, government services, municipalities, utilities, education, telecommunications, banks, credit unions, and property management among others. These bookings position us quite well for 2025 and beyond due to the multiyear nature of these agreements. On to our onboarding of activities now. We are onboarding revenue at a faster pace than ever before, as is evident from the top-line growth rate. Our success here resulted in onboarding a cohort of large clients in the third quarter that were originally slated to go live in 2025. This means we can expect to enjoy the full year benefit from this cohort of go-lives throughout all of 2025 versus only a portion of this contribution, which is what we had originally modeled. Bringing on this cohort of large clients earlier also brings other strategic benefits to us. These include giving us more ammunition for our marketing activities, strengthening our IPN and ecosystem, enabling further economies of scale, and longer term, increasing our margin expansion opportunity. We believe this onboarding performance has reduced our risk towards 2025 execution. And therefore, as we initiate budget planning for 2025, we are very pleased to take a bit of a head-start towards achieving our CAGR model. As we have demonstrated throughout the last seven quarters, we will continue to methodically calibrate our secondary metrics using our operating leverage to achieve our desired CAGR model despite the variability that is inherent to contribution profit from quarter-to-quarter or even year-to-year. With that, let me turn it over to Sanjay to review our financial results in greater detail. Sanjay?

Thanks, Dushyant, 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'd be referring to include non-GAAP financial measures. As David mentioned earlier, our Q3 press release and earnings presentation includes reconciliations of the non-GAAP financial measures discussed on this call to their corresponding GAAP measures. Both of these are available on our website. Turning to Slide 5. Our third quarter 2024 results demonstrate another quarter where we exceeded the top end of our guidance range. These results demonstrate the overall strength of our business model and our team's proven ability to execute. Our third quarter results included revenue of $231.6 million, up 51.9% year-over-year, contribution profit of $80 million, an increase of 30.1%, and adjusted EBITDA of $24.6 million, up 58.2%. We also continued to experience strong customer activity and demand, which drove robust bookings and allowed us to exit the quarter with a significant backlog. Based on our excellent quarterly performance, the positive business trends Dushyant mentioned earlier, our expectations for the remainder of 2024 and forward visibility, we are raising our full year 2024 revenue, contribution profit, and adjusted EBITDA guidance, which I will discuss in more detail shortly. Now let's review our third quarter financials in more detail. As mentioned, Q3 revenue was $231.6 million, up 51.9% year-over-year. This growth, which was ahead of our original expectations, was driven by three key factors: first, increased same-store sales from existing billers; second, the successful launch of new billers as anticipated; and third, the early launch of some large enterprise customers, which we originally expected to launch in early 2025. These early launches were a result of continued improvement in implementation pace, due mainly to our team's hard work and strong client engagement. Additionally, the number of transactions Paymentus processed grew to 155.3 million in the quarter, up 34.6% year-over-year. Our average price per transaction increased during the third quarter to $1.49, up from $1.32 last year. This was mainly due to the biller mix or more specifically by the early launch of large enterprise billers I mentioned earlier that had a higher average payment amount. Third quarter 2024 contribution profit increased to $80 million, up 30.1% year-over-year. The contribution profit increase was also higher than expected and reflects increased transactions from existing billers, the launch of new billers, and the mix of billers launched. Contribution margin was 34.5% for the third quarter compared to 40.3% in the prior year period, as we continue to add large high-volume enterprise billers to our customer base. This 5.8% margin reduction was almost entirely offset by a 5.7% operating expense margin reduction year-over-year, and when combined with economies of scale, resulted in an improved adjusted EBITDA margin. This is consistent with our overall growth strategy, focusing on profitability, which I will elaborate on shortly. Contribution profit per transaction for the quarter was $0.52, similar to $0.53 in the prior year period, demonstrating our ability to capture market share with comparable contribution profit per transaction. During the third quarter, we saw transaction growth in closer proximity to contribution profit growth. In prior quarters, we've seen transaction growth at times closer to revenue growth and at other times closer to contribution profit growth. This is because we are capturing more market share and winning larger clients. Because we are adding more of these larger clients to our customer base, we expect pricing and contribution profit to vary quarter-to-quarter as we continue to grow and diversify our client base. Please note that as a result of the quality of our services and solutions and client-centric approach, these larger clients are paying a similar or even increased average selling prices than they are accustomed to with other providers. Given the growth areas Dushyant highlighted earlier, we believe long-term, the growth rates for both revenue and contribution profit will converge in a closer range, also taking into account the inherent operating leverage as we have in our business model. As we noted in the past, variables that are outside our control, such as an increase in the average payment amount or changes in the payment mix, can substantially affect the contribution profit on a quarter-to-quarter basis, and therefore, we treat this as a secondary metric, while our gross revenue and adjusted EBITDA remain primary metrics and focus areas on how we drive our business strategies. Third quarter adjusted gross profit was $66.2 million, up 29.1% year-over-year. Third quarter non-GAAP operating expenses were flat sequentially, and increased 16.9% year-over-year to $44.3 million. The increase was primarily due to higher sales and marketing expenses as well as research and development expenses. The increases in both of these areas was mainly driven by increased hiring, which we've talked about previously as we enhance our existing technical strengths. This year-over-year expense increase was consistent with our expectations. Third quarter non-GAAP net income was $19.6 million or $0.15 per share compared to non-GAAP net income of $10.9 million or $0.09 per share in the prior year period. Third quarter adjusted EBITDA was $24.6 million, up 58.2% compared to $15.5 million in the prior year period. Adjusted EBITDA also represented 30.7% of contribution profit for the quarter compared to 25.3% last year. This strong adjusted EBITDA performance was due to the same combination of positive factors I talked about earlier, all of which came together in the quarter. We believe the stronger adjusted EBITDA margin demonstrates the inherent operating leverage we have in the business and our proven ability to adapt to changing market conditions as we continue to grow. Interest income from our bank deposits was $2.3 million during the third quarter compared to $1.9 million in the prior year period. This year-over-year improvement was a result of an increased average cash balance and effective cash management. Related to our performance, we once again exceeded the Rule of 40 for the quarter, coming in at 61 compared to 58 last quarter and 46 in the prior year period. This marks our sixth consecutive quarter exceeding the Rule of 40. Now, I'll discuss our balance sheet and liquidity position on Slide 6. We ended the third quarter 2024 with total cash of $190.8 million compared to $192.9 million at the end of last quarter. The $2.1 million decrease is primarily comprised of $6.7 million of cash generated from operations, offset by $8.8 million used in investing activities primarily for capitalized software. The net cash generated from operations of $6.7 million consists of $26.5 million cash generated from operations, net of investments in working capital of $19.8 million. Our days sales outstanding at the end of the third quarter was 44 days compared to 42 days last quarter. Working capital in the end of the third quarter was approximately $245.8 million, an increase of approximately $16.2 million from the end of the second quarter. We had 127.6 million diluted shares outstanding during the third quarter, essentially flat from 127.3 million diluted shares outstanding during the second quarter. Now I'll turn to our non-GAAP guidance for the fourth quarter and full year on Slide 7. Before discussing guidance, I want to mention that we are continuing to follow the same prudent approach to guidance that we have followed since last year. For the fourth quarter of 2024, we expect revenues to be in the range of $215 million to $220 million, representing 31.8% year-over-year growth at the midpoint and 33.3% at the high end. This growth rate is an improvement from prior year's fourth quarter growth rate of 24.7%. Contribution profit is projected to range from $79 million to $81 million, which represents 20.7% year-over-year growth at the midpoint and 22.2% at the high-end, in line with the prior year's fourth quarter growth rate of 22.7%. Adjusted EBITDA is forecasted to range from $22 million to $24 million, representing growth of 15.6% year-over-year at the midpoint and 20.6% at the high end. This represents a 28.8% margin at the midpoint and 29.6% margin at the high end, comparable to the prior year's fourth quarter adjusted EBITDA margin of 30%. Along with our guidance, I also want to provide further insight related to our outlook for contribution profit growth rates and adjusted EBITDA margin. As our business grows, we are receiving greater inbound interest from larger enterprise customers. Not unexpectedly, these customers often request volume discounts, which we are open to where the deal economics support it. In addition, our tremendous operating leverage allows us to attract and book these larger customers. Said differently, volume discounts for larger customers are typically more than offset by strong incremental adjusted EBITDA as we just saw in Q3. This increases our efficiency as our onboarding time per biller is declining, while the average customer size is simultaneously increasing. Furthermore, we have the ability to recalibrate OpEx spending relative to contribution profit in order to reach a desired adjusted EBITDA. For reference, our incremental adjusted EBITDA margin for the third quarter 2024 was 49.2% relative to the adjusted EBITDA margin of 30.7%. Based on our results and progress we have already made in three quarters of '24 and our expectations for the remainder of the year, for the full year 2024, we now expect revenue in the range of $829 million to $834 million, up 7.3% from the midpoint of our previous guidance. The updated guidance now represents 35.3% growth at the midpoint, an improvement from the prior year growth rate of 23.6%. Contribution profit is projected to be in the range of $305 million to $307 million, which is up 3.6% at the midpoint versus previous guidance. This updated guidance now represents 27% growth at the midpoint, an improvement from the prior year growth rate of 19.7%. Adjusted EBITDA is forecasted to range from $89 million to $91 million, representing an 8.4% increase at the midpoint versus our previous guidance. The updated guidance represents a 54.9% increase at the midpoint. This represents a 29.4% margin on contribution profit at midpoint, an improvement from 24.1% in the prior year. This annual guidance implies a Rule of 40 scale of 56 to 57 at midpoint and high-end, respectively, an improvement from the scale of 44 we achieved in 2023. In closing, we reported another quarter of excellent results. In the third quarter of 2024, we continued to build on solid momentum from the second quarter, resulting in strong revenue, adjusted EBITDA, and bookings growth. Additionally, we ended the quarter with earlier implementations of larger clients and a sizable backlog. Due to all of this, we have considerable visibility and believe we are well-positioned for the rest of '24 as well as for 2025.

Thanks, Sanjay. It's indeed humbling to see that our raised full year 2024 guidance when compared to our results from the full year 2021, the year of our IPO, we have more than doubled our business in three years. And it's quite exciting actually. In summary, we reported another quarter of strong financial results that exceeded our expectations, we feel good about the long-term durability of our CAGR model. We serve a large, growing and non-discretionary market. The combination of our platform and the IPN ecosystem allows us the benefits of a strong and differentiated competitive moat. In addition, we are looking to continue to build on our success to increase our TAM using our innovative DNA. In short, we, as investors, own a very special business here. I want to take this opportunity to thank my team who worked tirelessly to deliver these great results and create long-term shareholder value. With that, I'll open up the line for questions.

The first question is from Dave Koning with Baird. Your line is now open.

Yeah. Hey, guys, congrats. This is one of the biggest beats I think I've seen in 20 years. So congrats on that.

Thank you, David.

Could you provide more details about the mix of network fees? I understand that network fees account for 65.5% of gross revenue, which is higher than usual, and there was a significant gross revenue beat. Could you discuss this further? Additionally, I noticed that in Q4, the expectation is for that percentage to decrease to 63%. Could you explain the dynamics behind these changes?

Thank you very much for your question. In Q3, we brought on some large enterprise customers who had higher network fees compared to previous providers. We onboarded them at similar or even better pricing, but the network fees remained elevated. This led to a slightly softer contribution margin this quarter. However, despite the margin decrease, we still achieved a Rule of 61 and saw a 30% year-over-year contribution profit growth, demonstrating how we managed our operational expenses and gross margin. Regarding network fees, they are indeed high for enterprise customers. As Dushyant mentioned earlier, we see an opportunity in our long-term strategy to convert part of this interchange into a total addressable market for us, potentially turning it into a revenue source rather than just a cost center. We are working on these initiatives. While this is a long-term strategy, it's important to note that the contribution profit per transaction remained relatively stable, with only a minor difference of $0.52 compared to $0.53, which is insignificant given our scale this quarter. Concerning Q4, we have been disciplined and thoughtful in our guidance for seven quarters now. We assess all risks and opportunities, assigning probabilities to what guidance makes the most sense. We aim to remain grounded and aware of potential risks while also looking to come out strong. Q4 is not significantly different from Q3, and there's also a seasonal aspect to consider. Overall, we feel confident about how the year is progressing, and all metrics for the full year are looking strong.

Got you. Thanks, guys. That's helpful. Maybe just a quick follow-up. Really, my second question is going to be around what you mentioned, the TAM, kind of a new TAM of the network fees. I assume almost all the network fees are interchange. You've over-doubled those network fees. So, the TAM is actually exploding, right, in the last few years. So, maybe can you talk a little bit about how you could convert that into like revenue?

I think this is a very interesting dynamic actually. If I may take a step back and see how we see our business differently than the traditional payment processing business is the way I would see them and what you would look at them as well. So, the way it used to be is that a traditional payment processor will just charge a flat fee for a transaction, whether it's a few pennies or what have you or a few basis points and then they will literally pass through the entire interchange to the customer. They did not have any control over the behavior of the customer as to which payment for payment modality or form of payment the customer will be using to make a payment, nor did they have the pricing structures, which were actually conducive to be able to have the global view of the overall transaction revenue versus the internal cost payment incurs in terms of the network fees. So, we have been busy thinking about how can we convert the network fees into revenue and we have some thoughts which will be shared in due course. But that's where the exciting part of our business is, where we feel like that the way more opportunities we have in terms of loading, if I may use the word 'loading on' the interchange expense on our platform, the easier it is for us to track exactly what the user behaviors are, how they're making a payment, what type of cards are being used and what type of opportunities we can create to convert those into more meaningful profitable instruments for us. So, we'll talk more about that, but that's a little bit more on the longer-term side.

Got you. Thanks, guys. Great job.

Thank you.

Thank you for your question. Next question is from the line of Tien-Tsin Huang with JPMorgan. Your line is now open.

Thanks. Good afternoon. Really great quarter. Good explanations here. Just thinking about the faster go-lives of larger clients, is that a structural change? Are you doing more to improve the onboarding process from a technology standpoint? Just trying to understand that, if this is a new trend to consider?

It is actually a combination of several factors. As we have mentioned before, the pandemic impacted our ability to onboard and realistically brought challenges in bringing larger new clients into our bookings pipeline due to closed boardrooms. This, combined with our limited interactions with clients in person, has prompted us to take a closer look at the points where we can improve our onboarding processes. We were previously effective at onboarding more complicated and sophisticated workflows onto our platform. We continue to innovate by learning from our customer interactions, and we are making technological changes to enhance our approach. Overall, the combination of in-person interactions, post-pandemic conditions, and our advancements in technology is leading to significant improvements.

Okay. Good to know that. It's a combo of things. Just thinking about the fourth quarter and the guide, I appreciate the philosophy around guidance, but just want to make sure, fourth quarter contribution profit, you're calling it to be stable. History says it's up quite a bit in the fourth quarter, I think due to seasonality, but why would might this year be different?

So, Tien-Tsin, great question. In Q4, what we are seeing is these new large enterprise customers we onboarded in Q3, and again, they happen sooner than originally anticipated. They are large to the extent that we don't really have a very good handle on their seasonality aspect and unless we spend a few quarters with them, we will have to wait and see how those trends continue. So, we did not exactly base the Q4 continuation of an entirety of that cohort of customers, a portion we bid, but not all. We have to wait and watch how those trends will play. So, we've taken a very prudent approach in how this may play out when we come to Q4 guidance. So, we want to just stay focused on execution and remain grounded when we come to guidance, especially for one quarter. I think the whole year is shaping well, but we feel very good about where we are.

Great. Well done. Thank you so much.

Thank you, Tien-Tsin.

Thank you for your question. Next question is from the line of John Davis with Raymond James. Your line is now open.

Hey, good afternoon, guys. Dushyant, just wanted to touch a little bit on the revenue growth acceleration this year. I think the midpoint of the guide is about 1,200 basis-point acceleration versus last year. Maybe dimensionalize that for us and how we should think about share gains versus pricing versus same-store sales or anything else to call out? And anything you would caution us about kind of taking that forward into 2025?

I think for 2025, we're still in the budgeting process, which is why we emphasized the long-term CAGR model in our prepared remarks to clarify that we are not changing the model. This year has seen many factors come together. The pricing changes are behind us, and now it's more about capturing market share and signing deals with sophisticated large enterprise clients, often implementing them sooner than we expected. This combination is driving our performance. Sanjay, would you like to add anything?

Yeah. I'll add that this year has been really a good year, right from the start. Starting Q1, Q2, Q3, we've been seeing continuous trends of improvement in implementation, improvement in the bookings, and our exit backlogs at the end of every quarter are very good, giving us a lot of comfort for not only the next quarter or next two quarters, but I would say four, five quarters out, we got a very good visibility. The momentum is very high and that speaks to why the '24 growth has happened in a phenomenal fashion. But to your other piece of the question, John, I would say that when it comes to 2025 and if you're seeking any color on modeling, the best thing we can provide at this time is that we are currently in the process of setting our 2025 budgets and we are not giving any guidance today for 2025. However, for modeling purposes, we recommend assuming that we will follow the same prudent and disciplined approach we have used over the past seven quarters, which would imply as a starting point using similar growth rates we used in our initial 2024 guide, which we gave in March earlier this year to the prior year numbers. I would like to just remind everyone that our business is doing very, very well. We have a very good pipeline. The bookings and backlog are very healthy and we have a very strong balance sheet, a very liquid balance sheet in terms of working capital to deploy cash as and when we need, which we have actually used to our advantage even in the current quarter.

Okay, great. Sanjay, you mentioned that the incremental margins this quarter were around 50%. For the year, EBITDA margins are expected to be just under 30% based on the midpoint of your guidance. How should we consider the long-term margin potential of this business over the next several years? You've successfully expanded margins by over 500 basis points this year, and since going public, we've seen a notable improvement in profitability. Some payments companies achieve margins of 40% to 50%. I'm interested in your thoughts on the medium-term outlook for margins and their potential growth. I'm not asking for precise predictions over the next three years, but I'd appreciate your insights on the profitability and scalability of this business.

Yeah, John, great question. And we think about that as well as we do our models for a couple of quarters or outer periods. I think the right way to think about our business is that business is humming in all the directions. The momentum is very high and our growth strategy is not just purely growth, but has a strong partnership with profitability. So, profitable growth is our mode of operation, which is just very clear from the numbers. Like, is there a room for opportunity to grow better? Definitely, there is. As we grow, as we scale, we should expect economies of scale to help us. We should expect the opportunities that Dushyant mentioned in the outer term to help us as well. And our pricing and all is working really well. We are in the mode of capturing the market and during that process, we could have many opportunities, which could give us better margins. But at the same time, I just want to be very careful that our long-term expectations and hopes, and desires for the business are not confused with the way we should model the business. We want to have a very straight head and remain grounded in how we set the numbers and how we set expectations. And again, staying disciplined in that fashion has helped us as a company, especially in the last year we have seen. I would not like to distort that model. So, I would suggest having a Rule of 61 is something which we are really proud of, but is it going to continue? Can I say that for sure? No, I don't think I would like to say that. But there are risks and opportunities outside of our control and it goes back to how much profitable it be. I think longer-term seeing that this business can get better is a good expectation, but I would not model it that way and take it easy over the time. I think we are doing really well. And I would not speak more than this, but I think the business is just is doing well.

And John, this is Dushyant. If I may add, our strategy is truly to create a perpetual growth engine here. From that perspective, we are always making significant progress, as Sanjay mentioned. There is a strong partnership between revenue and profitability, but our goal remains to deliver long-term shareholder returns by consistently growing the business. Therefore, we will continue to make strategic investments as well.

Okay, appreciate the color. Thanks guys.

Thank you.

Thank you for your question. Next question is from the line of Darrin Peller with Wolfe Research. Your line is now open.

Guys, thank you. And nice job on the quarter. I think you touched on how there's incremental larger customers that you see onboarding coming up, not just in addition to the ones you brought on early. So maybe just help us understand if there's any type of inflection in demand or more of a recognition of your offering that you're seeing resonate even more in a more pronounced manner today than maybe you were, let's call it, a year ago, just because the pace of adds and the pace of acceleration was pretty notable, as I know others have called that also? So, I think we'll just start there, guys. Thanks.

Thank you, Darrin. This ties into our discussion during the IPO about our Horizon 1, Horizon 2, and Horizon 3 strategies. We're at a pivotal moment as we transition from mid-market clients to higher-end customers. We've come to realize that we're redefining what the higher end of the market looks like. Initially, we believed that higher-end meant deals in the millions; however, we've identified opportunities that exceed that as the complexity of payment inflows and outflows for organizations has surpassed their engineers’ capabilities. We used to view our role as simply replacing legacy providers because of the advancements in the Paymentus platform and ecosystem. Now, we see this as a complete reengineering of the customer and payment journey for all participants in the ecosystem related to Paymentus. This is what is currently unfolding, and in the verticals we discuss, we're experiencing promising successes. For instance, we didn't anticipate achieving such success this early in the education sector, along with other verticals reflected in our bookings this quarter. Our platform is scalable across any vertical; no client is too large or too small, and no workflow is too complex for us. We believe a significant opportunity is at hand, and I'm enthusiastic about it. I look forward to sharing more as we continue to develop our strategy.

I understand that the IPNs have been beneficial for reselling and go-to-market efforts. Can you clarify the current status with your partners in that area? More importantly, how should we view your overall go-to-market strategy in light of your significant growth, especially as you incorporate these additional verticals? Thank you.

Thank you. The IPN remains a versatile network connecting banks and credit unions with our billing clients. As we are now onboarding billing companies more rapidly, these companies are large and diverse across different sectors, making the IPN a significant long-term asset for all parties involved. This includes billing companies aiming to engage their customers through various interaction channels and originating partners seeking modern ways to connect with payees on behalf of their customers. We believe our IPN will continue to serve as a competitive advantage for us. Since it is a proprietary network developed and managed by us, we consider it a lasting competitive asset for the company.

Yeah, makes sense, guys. Thank you.

Thank you, Darrin.

Thank you for your question. Next question is from the line of Matt O'Neill with FT Partners. Your line is now open.

Yeah, hi, good evening, gentlemen. Thanks for taking my question. I think I know a lot of different questions have been asked around the outperformance in the quarter, but given the magnitude of it, I think investors want to understand where things may be sort of recurring in nature and where things may have kind of come through on a more one-time basis. So, given how much visibility you have into the core business, would it be possible to parse in some way the benefit in the quarter from things like price, same-store sales, implementations coming on faster? And to that last point, I believe last quarter was a record for implementations coming on, and with this quarter, maybe even getting another record? Thank you.

Matt, great question. Thank you for asking. I say that in the past, we have not broken down the vectors in terms of quantitative aspects that how much each vector contributes for revenue growth or CP growth or – I think, I would like to stay consistent with that kind of a discussion. I think we like to discuss these things more qualitatively than quantitatively. But I understand that growth is significant in the quarter and I would like to provide some minimal color. I would say that large implementations which happened in the quarter, it's a cohort of implementation, so it's not just one or two implementations. And they all happened at different points in time in the quarter, some in first month, some in second month, some in third month, and they were originally planned to happen in '25. So, what that does for us is, it kind of de-risks the '25 expectation from these customers, and in '24 we got is, basically, an upside. So, if you want to call that as non-recurring, maybe it will fit the definition of non-recurring in Q4. But from our perspective, the recurring revenue from these customers is now secured instead of being at risk for next year. The impact on the quarter, definitely, I cannot quantify, but I'd like to quantify that the impact of these cohort of customers going live early is approximately 500 basis points growth on our annual adjusted EBITDA margin dollars growth. So, you're seeing around 55%, I think growth year-over-year for the full year. And I would say 500 basis points come from these. I think that's a relevant information I can share. But at the same time, like same-store sales, yes, it's getting better. Over time, the trends when I look at for the last seven, eight quarters, the trends are just getting better for same-store sales and that's primarily because the kind of customers we are getting or booking or going live are from not only the verticals we are getting focused on, but also the kind of customers we are getting, they have themselves in a growth stage. So, we are inherent beneficiaries of their growth. So, same-store sales is getting better. And overall, the transaction growth is speaking for our growth in any direction you think of. I hope that provides some decent perspective for the quarter.

Yeah, that was extremely helpful. I appreciate it. And I would agree, it's not non-recurring by definition, but I appreciate how you articulated this point. Thanks so much.

Sure. Thanks, Matt.

Thank you for your question. Next question is from the line of Andrew Bauch with Wells Fargo. Your line is now open.

Good evening, everyone, and thank you for the question. I would like to get more details on what these larger customers look like. Can you provide a framework for understanding their size in terms of potential total addressable market compared to a typical biller in your current customer base? Additionally, could you share how much of the backlog is made up of this group of large billers?

I think I would say, as I was trying to refer earlier, Andrew, that from our vantage point, we are increasingly excited about the total addressable market. This market is expanding beyond the typical billers. We are now able to demonstrate, in practice, that we can convince a large enterprise, a well-known name outside of the traditional biller category, that Paymentus is the right choice for them long-term. We have proven this by implementing their complex workflows, both inbound and outbound in many cases, which has been quite a remarkable journey for us. So, it is very exciting. Regarding the backlog, we are not providing detailed information on it, but our backlog remains strong. It reflects a mix similar to our current customer base, encompassing small, large, and mid-sized customers across different verticals, and the pipeline is similarly diversified.

And, Dushyant, I appreciate the comments that the business has now doubled from the IPO three years ago and thinking about this business over the next three years, not asking if we can anticipate another double, but how would you anticipate the use cases of the platform to evolve? I mean, with the dual-sided nature of the business, we always thought that payouts would be a natural extension to what level of service that you could provide to your customers, but any other high-level thoughts on maybe the longer-term opportunities that you're investing in today that we may not see in the numbers for a couple of years to come?

That's a great question, Andrew. I believe it captures the essence of our company’s innovative framework. As you mentioned, payments are our strength, particularly inbound payments. Payouts are a logical extension, but they encompass more than just the vendor's perspective; they include all forms of payouts. Paymentus' current platform supports all workflows, whether it's between an employee and an employer, a customer and a billing company, a bank and a customer, or an enterprise and a vendor. We have been developing these capabilities. Although they don't yet reflect in the numbers due to size and scale, we expect them to begin showing results in the future. Additionally, this is one reason we are excited about the potential to eventually monetize interchange as a revenue source, transitioning from its current view as a cost center.

Pretty exciting. Thank you, Dushyant.

Thank you, Andrew.

Thank you for your question. There are no additional questions waiting at this time, so I'll pass the call back to the management team for any closing remarks.

Well, thank you so much, everyone, for joining today. Have a great day. Bye-bye.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.