Paymentus Holdings, Inc. Q4 FY2025 Earnings Call

Good day and welcome to the Fourth Quarter and Full Year 2025 Paymentus Earnings Conference Call. This call is being recorded. At this time, 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 fourth quarter and full year 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 fourth quarter and full year 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 differ materially from expectations are detailed in our earnings materials and our SEC filings that are available on both the SEC and our websites. Information about non-GAAP financial measures, including reconciliations to U.S. 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 fourth quarter and full year 2025. We are looking forward to a great 2026 and feeling even better about our business beyond that based on the durability of our growth algorithm and the broad spectrum of our innovation framework. Now that we have been public for about 5 years, I will provide additional color on how we are feeling about the next 5. 2025 was a significant milestone year for us, where for the first time, we delivered top line revenue exceeding $1 billion. I think that's particularly inspiring because if you recall, we exited 2023 with just over $600 million of top line revenue. And if you look back just 5 years ago to our IPO, we had a little over $300 million of revenue for 2020. So that would imply 100% revenue growth over 3 years. And if you then put our 2025 top line of $1.2 billion against our 2023 revenue, that's another instance of 100% revenue growth, but this time in just 2 years. This was done despite the backdrop of unprecedented inflation and other macroeconomic factors. In other words, we have quadrupled our business in the last 5 years, far ahead of our long-term CAGR model of 20% top line growth. And if I go back 10 years, we have grown the business 25x. The reason I'm sharing this context is because I believe this type of growth is possible due to our innovative DNA and thoughtful execution of a long-term business strategy. In the process of achieving this scale and strategic position, I want to point out the level of disruption already caused by Paymentus to the status quo of legacy infrastructure through our ever-growing innovation footprint. At our inception, the vast majority of all digital bill payments occurred through all school banks' bill pay. And today, vintage bank bill pay represents a fraction of the overall bill payment volume. At the same time, what is now deemed as the legacy infrastructure of in-house and third-party biller-direct solutions used to be considered large and thriving bill payment solutions. This change is not an accident. This was a result of a carefully crafted long-term business strategy, executed with a focus on long-term shareholder value creation, by first creating customer value through an ever-growing customer value proposition. So as you're now observing some discomfort with the broader fintech landscape, where increasingly more sophisticated buyers are rejecting the strategic complacency of their service providers or not accepting niche business models. Paymentus, on the other hand, is getting even more excited as that is not a surprise to us. We see this as a great opportunity for further disruption just as we saw at our inception. Compounding our excitement is the advent of GenAI that is further challenging the old-school software business models. We believe the world is moving more towards us. As a result, despite being a large-scale billion-dollar company, it is my distinct belief that we are still just getting started and the larger value will be created from here on out. I believe we are strategically better positioned now than we were even just a few years ago. We have a state-of-the-art platform, innovative DNA, and a broad-based innovation footprint. We have a diverse, large existing and growing client base. We serve a large portion of U.S. households and businesses using our platform, which is becoming increasingly more pervasive. Furthermore, the industry appears ripe for further disruption. And as a result, I believe we have a big market opportunity and our best is yet to come. But of course, as we all know, talk is cheap. We will still have to keep our heads down, execute and perform as we have done in the past. With that backdrop, I'm also looking forward to this year. Our initial revenue guidance of 2026, which Sanjay will cover shortly, is over $1.4 billion in revenue at the top end, which we believe we can deliver without signing any new clients. And our story is not complete without talking about profitability and margin expansion. At the same time as we are delivering this top line growth. For example, we generated $125 million of free cash flow in 2025 and exited with over $320 million of cash without any debt. In addition, for 2026, we are expecting adjusted EBITDA of $167 million at the top end of our guidance, which also implies a non-GAAP net income of over $100 million, which is exciting in itself. With that, let me go into our quarterly business update. Paymentus reported both fourth quarter and full year 2025 results that surpassed our expectations. Furthermore, Paymentus ended the year with a strong bookings and backlog, which gives us strong visibility as we head into 2026. What makes me even more excited is that we were able to achieve this year-over-year growth even with the strong results we reported in the fourth quarter of 2024. Our team continues to demonstrate solid execution when it comes to onboarding activities. Additionally, while we expected to see growth from the rising portion of large enterprise customers, the beneficial impact we saw in Q4 was even greater than we had originally anticipated. Also, as our customer mix is shifting more towards enterprise and large and mid-market clients, our revenue and contribution profit per transaction has continued to grow substantially. I'm also pleased with the growth in our adjusted EBITDA, which was 46.3% year-over-year. I think these results display the tremendous operating leverage we have in our business. They also show how we understand the economics and profitability of each piece of new business we bring in, including the large enterprise billers we signed up in the second half of 2025. In addition, our results clearly highlight our capacity to manage and calibrate our business to meet or exceed our long-term CAGR model. We have consistently shown our ability to achieve this even if we experience variability and noise in our secondary metrics from quarter to quarter. Now let's briefly recap our fourth quarter and full year 2025 results. Fourth quarter revenue was a record $330.5 million, an increase of 28.1% year-over-year. At the same time, contribution profit was $106.9 million, up 24% year-over-year. Adjusted EBITDA was a record $39.9 million for the quarter, representing a 37.3% margin and 46.3% growth year-over-year. Similar to the past quarters, the majority of our year-over-year growth in contribution profit fell to our bottom line. And once again, we exceeded the Rule of 40 for the quarter, coming in at 61% versus 59% last quarter. This reflects our team's solid execution and our focus on delivering consistent revenue growth alongside high-quality earnings. For the full year 2025, revenue increased 37.3% year-over-year to reach $1.2 billion. Contribution profit for the full year was $386.3 million, a year-over-year increase of 23.8%. Adjusted EBITDA was $137.4 million, representing a 35.6% margin and a 45.9% growth year-over-year. Now I'll review our fourth quarter business highlights and accomplishments. In terms of bookings, we had a very strong quarter and finished the year with a significant backlog. As I mentioned earlier, during the quarter, we saw particular strength in the large enterprise segment of the market. These large enterprise customers continue to represent a growing component of our client base. We also continue to expand and diversify our customer base by signing clients in several industry verticals, including utilities, telecommunications, government agencies, educational institutions, banking, property management, health care, and insurance, among others. As a reminder, we handle both consumer and business payments for our clients and serve B2C and B2B clients and handle both inbound and outbound payment workflows based on the sophisticated platform we have created. Complementing this, we signed additional channel partners in various industry verticals to deepen our partner ecosystem. These verticals include consumer finance and utilities. In addition, onboarding of our substantial backlog remains a priority for us. During the fourth quarter, we onboarded several large enterprises. We also onboarded clients throughout multiple verticals, including insurance, utilities, government agencies, telecommunications, and health care. Now I'll turn it over to Sanjay to review our financial results in more detail.

Thanks, Dushyant, and thank you all for joining us today. Before I discuss our quarterly and full year 2025 results as well as our outlook for 2026, I'd like to remind everyone that the financial results I'll be referring to include non-GAAP financial measures. Turning to Slide 5. We ended 2025 with fourth quarter and full year results that again surpassed the top end of our guidance range across our key financial metrics. Our fourth quarter results included record revenue of $330.5 million, up 28.1% year-over-year. Contribution profit of $106.9 million, up 24%, and adjusted EBITDA of $39.9 million, up 46.3%. On the Rule of 40 basis, for Q4, we came in at 61%. During the quarter, we also continued to experience strong customer activity and demand, consistent with what we experienced throughout 2025. This solid momentum drove strong bookings and we exited the year with a significant backlog and strong free cash flow generation to support our continued growth strategies in 2026. Now let's review our fourth quarter financials in more detail. As mentioned earlier, fourth quarter revenue grew 28.1% year-over-year to $330.5 million. This higher-than-anticipated growth was driven by 2 key factors: first, the successful launch of new billers. The fourth quarter was the first full quarter where we realized the benefits from large enterprise customers that launched in the prior quarter. And second, increased same-store sales from existing billers. In the fourth quarter, we derived more revenue from these newly launched large enterprise customers with higher average payment amounts, contributing to higher revenues. While our original fourth quarter guidance did contain some upside, we took a prudent approach because it was still a bit early to gauge the precise magnitude of this beneficial effect. As you can see, it was quite substantial. Complementing this, in the fourth quarter, the number of transactions we processed grew to $192.7 million, up 16.1% year-over-year. Our average price per transaction also increased during the fourth quarter to $1.72, up over 11% from $1.55 in the prior year period. This was mainly due to the biller mix or more specifically, the large enterprise billers that launched in the third quarter with higher average payment amounts. Fourth quarter 2025 contribution profit increased 24% year-over-year to $106.9 million. This growth exceeded transaction expansion as the large enterprise billers I discussed earlier generated a higher contribution profit per transaction. Contribution profit per transaction for the fourth quarter was $0.55, up sequentially from $0.54 in the prior quarter and also up from $0.52 in the prior year period, demonstrating our ability to capture market share while improving overall profitability. Contribution margin was 32.3% for the fourth quarter compared to 31.6% last quarter and 33.4% in the prior year period, reflecting the continued addition of large high-volume enterprise customers during the past year with healthy margins. We generated a record adjusted EBITDA margin of 37.3% as both our contribution profit per transaction and operating expense margin improved year-over-year by 5.8% and 2.4%, respectively. Furthermore, our improved contribution profit per transaction together with our strong operating leverage generated an incremental adjusted EBITDA margin of 61.1%. As we continue to grow and diversify our client base, and add large clients to the mix, we expect to see some quarterly variability in pricing and contribution profit. As we have noted in the past, 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. And therefore, we treat this as a secondary metric while our total revenue and adjusted EBITDA remain primary metrics for us. Fourth quarter adjusted gross profit grew 25% year-over-year to $89.8 million. We experienced adjusted gross profit growth that was greater than our contribution profit growth, reflecting the increased economies of scale. Fourth quarter non-GAAP operating expenses were up 11.4% year-over-year to $52.7 million, primarily reflecting higher sales and marketing as well as research and development expenses. These increases were consistent with our expectations and mainly driven by increased hiring and higher agency fees for business from resellers and partners. This enabled us to convert our strong pipeline into bookings as evidenced by our results and also to enhance our technical strengths. Using a non-GAAP tax rate of 25%, our fourth quarter non-GAAP net income was $25.4 million or $0.20 per share compared to non-GAAP net income of $16.3 million or $0.13 per share in the prior year period. Fourth quarter adjusted EBITDA grew 46.3% to $39.9 million compared to $27.3 million in the prior year period. Adjusted EBITDA also represented a record 37.3% of contribution profit for the quarter compared to 31.6% in the prior year period. 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. As I mentioned previously, incremental adjusted EBITDA margin was 61.1% in the quarter. Interest income from our bank deposits was $2.5 million in the fourth quarter, improved from $2 million in the prior year period as a result of our increased average cash balance and effective cash management. Related to our performance, as mentioned earlier, we once again exceeded the Rule of 40 for the quarter, coming in at 61% compared to 59% last quarter and 62% in the prior year period. Now turning to Slide 6. I will summarize the highlights of our full year 2025 results, which also came in higher than we projected. Revenue for the full year increased 37.3% to $1.2 billion, driven by a 21.3% increase in transactions, primarily from new billers as well as transaction growth from existing billers. Contribution profit increased 23.8% to $386.3 million, mainly from increased transactions. Non-GAAP operating expenses increased to $195.4 million, up 11.1% year-over-year due to higher sales and marketing and research and development expenses, as we continue to focus resources on executing our go-to-market strategy. Non-GAAP net income increased 51.2% to $84.9 million and diluted EPS increased 50% to $0.66 per share compared to the prior year. Full year adjusted EBITDA increased 45.9% to $137.4 million. We exceeded the Rule of 40 for the full year coming in at 59% for 2025, pretty much comparable to 2024 when we ended at 60%. We are also proud to report that in fiscal year 2025, $43.2 million out of $74.2 million contribution profit increase flowed through to adjusted EBITDA, representing a 58.2% incremental adjusted EBITDA margin. Now I'll discuss our quarter end balance sheet and quarterly liquidity improvement highlights on Slide 7. We ended 2025 with total cash of $324.5 million compared to $291.5 million at the end of the third quarter. The $33 million sequential increase is primarily comprised of $45.1 million of cash generated from operations, offset by $8.7 million used in investing activities primarily for capitalized software and $3.5 million spent in the net settlement of employee RSUs. Free cash flow generated during the fourth quarter was $35.7 million, and the company does not have any debt. Our days sales outstanding at the end of the fourth quarter was 28 days compared to 31 days last quarter. The sequential improvement is due to overall improvement in payment terms from our billers. Now I'll discuss our year-end balance sheet and annual liquidity improvement highlights on Slide 8. For the full year 2025, $324.5 million of total cash reflects an annual increase of $115.1 million. Free cash flow generated during the year was $125 million, representing a growth over 360% year-over-year. Our days sales outstanding at the end of the fourth quarter was 28 days compared to 43 days last year. This annual improvement in DSO is primarily due to an increase in the mix from large enterprise customers with favorable payment terms. It is noteworthy that while revenues have increased 37.3% this year, our DSO has declined 35% year-over-year, which we believe implies that our working capital cycle, which is already operating efficiently has significantly improved. We paid $14.9 million in income taxes during 2025 and also generated $9.5 million from interest income. In 2026, our cash deployment priorities are unchanged. Driving organic growth remains our primary focus. Our strong cash position gives us considerable financial flexibility for working capital investments as we scale. Additionally, our strong balance sheet enables us to explore attractive M&A opportunities that may arise in order to further increase our growth prospects. That concludes my financial review. Now I'll turn to our non-GAAP guidance for the first quarter and full year 2026 on Slide 9. Before discussing our 2026 guidance in detail, as mentioned on our last earnings call, we are continuing to follow the same prudent approach to our first quarter and full year 2026 guidance that we followed throughout 2025, which I believe has served us well. Now to details. For the first quarter 2026, we expect revenues to be in the range of $330 million to $340 million, representing approximately 22% year-over-year growth at the midpoint and approximately 24% at the high end. Contribution profit to range from $103 million to $105 million, which represents approximately 19% year-over-year growth at the midpoint and approximately 20% at the high end. Adjusted EBITDA of $36 million to $38 million representing approximately 23% year-over-year growth at the midpoint and approximately 27% at the high end. This also represents a 35.6% margin at the midpoint and a 36.2% margin at the high end. On a Rule of 40 basis, for the first quarter of 2026, our guidance implies a range of 52% to 56% ahead of the implied Rule of 40 initial guide we provided for the first quarter of 2025 around the same time last year. Now on specific details turning for the full year 2026, we expect revenue in the range of $1.39 billion to $1.41 billion, which represents 17% growth from the prior year at the midpoint and 17.8% growth at the high end. This reflects our increasing market share and diversifying customer base at scale. And as a reminder of Dushyant's earlier remarks, we can deliver the top end of this guidance without signing any new clients. Contribution profit in the range of $442 million to $452 million. This guidance represents 15.7% year-over-year growth at the midpoint and 17% at the high end. Our expected 2026 contribution profit growth at the midpoint and high end is very similar to the initial guidance we provided for 2025 contribution profit growth around the same time last year. Adjusted EBITDA to range from $157 million to $167 million. This guidance represents approximately 17.9% year-over-year growth at the midpoint and 21.5% at the high end. This also represents a 36.2% margin at the midpoint and a 36.9% margin at the high end. A non-GAAP tax rate of 25% and on a Rule of 40 basis for the full year 2026, our guidance implies a range of 50% to 54%, significantly higher than the implied Rule of the 40 initial guide we provided for 2025 around the same time last year. Once again, we are quite pleased with our 2025 results. Importantly, based on the strength of these results, our substantial bookings, sizable backlog and strong free cash flow generation, we believe we are well placed to once again deliver solid growth in this year. We are entering 2026 with considerable momentum in our business, and we intend to continue this during the course of the year.

Thanks, Sanjay. In closing, we ended 2025 with another quarter of outsized performance that exceeded our expectations. We ended the year with a substantial backlog, giving us considerable visibility as we look forward to 2026 and beyond. In addition to our results, I remain confident in Paymentus continued success due to a number of factors, including our strong business model, which has repeatedly shown our ability to meet or exceed our long-term CAGR model of 20% top line growth and 20% to 30% adjusted EBITDA dollar growth. Our unique and ever-growing technology footprint and our ecosystem, our large, diversified and growing customer base, and the vast nondiscretionary and still relatively untapped bill payment market that we serve. With that, I want to recognize and thank all of my team at Paymentus who have helped to make all of our success possible. That concludes our prepared remarks. I'll now open up the line for questions.

The first question comes from Madison Suhr with Raymond James.

I just wanted to start at a high level around AI, given the market dynamics. Can you just touch on where you see potential opportunity for AI, but then also where you see potential risks related to AI.

Thank you for the question, Madison. It's important to discuss this given the current market climate. We are very optimistic about the role of AI for Paymentus. We believe we will significantly benefit from the AI revolution, particularly in our sector. Our business model is structured to provide a world-class platform to our clients that ensures security compliance around the clock. Clients place great importance on maximizing their revenue collection without the risk of losing out while trying to save money. Importantly, we offer this platform at no cost to our clients. We designed our model to allow clients to fully utilize our platform without altering their existing systems. Paymentus handles all the operational work, and clients only pay for what they use. Since we don’t rely on software licensing fees, our earnings are based solely on platform usage. This approach positions us favorably against traditional software and SaaS companies that rely on subscription fees and hope clients won't fully utilize their services, which can ultimately compromise their value propositions. Paymentus, on the other hand, is built to function optimally through consumption, whether utilizing AI or other tools, and our clients benefit without upfront costs besides transaction fees. The opportunity presented by AI is immense and has opened numerous avenues for us. As a technology-focused company, we've been investing in no-code solutions and have a solid software infrastructure. AI has been a priority for us for a long time; we even considered acquiring an AI company years ago. Now, as we serve our thousands of clients, AI is creating even more opportunities aligned with our role in revenue collection. We are enthusiastic about the future, especially as AI continues to evolve and permeate various sectors.

Okay. That's awesome. I appreciate all the details there. Just a quick follow-up on numbers. The 2026 guide implies an incremental margin of just over 40% at the midpoint. You guys just said 61% in the quarter, 58% for the year. Totally appreciate the conservative outlook. But just anything to call out in terms of incremental investments? Or why you think incremental margins would kind of decelerate from here?

So Madison, I'll point out 2 things. Number one, in Q3, we launched large enterprise customers, and we had experience of half a quarter approximately for Q3 and full quarter for Q4. We have kind of 1.5 quarters of experience with these large billers, and we follow a prudent approach to not make the same run rate for 1.5 quarters for the next full year. We want to see seasonality. We want to see how the trends move. We really need experience for 4 full quarters before we can bake into our guidance and forecast properly. And as you know, from historical trends, we don't count our eggs before they hatch. So we need proper experience. Hence, our guidance is prudent. At the same time, at the high end, which we have guided today, that can be achieved without booking any new customer. I understand your question is mainly on the incremental adjusted EBITDA margins, we also are factoring in decent operating expense for sales and marketing at this point in time because the opportunity in front of us is massive. The pipeline is massive for us. We are diversifying into more verticals than we were. In fact, there are a couple more new verticals, which we have not named yet, but we have seen an entry into that in this quarter. So we want to expand our horizons there as well and see how quickly we can scale. We are already disrupting the market at a very decent pace. In fact, achieving 37.3% growth annually in top line, despite improving margins. I think that's remarkable. But we want to see if we can continue this trend. So on the guidance side, we remain prudent. Although at the same time, we have raised the guidance from what we proactively provided in the previous call, especially on adjusted EBITDA margin. But we stay grounded when it comes to guidance. Second thing I said was operating expense, we are also prudent in planning for more because we want to expand our horizons on a few other verticals. Otherwise, we remain committed to deliver great results and maintain the momentum of what our trends indicate.

Next question comes from the line of Darrin Peller with Wolfe Research.

Congratulations on a successful year. I would like to follow up on your guidance. I know you tend to be conservative with it, but considering the recurring revenue nature of your business and the significant bookings you're seeing as the year ends, I’m curious about where you might have built in some conservatism. Are you being cautious regarding transaction growth, the timing of enterprise ramps, payment mix, or margins? Additionally, what factors need to align operationally or commercially for you to exceed your guidance as the year goes on? I’ll start with that, and I have a follow-up regarding the enterprise side afterward, if that's alright.

Yes, Darrin. So it entails a lot of things. I would say it's a confluence of multiple factors on why we are prudent and why we feel bullish at the same time on how the business is. I'll start with bookings. The bookings are very good. In fact, the composition of bookings is more intriguing to us because we are diversifying into multiple verticals. That is helpful. At the same time, the pipeline is also very big. And you already know we operate in a very large TAM. And we have around 4.3% market share at the end of 2025. So a pretty small share and a large market to capture and the pace at which we are, I think things are looking very good. The visibility is very high. But we remain grounded as I said to earlier question from Madison. But at the same time, I think delivering good results is our goal. And at the end of the day, the free cash flow generation we have, which we have seen especially in the last quarter and last year has given us a further boost to stay grounded and execute, and that's where this confidence is coming from.

Can I follow up on the four different growth vectors you've outlined in the past? When we consider new biller launches, same-store sales, enterprise go-lives, and the IPN, could you rank the contributors you're seeing this quarter? Also, which of these do you anticipate will be the primary drivers going forward to 2026, particularly those that showed the most momentum at the end of the year?

Yes. So new implementations are generally the largest vector and will continue to remain the same. I would say the second vector would be same-store sales, which actually is doing really well. And in fact, as we have launched the new large enterprise billers since past few quarters, we are analyzing their trends as well. And that also the same-store sales continues to be very strong. And early implementations is one thing which could provide an upside. At the same time, any new customer bookings if they happen. And if they get long, the timing works in a way that could provide an upside. But at the same time, IPN continues to be a strong vector as well. We have actually done really well in the past few years on IPN, and that also is a very important vector. So upsides could happen, but we keep our fingers crossed, and we don't count the eggs before they hatch, as I said.

Next question comes from the line of Tien-Tsin Huang with JPMorgan.

Great results. Following up on Darrin's question about same-store sales, I’m interested in how much more potential there is for AutoPay among your larger billers that are more established rather than the recent additions. It seems like there’s still a lot of growth possible, but I wanted to get an update on that.

Thank you for the question, Tien-Tsin. We see tremendous opportunity in this area. In fact, as we have mentioned publicly, we could more than double our business within our existing customer base and still have room to grow. There are many opportunities still left. Same-store sales continue to be a major focus for us, along with ongoing adoption. If you consider the situation, we have only captured 4.3% of the revenues from our current customers relative to the total market potential, but there is significantly more potential to be realized even within our current customer base as we move forward. This, along with numerous open opportunities and a vast market, gives us confidence that our best days are still ahead of us.

Great. As a follow-up, I'm curious about the current status of the pipeline compared to last year. Large enterprise has significantly contributed to growth; how does the pipeline look today compared to last year?

We're feeling great. Pipeline is looking great. Backlog is strong. I think all of the aspects you would want to see in a business which is doing well and growing are all moving in the right direction. We are feeling great.

The next question comes from the line of Will Nance with Goldman Sachs.

I wanted to follow up on a couple of comments you made around the large enterprise billers. I think at several points, you talked about that being one of the drivers between the increased revenue per transaction. And I was hoping you could unpack that. I think when most people think about more enterprise in that market, they think about kind of revenue compression. But I think the way you're characterizing it, you're speaking more about, I don't know, larger transaction sizes, driving higher revenues. So I was wondering if you could maybe unpack that a bit. What is driving that? What verticals are maybe contributing to the growth that's causing the average transaction sizes to increase? And just how do you think about the mix shift embedded in kind of outlook or pipelines today from a vertical perspective?

Yes. Well, I'll start by saying we feel very optimistic about the trend in revenue per transaction, which has grown by 11% year-over-year. This growth is significant to us and highlights the disruption we are creating in the marketplace by increasing our market share and attracting large enterprise customers, some of whom are well-known brands. The average price per transaction for these customers is relatively high, which is also driving the increase in revenue per transaction. Additionally, this has led to a year-over-year improvement of 5.8% in contribution profit per transaction. Everything is moving in a positive direction. In terms of sectors, we have several key areas, with utilities being our foundation. Utilities are definitely prominent, and insurance also plays a role. These various sectors together contribute to the improvement in revenue per transaction.

Got it. That's helpful. Following up on the AI discussion, I think you addressed some concerns from a software perspective. From a payments perspective, I was hoping you could talk about how you view agentic payments. Bill pay seems like a good candidate for more agentic transactions over time since they're fairly low risk and highly recurring. How have you engaged with companies like Google and Stripe that are involved with agentic protocols? How far off do you think we are from seeing more agentic penetration in the bill pay space?

I believe agentic AI will significantly impact bill payments for the reasons previously mentioned. Our strategy will focus on being customer-centric, innovating around the customer experience, and delivering a distinct experience using AI. We will provide more updates on this later, but the main point I want to emphasize is that our approach is not just about marketing materials or website updates for appearances. We've always prioritized meaningful enhancements to customer experience and value creation, which in turn improves the experience through innovation. We are confident that bill payments, which make up a large part of typical household expenses, will greatly enhance the lives of customers and businesses alike. As I mentioned earlier, we serve a large number of U.S. households and businesses actively engaging on our platform. This is a priority for us, and we are making strides in this area. We will share more details in the future.

Next question comes from the line of Craig Maurer with FT Partners.

Just a quick modeling question. OpEx was a little higher than we had expected, and you mentioned that was consistent with spending to convert the pipeline. So I was just hoping you could help us with thinking about cadence for the year, in terms of how you expect that spending to progress through '26?

Sure, Craig. If you look at the trends from the past quarters, particularly for '24 and '25, using those trends can help in understanding the quarterly changes in OpEx from Q1 to Q4 in 2026. A gradual improvement over the quarters seems reasonable. We always evaluate our pipeline at the end of the month to decide where to allocate our sales and marketing resources. While there may be fluctuations, they seem justifiable. At the beginning of the year, it's appropriate to rely on past trends for analyzing quarterly growth.

There are currently no questions registered. There are no further questions waiting at this time. I would now like to pass the conference back for any closing remarks.

Well, thank you, everyone. I appreciate your time. Have a great day.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.