Title

Presentation

Paymentus Holdings, Inc. beats earnings expectations. Reported EPS is $0.21, expectations were $0.17.

Operator: Good day, and welcome to the First Quarter 2026 Paymentus Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, David Hanover, Investor Relations. Please go ahead.

David Hanover: Thank you, Operator. Good afternoon. Welcome, and thank you for joining the webcast to review our first quarter 2026 results. Our earnings release documents are available on the Investor Relations section of paymentus.com. They include the earnings presentation that we will reference 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 remarks before Sanjay Kalra discusses the details of the first quarter and our guidance. Following our prepared remarks, we will take questions. Let me remind you we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and we will refer to non-GAAP financial measures during this 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 in our SEC filings, which are available on both the SEC’s website and our website. Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials available on the website. With that, I would like to turn the webcast over to Dushyant Sharma. Dushyant, thanks.

Dushyant Sharma: Thank you, David. We are off to a tremendous start in 2026, with record revenue and strong growth exceeding our CAGR model across all key metrics. We believe these results underscore the durability and long-term growth potential of our business model. That strength is driven by our platform, our ecosystem, our expertise and scale, and our quality of service with support, security, availability, and compliance frameworks, along with a broad and continuously evolving innovation framework. In addition to our very strong financial results, we also announced an important product launch today that we believe will transform how service providers interact with their customers. Today’s agenda will proceed as follows.

First, I will provide a brief overview of our results. Sanjay will then provide a detailed financial review and discuss our outlook. I will then come back and discuss the strategic product announcement we have made today. We will then answer any questions. Let me start with financial highlights as shown on Slide 3. First quarter revenue was a record $358.4 million, an increase of 30.2% year over year. Contribution profit was $109.7 million, up 25.2% year over year. Adjusted EBITDA was a record $42.4 million in the quarter, representing 41.5% growth year over year and a 38.7% margin. Once again, a majority of our year-over-year growth in contribution profit fell to our bottom line. We exceeded the Rule of 40 for the quarter again, coming in at 64 versus 61 in Q4.

This reflects our team’s solid execution and our focus on delivering consistent revenue growth alongside high-quality earnings. These results are exciting for multiple reasons. First, they speak to our vertical diversification and our enhanced pricing strategy over the years, whereby the impact of the elevated energy price index on our numbers has been materially reduced. Second, as we have shared in the past, we operate on a two-fiscal-year horizon. Therefore, this outperformance is not just about one quarter. It gives us confidence and additional visibility for the rest of the year, and when combined with our backlog and bookings, we are also feeling good about 2027 visibility. Now on to our business results on Slide 4. We continued our strong momentum in the first quarter with robust bookings and a very substantial pipeline.

We also continue to expand and diversify our customer base by signing new clients in several industry verticals, including utilities, insurance, telecommunications, government agencies, property management, consumer finance, banking, education, and health care. Complementing this, we signed channel partners in the education and telecommunications verticals. Onboarding our substantial backlog remains a priority for us, and our team continues to demonstrate solid execution. We also saw better-than-expected seasonal performance in the first quarter, largely from the large cohort of new customers that we added in the second half of last year. In addition, during the first quarter, we onboarded clients throughout multiple verticals, including utilities, consumer finance, government agencies, telecommunications, banking, insurance, and education.

With that, I will turn it over to Sanjay to review our financial results in more detail. Thanks, Sanjay.

Sanjay Kalra: Thank you, Dushyant, and thank you all for joining us today. Before I discuss our first quarter results and outlook, I would like to remind everyone that the financial results I will be referring to include non-GAAP financial measures. Our Q1 press release and earnings presentation include reconciliations of these non-GAAP financial measures to their corresponding GAAP measures. Both are available on our website. Turning to Slide 5, we delivered a strong start to the year with first quarter results that came in much stronger than we had anticipated, driven by higher transaction activity from both new and existing billers. This helped drive strong double-digit growth for revenue, contribution profit, and adjusted EBITDA.

Combined with our strong bookings, sizable backlog, and strong pipeline at quarter-end, this supports our positive outlook for 2026. Our first quarter 2026 results included revenue of $358.4 million, contribution profit of $109.7 million, and adjusted EBITDA of $42.4 million. On a Rule of 40 basis, we came in at 64, which we consider a solid result and a record for the company. We are encouraged by this achievement, especially given the macro backdrop we are operating in. We also saw a sequential acceleration in the year-over-year growth rate for the number of transactions, revenue, and contribution profit despite tough year-over-year comps and a challenging macroeconomic environment. Moreover, the sequential growth rate we saw for all three of these metrics in Q1 was greater than the sequential growth rate we saw during the same period last year.

Simply put, both our annual and sequential growth rates accelerated in Q1 2026, boosting our confidence for the full-year 2026 outlook. These strong results also enabled us to once again exit the quarter with a much stronger cash position and gave us the flexibility to allocate capital with a continued focus on longer-term growth, which also contributed to robust bookings. Now let us review our first quarter financials in more detail. As I mentioned earlier, first quarter 2026 revenue was $358.4 million, up 30.2% year over year. This growth was largely driven by the launch of new billers over the past year, as well as increased same-store sales from existing billers. We also processed a higher number of transactions during the first quarter, reaching 203.4 million, up 17.4% year over year.

Our average revenue per transaction increased by approximately 11% to $1.76 in the first quarter compared to $1.59 in the prior-year period, continuing a robust trend of double-digit annual growth in revenue per transaction over the past seven quarters. This was mainly due to the biller mix, or more specifically, the large enterprise billers that we launched during 2025 with higher average payment amounts. The first quarter guidance we previously provided did consider some of the anticipated upside from large enterprise accounts, but as you can see, results still exceeded our expectations. First quarter 2026 contribution profit increased to $109.7 million, up 25.2% year over year. This increase reflected the launch of new billers and higher transactions from existing billers.

Contribution margin was 30.6% for the first quarter, compared to 31.8% in the prior-year period. The year-over-year reduction reflects the increased mix of large, high-volume enterprise billers in our growing customer base. This change in contribution margin was largely offset by a year-over-year reduction in operating expense margin, which resulted in a record adjusted EBITDA margin of 38.7%. This is consistent with our continued focus on profitability. Contribution profit per transaction for the quarter was $0.54, an improvement from $0.51 in the prior-year period, demonstrating our ability to expand market share without sacrificing comparable contribution profit per transaction. As we have noted before, variables that are outside of our control, such as an increase in average payment amount or changes in the payment mix, can affect contribution profit on a quarter-to-quarter basis.

Therefore, we treat this as a secondary metric, while our gross revenue and adjusted EBITDA remain primary metrics for us. First quarter 2026 adjusted gross profit was $92.4 million, up 27.3% year over year and ahead of our contribution profit growth rate as we achieve operational economies of scale. As we anticipated, first quarter 2026 non-GAAP operating expenses increased 16.3% year over year to $53.0 million. This increase was primarily due to higher sales and marketing expenses. You may notice our OpEx year-over-year growth rate increased this past quarter. This is a positive leading indicator for our business, as it means we are aggressively converting our substantial pipeline to bookings. We expect to make similar investments throughout the year as we continue to execute our go-to-market strategy, calibrate operating expenses with contribution profit expansion, and deploy our growing cash balance to support further organic growth.

These expectations are already incorporated into our guidance, which I will review shortly. First quarter 2026 non-GAAP net income was $26.9 million, or $0.21 per share, compared to non-GAAP net income of $17.6 million, or $0.14 per share, in the prior-year period, reflecting an annual EPS growth rate of 50%. This EPS incorporates a non-GAAP tax rate of 25%, which is based on our current expectation of our long-term projected tax rate and is reflected in our 2026 guidance. First quarter 2026 adjusted EBITDA increased 41.5% to $42.4 million, compared to $30.0 million in the prior-year period. Adjusted EBITDA also represented a record 38.7% of contribution profit, an annual improvement of 450 basis points compared to 34.2% in the prior-year period.

Our incremental adjusted EBITDA margin was approximately 56%. Related to this, once again we exceeded the Rule of 40 for the quarter, coming in at 64, a record. Now I will discuss our balance sheet and liquidity position on Slide 6. We ended the first quarter with total cash and cash equivalents of $342.1 million, compared to $324.5 million at the end of 2025. The $17.6 million sequential increase was primarily comprised of $30.5 million of cash generated from operations, partially offset by $9.4 million used in investing activities, primarily for capitalized software, and $3.3 million spent in net settlement of employee RSUs. The company does not have any debt. Free cash flow generated during the quarter was $20.9 million. This was primarily driven by strong adjusted EBITDA, offset by investments in working capital, primarily in accounts receivable.

Driving organic growth continues to be our primary focus. That said, our strong cash position enables us to maintain financial flexibility to keep room for working capital investments as we scale. In addition, our ample liquidity allows us to explore attractive M&A opportunities that may arise in order to expand our growth prospects. Our days sales outstanding at the end of the first quarter was 29, comparable to 28 days at the end of the prior quarter and much better than our expected range. Working capital at the end of the first quarter was $365.4 million, an increase of approximately 6.7% sequentially. We had 129.3 million diluted shares outstanding during the first quarter, pretty much comparable to the prior quarter. Now I will turn to Slide 7 to discuss our second quarter and full-year 2026 raised guidance for revenue, contribution profit, and adjusted EBITDA.

Before discussing full-year guidance, I want to mention that we are continuing to follow the same prudent approach to guidance that we have followed for the past three years, which has proven to be successful for us. For Q2 2026, we expect revenue in the range of $340 million to $350 million, contribution profit in the range of $108 million to $111 million, and adjusted EBITDA in the range of $38 million to $40 million. On a Rule of 40 basis for 2026, our guidance implies a range of 51 to 55. For the full year 2026, we now expect revenue in the range of $1.425 billion to $1.440 billion, an increase of 2.3% from the midpoint of our previous guidance. This guidance now represents 19.7% annual growth at the midpoint and 20.4% annual growth at the high end.

Contribution profit in the range of $450 million to $457 million, up 1.5% from the midpoint of our previous guidance and now representing 17.4% annual growth at the midpoint and 18.3% annual growth at the high end. Adjusted EBITDA in the range of $165 million to $172 million, up 4% from the midpoint of our previous guidance and now representing 22.6% annual growth at the midpoint and 25.2% annual growth at the high end, and a non-GAAP tax rate of 25%. On a Rule of 40 basis, our guidance implies a range of 53 to 56 for the full year 2026. During our past few earnings calls, we provided long-term growth targets for both revenue and adjusted EBITDA—our two primary financial metrics. We stated that our goal was to grow revenue at approximately 20% and grow adjusted EBITDA between 20% and 30%.

The full-year updated 2026 guidance range we have provided today reflects the expected achievement of these long-term targets. In summary, we are very pleased with our strong start to 2026, reflecting the continued momentum we have shown across the past several quarters. During this time, we have consistently demonstrated our ability to generate profitable growth. This enabled us to end the first quarter with a substantial backlog and pipeline. Given our solid footing and strong visibility, we continue to believe we are well-positioned for further growth in 2026 and beyond. Thank you for your attention. I will now turn it back to Dushyant for final remarks before we open up the call for questions.

Dushyant Sharma: Thanks, Sanjay. After seeing the impact of our state-of-the-art platform and ecosystem on the broader service economy, we find ourselves at an exciting juncture similar to what we experienced at our inception. As we look at the economy broadly, we realized that almost all investments in commerce have gone toward product or retail commerce, with a focus on how to sell more to customers and have them check out quickly. This product commerce paradigm is also retrofitted in service commerce, which at its core is not transactional but instead relational. This mismatched paradigm has led service commerce to lag behind, as enterprises spend millions of dollars on a myriad of mismatched components and tools. At Paymentus Holdings, Inc., we realized that to truly solve the issue, we needed to bring about a paradigm shift with a full-stack, purpose-built, AI-native platform with service-native components.

Even before our IPO, employing our proactive thinking, we wanted to make sure that we not only built a platform with full-stack components, but also incorporated AI, which we knew would become mainstream. Additionally, we knew we would need to seek patent protection on all major components, thereby creating a long-term moat and ecosystem. In line with that, today we announced that we are establishing a new category—AI-native service commerce—where every service interaction becomes intelligent, secure, and outcome-driven. As you can see from Slide 9, there are three key gaps in service commerce. First, there is no native payment method that preserves the service provider–customer relationship and identity. Second, static service and transactional documents must become intelligent and interactive.

Third, there is a lack of intelligent orchestration across fragmented systems. To address these three pain points, as you can see on Slide 10, we have created a new paradigm called Billio that has four key components, all of which have been patented. First is Bill Wallet, a purpose-built digital wallet designed specifically for bill and service payments. Unlike traditional retail wallets that store cards for one-time purchases, Bill Wallet establishes a persistent, secure relationship identity between the customer and service provider, linking accounts, service relationships, and payment credentials into a unified layer. Bill Wallet is designed to reduce time to complete a payment by approximately 75% and to work across all dimensions—agentic, digital, social, physical, and vocal.

Second, Billio transforms static bills, invoices, and statements into intelligent, interactive experiences. Billio enables consumers to understand charges, resolve issues, and take actions directly within the document itself. Third, AI 360 is an AI-based integration, orchestration, and data intelligence framework that powers both Billio and Bill Wallet and enables systems to automatically interpret, connect, and operate across disparate data sources. AI 360 also provides data visualization and business intelligence capabilities, replacing third-party BI tools. Fourth, all interactions are secured through Paymentus Holdings, Inc.’s patented PCI-compliant secure service framework, which we believe will ensure end-to-end protection, trust, and compliance across every service interaction and payment flow.

Putting this in context, in the past we have mentioned the opportunity to monetize interchange in the outer years. By design, the interchange cost we incur today is big and getting bigger as we scale. To us, that represents an incremental, untapped TAM. Additionally, with the advent of generative and agentic AI, the industry is predictably moving in our direction and has opened up opportunities far beyond payments with our existing and prospective clients and users of our platform across all of our current and prospective verticals. Let me discuss both in detail. Bill Wallet is an IPN-native wallet, purpose-built for bill payments and service commerce. As a result of Bill Wallet, a customer visiting their insurance company’s website can complete their premium payment in seconds rather than minutes with their Bill Wallet ID.

We believe that Bill Wallet will also significantly improve security and reduce fraud, whether the interaction takes place through an agent, in a self-driven car, via wearable technology, or any other traditional self-service or assistive channels. It is also intended to work well in a physical context. For example, at a government or utility walk-in center, a customer can pay their bill simply by providing the Bill Wallet ID—no card swipe, no manual entry, no POS terminals. This establishes a new paradigm for service commerce, away from the retail commerce paradigm. We believe this will result in a massive improvement in convenience, speed, and security, and also create a more direct link between service providers and their customers. As Bill Wallet scales in the next several years, we also intend for it to include native funding capabilities, enabling us to participate in interchange economics while increasing transaction frequency and depth of engagement for our clients.

Bill Wallet works in all aspects of the service economy—B2C and B2B. Let me now discuss early success. As you know, we reported that in December 2025, users on our platform numbered 53 million, which we believe represents approximately 40% of U.S. households and possibly businesses. Out of that customer base, we have made Bill Wallet available to a mere fraction of our end-user base, but across various cities—early 100 thousand users across more than 1 thousand cities—with a very high conversion rate and no marketing spend. Not a single dollar of marketing from Paymentus Holdings, Inc. We believe these results speak to the pervasive nature of our platform, the power of the network effect, and the ease of use—unlocking an additional dimension to the durability and profitability of our longer-term growth algorithm.

After seeing this early success, we are getting increasingly excited about exploring how Bill Wallet can be fully rolled out over the next several years. In addition, we recognized years ago that with the advent of AI, service documents like policies, bills, invoices, and other transactional documents such as bank, credit card, loyalty, or mutual fund statements must evolve to become more intelligent. As a result, we patented our technology called Billio that transforms traditional bills, invoices, and statements into AI-powered interactive experiences. With Billio, a utility customer can simply ask, “Why is my water bill higher this month?” Or a customer can interact with any other Bill Wallet and Billio-enabled service provider—such as a plumbing or HVAC service provider—and automatically schedule a visit and pay for it in advance, based on rules set by the user.

Or a customer can interact with the Billio-powered mutual fund statement and ask why their portfolio returns are trending lower than the indexes. Billio is designed to answer, resolve, and execute, eliminating friction, driving faster payments, and reducing support costs for billers and other service providers. Billio is also a full-stack service commerce platform, and with the help of Bill Wallet, it has the potential to transform legacy websites into multimodal Billio sites, potentially ending the era of retail paradigm–based old-school portals and replacing them with secure, interactive, and agentic Billio sites. Once a customer is recognized using Bill Wallet, the entire Billio-enabled website is hyper-personalized, and payment can be made—but more importantly, many questions can be asked and answered—whether the interaction is from your car, your personal agent, wearable technology, or any other traditional mainstream channels, such as your computer or mobile phone.

These are not just patents, but rather families of patents. All patent families referenced have granted patents in the U.S. and some international jurisdictions, with additional patent applications pending in domestic and many major international markets. As exciting as the depth and breadth of our further expanded moat is with our patent families, we want investors to know that this success is not an accident. We have a carefully crafted business strategy executed over the past several years, emanating from our mindset that the proverbial technological puck will be at a specific place in the future, and we want to take full advantage of it. We believe this strategy will augment our already very strong growth algorithm, further helping Paymentus Holdings, Inc.

attain its goal of becoming a multibillion-dollar business and ensuring that our efforts are patent protected so that our customers, our partners, our employees, and of course, our investors are able to enjoy the benefit of their trust in Paymentus Holdings, Inc. That concludes our prepared remarks. We will now open the call for questions.

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Operator: Thank you. Due to time restraints, we ask that you please limit yourself to one question and one follow-up. To ask a question, please press star 11. To withdraw your question, press star 11 again. Our first question will come from the line of Madison Suhr with Raymond James. Your line is open.

Madison Suhr: Hey, good afternoon, guys. I wanted to start on the new AI product. I really appreciate all the color around the technology, but was hoping you could also provide a little more detail on the economics. Do you expect any differences in gross or contribution dollars per transaction in the near term? And then longer term, does this open up Paymentus Holdings, Inc. to other revenue opportunities outside of the traditional per-transaction model?

Dushyant Sharma: The revenue opportunities, yes—let me start with that—but not necessarily outside the transaction model. As we have shared previously, our pay-per-use and success-based pricing model has withstood the test of time and, in our view, is further validated with the advent of AI as the world moves toward pay-per-use models. Our approach remains the same: we want to offer more to our clients, and as they achieve success in reducing their cost to serve and improving their end-user experience, we participate in those economies and benefit. We plan to remain in a consumption-based model. Our clients love that model. They can clearly understand where the success is, what the success KPIs are, and how Paymentus Holdings, Inc.

will get paid. It does open up opportunities. If you think about the paradigm change of the service economy, as we scale over the years to come, Paymentus Holdings, Inc. will not only provide a total service platform; users should be able to do almost anything with it related to their service providers—for example, schedule a service, ask a question like “My hot water heater is not working—can you schedule someone to come in and take a look?”—and that could include a payment transaction as well. In terms of the gross and net, the long-term strategy here is to convert interchange expense into interchange revenue, and we believe Bill Wallet and Billio will play a big role in that.

Sanjay Kalra: And if I may just add, Madison, on any near-term impacts: we remain committed to our model—top line to grow approximately 20% annually and bottom line between 20% and 30%. As you have seen from our past performance, we remain committed to deliver this model with operating leverage. In the near term, there should be no significant impacts here, but especially over the longer term, as Dushyant described, we are going to get much better than where we are today. Thank you.

Madison Suhr: Awesome—thanks for that. Then, Sanjay, just a quick follow-up on free cash flow. It was down a little bit year over year. I understand the dynamics with working capital, but when do you expect some of that to normalize? And any color you are willing to share on free cash flow expectations for the full year?

Sanjay Kalra: Sure, Madison. In Q1, free cash flow is down compared to last year, and that is primarily working capital, as you correctly pointed out. If you look at our accounts receivable balance itself, we put around $15 million into working capital. Last year in Q1, we actually extracted around $19 million to $20 million from working capital. So that swing itself is about $35 million. Apples to apples, if the working capital position was exactly the same, our free cash flow would have been more than $50 million in the quarter. That said, working capital is very timing dependent and, within the year, very much temporary. It could come back either in Q2 or Q3. We are navigating our way to capture the market at a very good pace, and at times customers get implemented later in the quarter versus the beginning, and that creates timing differences, which dissipate over one or two quarters.

We feel very good about where the business is progressing. All the working capital is in very good shape. Rather than focusing on free cash flow in isolation, the right way to understand our business—given the pace—is to look at total working capital increasing. As I noted in prepared remarks, working capital is up more than 6% sequentially. Whether it is in cash or accounts receivable, both are very good. In fact, the DSO of 29 days versus 28 days is pretty awesome—much better than our model, which dictates ~32 days. We feel very bullish about free cash flow for the full year. Last year, we generated around $125 million. This year—while we do not guide for cash flow—we are marching on the same path, except for temporary working capital adjustments.

We think we are on the same path or better than last year.

Operator: One moment for our next question. That will come from the line of Dave Koning with Baird. Your line is open.

Dave Koning: Hey, guys. Thanks so much. Great job. My first question: the economics of the wallet. I think it is kind of the Paymentus trifecta—if I load $1 thousand every month, first, you get float revenue. Secondly, I make payments out of that, and you get to keep the debit interchange instead of paying it out, as you mentioned. And then thirdly, I think you would get the nonregulated debit economics because you are not a large issuer. So there are three nice combinations of economics, it seems, in my view. Am I getting that right?

Dushyant Sharma: Yes, that is part of the strategy—though not immediate—but that is where we are marching toward. There are other options as well. Bill Wallet is an IP-native instrument, and we will also potentially open it up as a network play. And there are fees coming from our clients for the services we are providing them, with Bill Wallet as part of that.

Dave Koning: Great to hear. Then when I look at the cadence of revenue through the year, Q2 typically is up sequentially in contribution profit. This year, you are guiding to flat. Is that related to fuel? And maybe talk a little bit about fuel/energy prices and how that is impacting numbers.

Sanjay Kalra: Sure, Dave. There are two pieces here. On Q2 guidance, there is seasonality in the business, as you would have observed from the past few years. Generally, we guide a little lower than Q1 because we do not know how seasonality will play, and the seasonality of government billers affects Q2. Although it could be similar to Q1 revenue or maybe slightly higher as well if all things come in the right path, we have just onboarded a lot of large enterprise customers recently—some in Q1 and some in the second half of last year. We really want to have a full-year history to forecast accurately, so we take a prudent approach. That prudence is why you see modest softness in Q2 compared to Q1, and that flows through to the bottom line as well.

Regarding energy prices, delivering 25% contribution profit growth in Q1 when energy prices are in the news daily is telling. As we have captured more of the market over many years, we have seen vertical diversification, and our enhanced pricing strategy has helped reduce the impact of the elevated energy price index on our numbers. Even within utilities, only a small subsector is affected. It has not fully dissipated, but as we have scaled, it has lost relevance and materiality. Our prudent guidance methodology already captures any modest impact.

Operator: One moment for our next question. That will come from the line of Analyst with Wedbush Securities. Your line is open.

Analyst: Hey, good evening, guys. Congrats on a great quarter. I have two questions. First, more color on the AI-native service commerce platform you launched. You gave a lot of color around the strategy, but can you talk about what is specifically in the pipeline for this product in the year? Is there any inclusion of revenue coming from this cohort in 2026, or is it strictly in 2027 and beyond? And can you talk about the ramp of this AI-driven cohort moving forward?

Dushyant Sharma: This will be a transactional model, and our goal remains to capture as many of the transactions for a given customer as possible. It applies to all of our existing and prospective customers. The goal is to build momentum using the patented technology by moving customers away from the retail-commerce paradigm to the service-native paradigm. That will take time because of the installed base. What we are seeing—and expect to continue—is momentum in market capture. If I summarize the strategy into two parallel streams: stream one is evangelize the marketplace with the new paradigm so more customers sign up with Paymentus Holdings, Inc.; stream two, right behind that, is monetize the transactions differently than historically. It was very important to have patent protection on all this. We are not counting anything in 2026 from it, other than continued market momentum. We are feeling good about 2027, given our momentum and bookings.

Analyst: Got it. Thank you for the color. And, Sanjay, on the full-year revenue guidance—you basically had a $20 million beat in Q1 but raised the midpoint by about $30 million, implying a stronger back half with strong bookings and backlog. What is holding you back from a larger full-year 2026 raise? Is it conservatism, or onboarding timelines? And similarly on the Rule of 40—about 65% this quarter, guiding to 51% to 55% for the full year—can you break that down?

Sanjay Kalra: Since the past three years, we have followed a consistent methodology for guidance, which is dominated by prudence. You answered it in your question—prudence prevails. We remain cautious about what is coming. We want to deliver; we do not want to count chickens before they hatch. The business is very good, the pipeline is encouraging, bookings are strong, and our vertical diversification is healthy. We are bringing in a lot of Fortune 500 companies. We feel very good about 2026 and outer years. Our renewal rates are very strong, and our customer contracts are longer-term, giving us more visibility—now six quarters or so—into 2027 as well.

Dushyant Sharma: If I may add, the reason we are prudent is to create long-term shareholder value. You can erode value faster than you can build it by being irresponsible in guidance. We want a smooth road for executing a thoughtful strategy. It takes discipline. It is far easier to pound our chest than to deliver. Our interest is to create long-term shareholder value by having prudent guidance with very aggressive execution behind it, and not create a noisy environment.

Operator: One moment for our next question. That will come from the line of Analyst on for Darrin Peller with Wolfe. Your line is open.

Analyst: Hey, guys. Thanks for taking my question. Quickly on your new products, Billio and Bill Wallet: do these products change who you compete against? Are there any incumbents we should think about? And overall, have you noticed any changes in the credit environment recently?

Dushyant Sharma: We are excited about where we are headed. The market is moving in our direction, and it has taken us years to get to this point—not a reaction to a wave of AI press releases. We wanted to create long-term value and a long-term competitive moat for our investors and, more importantly, for our customers. After disrupting the bill payment world—when we started, banks had the majority of payments and are now down significantly, primarily because of the model we championed—we believe trends under pressure accelerate in our favor. You will see more momentum as time goes by, and we have prepared the company for this so our investors, partners, customers, and employees benefit from thoughtful and innovative execution.

Analyst: Thanks. One quick follow-up: on go-forward focus verticals, does utilities still remain at the top? Which verticals will contribute most to this new AI-centric model?

Dushyant Sharma: Utilities will remain a key vertical for us. It is among the most complex and sophisticated at large scale. We had to be really good to drive more value for utilities and their customers. As noted in our prepared remarks, we are signing customers across all our verticals. Our goal is to go through a household’s and a business’s bills, look at all the bills they have, and start making markets in each of those—then capture more and more transactions in each market using the new service-commerce paradigm powered by Billio.

Operator: One moment for our next question. Our next question will come from the line of Tien-Tsin Huang with JPMorgan. Your line is open.

Tien-Tsin Huang: Hope you can hear me—I am at the airport here. Good results. On Billio and Bill Wallet, to clarify, will you be managing the Bill Wallet ID, and is the ID distributed through consumer service providers? Subscription payments are important. In an agent world, who would wear the risk? I know that is a big debate on the agent side, and I think subscription payments could be a big part of this.

Dushyant Sharma: Our approach is that any technology or service that distances service providers from their own customers will not last. Paymentus Holdings, Inc.’s approach with Bill Wallet—regardless of channel or mode of interaction—allows service providers to have a direct relationship with their end users. That is our goal, and that is what we have built. Unlike traditional retail-centric wallets, billers/service providers set the rules for identity—how they identify and authenticate their own customers. Bill Wallet enables that across channels—intelligent glasses, car interfaces, phone, etc.

Tien-Tsin Huang: Understood. So the wearing of the risk band in the agent example—that would be borne by Paymentus Holdings, Inc. given how you described it?

Dushyant Sharma: In some ways, yes; in other ways, it would be arranged between us and our clients.

Tien-Tsin Huang: Understood. More to talk about—ambitious and makes sense given the network you have built. One quick follow-up: Sanjay, you mentioned seasonal impact in terms of the upside for the quarter. Can you clarify that? What seasonal impact was there, if any, that surprised you?

Sanjay Kalra: The impact is modest. On the high end for Q2, our guidance is approximately 2% softer than Q1, primarily because prudence prevails and seasonality of government billers is a part of it. We also need to experience the full-year cycle of new large billers implemented in 2025. These factors in combination are creating small modest softness in Q2 compared to Q1.

Operator: One moment for our next question. That will come from the line of Will Nance with Goldman Sachs. Your line is open.

Will Nance: Thank you for taking the question. On the wallet product, can you talk about distribution and how to incentivize adoption by consumers over time? How do you think about marketing required to drive adoption given the competitive wallet landscape?

Dushyant Sharma: The simplicity and time savings for end customers are compelling. In the small fraction of our base where we launched, conversion rates were high, and we did not spend any marketing dollars. The scale of our platform and ecosystem is already pervasive, and that will play a big role. Our focus is the technological advantage as the key reason to sign up: “I do not want to remember where to log in or how to find information—can I just use my Bill Wallet ID?” That is why patent protection was important. We will also create other incentives within the wallet for repeated use.

Will Nance: Appreciate that. And on energy prices—can you remind us what fundamentally changed about the enhanced approach to pricing adopted several years ago? Do contracts automatically reprice with higher average ticket sizes? What mechanism has reduced the exposure within the utilities vertical? And secondarily, how much has the utilities vertical declined as a percentage of total over the last three or four years?

Dushyant Sharma: On pricing, you are right that in some cases it is auto-priced—as the average payment amount changes with inflation, our pricing changes with it. We have also moved customers to different pricing models that are favorable to both customers and to us. Previously, we had the ability to change pricing but later in the process; now it is more proactive. In the remaining cohort where there is still some immaterial impact, we have regular meetings with clients to discuss impacts and readjust pricing. We are simply more proactive than before. As for utilities as a percentage of revenue, traditionally it has been higher than 50%, but it is now a little less than 50%—still substantial, but the pricing model evolution means we are not seeing a material impact from energy prices. Only a small subset of utilities is modestly impacted, and overall it is immaterial for us now.

Operator: One moment for our next question. As a reminder, if you would like to ask a question, please press star 11. Our next question will come from the line of Craig Maurer with FBN Partners. Your line is open.

Craig Maurer: Hi, thanks for taking the question. What is your take on the acquisition of Kubra by Repay, and how might that change the competitive dynamics in the space?

Dushyant Sharma: Kubra has been around for a long period of time—we know Kubra and Repay well. From our perspective, the market has been moving in our direction, and we are excited about that. Customers and prospects know where the innovations are coming from and who is taking the approach seriously. We are very excited about our business and wish competitors the best.

Operator: Thank you. I am showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Sharma for any closing remarks.

Dushyant Sharma: Thank you so much, everyone. We really appreciate the opportunity to speak with you. Have a great day. Thank you.

Operator: This concludes today’s program. Thank you all for participating. You may now disconnect.

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