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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40429

 

Paymentus Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

45-3188251

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

11605 North Community House Road, Suite 300

Charlotte, NC

28277

(Address of principal executive offices)

(Zip Code)

(888) 440-4826

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

 

PAY

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 8, 2022, the registrant had 19,653,961 shares of Class A Common Stock, $0.0001 par value per share and 103,336,337 shares of Class B Common Stock, $0.0001 par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Comprehensive (Loss) Income

6

 

Condensed Consolidated Statements of Stockholders' Equity

7

 

Condensed Consolidated Statements of Cash Flows

9

 

Notes to Unaudited Condensed Consolidated Financial Statements

11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

36

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

38

Item 6.

Exhibits

38

Signatures

39

 

 

 

i


 

Special Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q for the quarterly period ended September 30, 2022 ("Quarterly Report") contains forward-looking statements within the meaning of the federal securities laws, such as those under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which statements involve substantial risks and uncertainties. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this report include statements about:

our ability to effectively manage our growth and expand our operations;
our ability to further attract, retain and expand our biller, financial institutions, partner and consumer base;
our ability to timely implement and recognize revenue from new customers;
our expectations regarding our revenue, expenses and other operating results;
the continued impact of the COVID-19 pandemic on our operating results, liquidity and financial condition and on our employees, billers, financial institutions, partners, consumers and other key stakeholders;
our market opportunity and anticipated trends in our business and industry;
our ability to remain competitive as we continue to scale our business;
our ability to develop new product features and enhance our platform;
our ability to hire and retain experienced and talented employees as we grow our business;
general economic conditions, including inflation, and their impact on us, consumer demand, average bill amounts and interchange fees;
the expected impact of our recent acquisitions of PayVeris LLC, or Payveris, and Finovera, Inc., or Finovera;
our future acquisitions or strategic investments in complementary companies, products or technologies;
our ability to maintain and enhance our brand;
our plan to expand into new channels and industry verticals across different markets;
our international expansion plans and ability to expand internationally; and
those factors described in the sections titled “Risk Factors" and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this report.

You should not place undue reliance on our forward-looking statements as predictions of future events. We have based the forward-looking statements primarily on our current expectations and projections about future events and trends that we believe may affect our business, operating results, financial condition and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

Neither we nor any other person assumes responsibility for the ultimate outcome of any of these forward-looking statements. Moreover, the forward-looking statements made in this report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law.

ii


 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

Certain Definitions

In this report, unless the context requires otherwise, all references to “we,” “our,” “us,” “Paymentus,” and the “Company” refer to Paymentus Holdings, Inc., and where appropriate its consolidated subsidiaries.

 

 

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

148,314

 

 

$

168,386

 

Restricted funds held for financial institutions

 

 

77,601

 

 

 

33,443

 

Accounts and other receivables, net of allowance of $332 and $102

 

 

62,758

 

 

 

43,935

 

Income tax receivable

 

 

2,650

 

 

 

2,488

 

Prepaid expenses and other current assets

 

 

12,318

 

 

 

8,184

 

Total current assets

 

 

303,641

 

 

 

256,436

 

Property and equipment, net of accumulated depreciation and
   amortization of $
5,448 and $4,791

 

 

1,996

 

 

 

2,044

 

Capitalized internal-use software development costs, net

 

 

42,711

 

 

 

30,888

 

Intangible assets, net

 

 

36,113

 

 

 

42,088

 

Goodwill

 

 

129,344

 

 

 

129,413

 

Operating lease right-of-use assets

 

 

9,582

 

 

 

7,703

 

Deferred tax asset

 

 

165

 

 

 

163

 

Other long-term assets

 

 

7,677

 

 

 

4,207

 

Total assets

 

$

531,229

 

 

$

472,942

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

27,394

 

 

$

24,748

 

Accrued liabilities

 

 

16,665

 

 

 

12,491

 

Financial institution funds in-transit

 

 

77,601

 

 

 

33,443

 

Operating lease liabilities

 

 

1,389

 

 

 

1,456

 

Contract liabilities

 

 

1,328

 

 

 

2,173

 

Income tax payable

 

 

720

 

 

 

122

 

Total current liabilities

 

 

125,097

 

 

 

74,433

 

Deferred tax liability

 

 

 

 

 

3,318

 

Operating leases, net of current portion

 

 

8,703

 

 

 

6,463

 

Contract liabilities, net of current portion

 

 

2,637

 

 

 

1,713

 

Finance leases and other finance obligations, net of current portion

 

 

750

 

 

 

883

 

Total liabilities

 

 

137,187

 

 

 

86,810

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock, $0.0001 par value per share, 5,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; none issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Class A common stock, $0.0001 par value per share, 883,950,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively;19,653,565 and 17,251,079 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

2

 

 

 

1

 

Class B common stock, $0.0001 par value per share, 111,050,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; 103,336,337 and 103,388,082 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

10

 

 

 

11

 

Additional paid-in capital

 

 

365,632

 

 

 

356,017

 

Accumulated other comprehensive income

 

 

(67

)

 

 

168

 

Retained earnings

 

 

28,465

 

 

 

29,935

 

Total stockholders’ equity

 

 

394,042

 

 

 

386,132

 

Total liabilities and stockholders' equity

 

$

531,229

 

 

$

472,942

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

128,152

 

 

$

101,676

 

 

$

364,825

 

 

$

287,393

 

Cost of revenue

 

 

90,295

 

 

 

70,512

 

 

 

256,286

 

 

 

199,754

 

Gross profit

 

 

37,857

 

 

 

31,164

 

 

 

108,539

 

 

 

87,639

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

10,350

 

 

 

8,818

 

 

 

30,925

 

 

 

24,469

 

Sales and marketing

 

 

19,048

 

 

 

11,314

 

 

 

53,089

 

 

 

29,041

 

General and administrative

 

 

9,376

 

 

 

9,904

 

 

 

29,038

 

 

 

24,067

 

Total operating expenses

 

 

38,774

 

 

 

30,036

 

 

 

113,052

 

 

 

77,577

 

(Loss) income from operations

 

 

(917

)

 

 

1,128

 

 

 

(4,513

)

 

 

10,062

 

Other income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

504

 

 

 

11

 

 

 

594

 

 

 

4

 

Foreign exchange gain (loss)

 

 

(28

)

 

 

(16

)

 

 

52

 

 

 

(8

)

(Loss) income before income taxes

 

 

(441

)

 

 

1,123

 

 

 

(3,867

)

 

 

10,058

 

(Provision for) benefit from income taxes

 

 

(296

)

 

 

(701

)

 

 

2,397

 

 

 

(5,423

)

Net (loss) income

 

$

(737

)

 

$

422

 

 

$

(1,470

)

 

$

4,635

 

Undeclared dividends on Series A preferred stock

 

 

 

 

 

--

 

 

 

--

 

 

 

(2,258

)

Net (loss) income attributable to common stock

 

$

(737

)

 

$

422

 

 

$

(1,470

)

 

$

2,377

 

Net (loss) income per share attributable to common stock

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.01

)

 

$

 

 

$

(0.01

)

 

$

0.02

 

Diluted

 

$

(0.01

)

 

$

 

 

$

(0.01

)

 

$

0.02

 

Weighted-average number of shares used to compute net (loss) income per share attributable to common stock

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

122,740,982

 

 

 

118,206,073

 

 

 

121,765,509

 

 

 

110,272,583

 

Diluted

 

 

122,740,982

 

 

 

124,427,777

 

 

 

121,765,509

 

 

 

116,419,674

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

(In thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net (loss) income

 

$

(737

)

 

$

422

 

 

$

(1,470

)

 

$

4,635

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax

 

(86

)

 

 

6

 

 

 

(235

)

 

 

(42

)

Comprehensive (loss) income

 

$

(823

)

 

$

428

 

 

$

(1,705

)

 

$

4,593

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands, except share amounts)

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income

 

 

Equity

 

Balances at December 31, 2021

 

 

120,639,161

 

 

$

12

 

 

$

356,017

 

 

$

29,935

 

 

$

168

 

 

$

386,132

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,276

 

 

 

 

 

 

 

 

 

1,276

 

Issuance of Class A common stock for stock-based awards

 

 

412,222

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

13

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45

)

 

 

(45

)

Net income

 

 

 

 

 

 

 

 

 

 

 

1,718

 

 

 

 

 

 

1,718

 

Balances at March 31, 2022

 

 

121,051,383

 

 

$

12

 

 

$

357,306

 

 

$

31,653

 

 

$

123

 

 

$

389,094

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,344

 

 

 

 

 

 

 

 

 

1,344

 

Issuance of Class A common stock for stock-based awards

 

 

1,568,761

 

 

 

 

 

 

289

 

 

 

 

 

 

 

 

 

289

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(104

)

 

 

(104

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,451

)

 

 

 

 

 

(2,451

)

Balances at June 30, 2022

 

 

122,620,144

 

 

$

12

 

 

$

358,939

 

 

$

29,202

 

 

$

19

 

 

$

388,172

 

Issuance of warrant

 

 

 

 

 

 

 

 

3,478

 

 

 

 

 

 

 

 

 

3,478

 

Change in estimate of warrants expected to vest

 

 

 

 

 

 

 

 

46

 

 

 

 

 

 

 

 

 

46

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,002

 

 

 

 

 

 

 

 

 

2,002

 

Issuance of Class A common stock for stock-based awards

 

 

369,758

 

 

 

 

 

 

1,167

 

 

 

 

 

 

 

 

 

1,167

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(86

)

 

 

(86

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(737

)

 

 

 

 

 

(737

)

Balances at September 30, 2022

 

 

122,989,902

 

 

$

12

 

 

$

365,632

 

 

$

28,465

 

 

$

(67

)

 

$

394,042

 

 

7


 

 

 

Series A

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid-In

 

 

Treasury

 

 

Retained

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Earnings

 

 

Income

 

 

Equity

 

Balances at December 31, 2020

 

 

23,013

 

 

$

 

 

 

103,479,239

 

 

$

517

 

 

$

29,175

 

 

$

(579

)

 

$

55,047

 

 

$

216

 

 

$

84,376

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

563

 

 

 

 

 

 

 

 

 

 

 

 

563

 

Repayment of related party loan
   receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

813

 

 

 

 

 

 

 

 

 

 

 

 

813

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

 

 

21

 

Net income