10-Q

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, 2023

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 1, 2023, the registrant had 20,390,502 shares of Class A Common Stock, $0.0001 par value per share and 103,306,842 shares of Class B Common Stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
	Special Note Regarding Forward-Looking Statements	3
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Income	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		29

2

Special Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q for the quarterly period ended September 30, 2023 (“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 impact of widespread health issues 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 impact of disruptions or instability in the financial services industry, or perceived or actual liquidity constraints at financial institutions, on our ability or the ability of our customers and vendors to meet operating expense requirements or to satisfy financial or other obligations;

•our ability to realize the anticipated benefits of past or future acquisitions or strategic investments in complementary companies, products or technologies and our ability to manage the potential business disruption and diversion of management attention caused by such acquisitions;

•our ability to maintain and enhance our brand;

•our ability to integrate, manage and keep our information systems secure;

•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, 2022 and our subsequent Quarterly Reports on Form 10-Q, 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.

3

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.

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.

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	September 30,		December 31,
	2023		2022
Assets
Current assets
Cash and cash equivalents	$	162,062	$	147,334
Restricted cash and cash equivalents		4,830		2,351
Accounts and other receivables, net of allowance for expected credit losses of $234 and $370, respectively		74,851		67,789
Income tax receivable		1,910		1,493
Prepaid expenses and other current assets		11,415		9,994
Total current assets		255,068		228,961
Property and equipment, net		1,676		1,823
Capitalized internal-use software development costs, net		56,488		46,032
Intangible assets, net		29,179		36,017
Goodwill		131,852		131,851
Operating lease right-of-use assets		9,596		9,561
Deferred tax asset		117		116
Other long-term assets		5,365		7,178
Total assets	$	489,341	$	461,539
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	33,450	$	29,232
Accrued liabilities		18,759		15,809
Current portion of operating lease liabilities		1,669		1,462
Contract liabilities		5,633		4,358
Income tax payable		23		635
Total current liabilities		59,534		51,496
Deferred tax liability		957		680
Operating lease liabilities, less current portion		8,420		8,608
Contract liabilities, less current portion		2,782		2,826
Finance leases and other finance obligations, net of current portion		200		750
Total liabilities		71,893		64,360
Stockholders’ equity
Preferred stock, $0.0001 par value per share, 5,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; none issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		—		—
Class A common stock, $0.0001 par value per share, 883,950,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 20,385,106 and 19,934,331 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		2		2
Class B common stock, $0.0001 par value per share, 111,050,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 103,306,842 shares issued and outstanding as of September 30, 2023 and December 31, 2022		10		10
Additional paid-in capital		375,094		367,767
Accumulated other comprehensive income (loss)		—		(22	)
Retained earnings		42,342		29,422
Total stockholders’ equity		417,448		397,179
Total liabilities and stockholders' equity	$	489,341	$	461,539

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

5

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenue	$	152,423		$	128,152		$	449,690		$	364,825
Cost of revenue		105,513			90,295			316,840			256,286
Gross profit		46,910			37,857			132,850			108,539
Operating expenses
Research and development		11,035			10,350			33,595			30,925
Sales and marketing		21,481			19,048			63,344			53,089
General and administrative		9,083			9,376			26,958			29,038
Total operating expenses		41,599			38,774			123,897			113,052
Income (loss) from operations		5,311			(917	)		8,953			(4,513	)
Other income (expense)
Interest income, net		1,905			504			5,003			594
Foreign exchange (loss) gain		(17	)		(28	)		(32	)		52
Income (loss) before income taxes		7,199			(441	)		13,924			(3,867	)
(Provision for) benefit from income taxes		(822	)		(296	)		(1,004	)		2,397
Net income (loss)	$	6,377		$	(737	)	$	12,920		$	(1,470	)
Net income (loss) per share
Basic	$	0.05		$	(0.01	)	$	0.10		$	(0.01	)
Diluted	$	0.05		$	(0.01	)	$	0.10		$	(0.01	)
Weighted-average number of shares used to compute net income per share
Basic		123,620,260			122,740,982			123,430,652			121,765,509
Diluted		125,639,879			122,740,982			124,457,360			121,765,509
Comprehensive income
Net income (loss)		6,377			(737	)		12,920			(1,470	)
Foreign currency translation adjustments, net of tax		(64	)		(86	)		22			(235	)
Comprehensive income (loss)	$	6,313		$	(823	)	$	12,942		$	(1,705	)

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

6

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

					Additional				Other			Total
	Common Stock				Paid-In		Retained		Comprehensive			Stockholders’
	Shares		Amount		Capital		Earnings		Income (Loss)			Equity
Balances at December 31, 2022		123,241,173	$	12		367,767	$	29,422	$	(22	)	$	397,179
Stock-based compensation		—		—		2,159		—		—			2,159
Issuance of Class A common stock for stock-based awards		104,991		—		5		—		—			5
Other comprehensive income (loss)		—		—		—		—		(7	)		(7	)
Net income		—		—		—		704		—			704
Balances at March 31, 2023		123,346,164	$	12		369,931	$	30,126	$	(29	)	$	400,040
Stock-based compensation		—		—		2,276		—		—			2,276
Issuance of Class A common stock for stock-based awards		160,625		—		196		—		—			196
Other comprehensive income (loss)		—		—		—		—		93			93
Net income		—		—		—		5,839		—			5,839
Balances at June 30, 2023		123,506,789	$	12		372,403	$	35,965	$	64		$	408,444
Stock-based compensation		—		—		2,456		—		—			2,456
Issuance of Class A common stock for stock-based awards		185,159		—		235		—		—			235
Other comprehensive income (loss)		—		—		—		—		(64	)		(64	)
Net income		—		—		—		6,377		—			6,377
Balances at September 30, 2023		123,691,948	$	12		375,094	$	42,342	$	—		$	417,448

7

					Additional					Other			Total
	Common Stock				Paid-In		Retained			Comprehensive			Stockholders’
	Shares		Amount		Capital		Earnings			Income (Loss)			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 income (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 income (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 income (loss)		—		—		—		—			(86	)		(86	)
Net loss		—		—		—		(737	)		—			(737	)
Balances at September 30, 2022		122,989,902	$	12	$	365,632	$	28,465		$	(67	)	$	394,042

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

8

PAYMENTUS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities
Net income (loss)	$	12,920		$	(1,470	)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		22,314			17,518
Deferred income taxes		278			(3,331	)
Stock-based compensation		6,891			4,622
Non-cash lease expense		1,346			1,703
Amortization of contract asset		2,197			1,347
Provision for expected credit losses		(122	)		219
Change in operating assets and liabilities
Accounts and other receivables		(6,941	)		(19,143	)
Prepaid expenses and other current and long-term assets		(1,797	)		(854	)
Accounts payable		4,279			2,975
Accrued liabilities		4,188			2,390
Operating lease liabilities		(1,364	)		(1,398	)
Contract liabilities		1,232			80
Income taxes receivable, net of payable		(1,034	)		485
Net cash provided by operating activities		44,387			5,143
Cash flows from investing activities
Other intangible assets acquired		—			(248	)
Purchases of property and equipment		(511	)		(1,163	)
Capitalized internal-use software development costs		(25,339	)		(22,257	)
Net cash used in investing activities		(25,850	)		(23,668	)
Cash flows from financing activities
Proceeds from exercise of stock-based awards		435			1,469
Financial institution funds in-transit		—			44,158
Payments on other financing obligations		(1,709	)		(2,486	)
Payments on finance leases		(102	)		(201	)
Net cash (used in) provided by financing activities		(1,376	)		42,940
Effect of exchange rate changes on Cash and cash equivalents and Restricted cash		46			(329	)
Net increase in cash, cash equivalents and Restricted cash		17,207			24,086
Cash and cash equivalents and Restricted cash beginning of period		149,685			201,829
Cash and cash equivalents and Restricted cash end of period		166,892		$	225,915
Reconciliation of Cash and cash equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period		147,334			168,386
Restricted cash at beginning of period		2,351			—
Restricted funds held for financial institutions at beginning of period		—			33,443
Cash and cash equivalents and Restricted cash at beginning of period	$	149,685		$	201,829
Cash and cash equivalents at end of period		162,062			148,314
Restricted cash at end of period		4,830			—
Restricted funds held for financial institutions at end of period		—			77,601
Cash and cash equivalents and Restricted cash at end of period	$	166,892		$	225,915
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds	$	1,718		$	421
Property and equipment purchases in accounts payable	$	16		$	—
Prepaid insurance funded through short-term borrowings	$	—		$	4,425
Issuance of warrant and change in estimate of warrants expected to vest	$	—		$	3,524
Right-of-use assets obtained in exchange of operating lease obligations	$	1,356		$	4,151

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

9

PAYMENTUS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Description of Business

Description of Business

Paymentus Holdings, Inc. and its wholly owned subsidiaries (“Paymentus” or the “Company”) provides electronic bill presentment and payment services, enterprise customer communication and self-service revenue management to billers through a Software-as-a-Service (“SaaS”), secure, omni-channel technology platform. The platform seamlessly integrates into a biller’s core financial and operating systems to provide flexible and secure access to payment processing of credit cards, debit cards, eChecks and digital wallets across a significant number of channels including online, mobile, IVR, call center, chatbot and voice-based assistants. Paymentus was incorporated in the state of Delaware on September 2, 2011 with office locations in Charlotte, North Carolina, Richmond Hill, Ontario (Canada), and Delhi and Bangalore (India). The Company is currently headquartered in Charlotte, North Carolina.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the United States Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and the related notes included in the Company's Form 10-K for the year ended December 31, 2022 filed with the SEC on March 3, 2023 (the “2022 Form 10-K”).

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position, results of operations and comprehensive income, changes in stockholders' equity and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates include revenue recognition, cost of revenue recognition, the allowance for credit losses, the lives of tangible and intangible assets, the valuation of acquired intangible assets and the recoverability or impairment of intangible assets, including goodwill, internal-use software development costs, valuation of stock warrants issued, stock-based compensation, and accounting for income taxes. The Company bases its estimates on historical experience and also on assumptions that management considers reasonable. The Company assesses these estimates on a regular basis; however, actual results could differ from these estimates.

Custodial Accounts

The Company has established a relationship with its merchant processors to act as collection and paying agents, whereby a merchant processor receives funds from customers and forwards such funds to the respective Paymentus client, based on the instructions received from the Company. These merchant processors act as custodians of the cash received, and the Company has no legal ownership rights to the funds held in such custodial accounts and does not control the use of these funds. As the Company does not take ownership of the funds, these custodial accounts are not included in the Company’s consolidated balance sheets. The balance of cash in the custodial accounts held by these merchant processors was $402.7 million and $353.9 million as of September 30, 2023 and December 31, 2022, respectively.

10

Restricted Funds Held for Financial Institutions and Financial Institution Funds In-Transit

Restricted funds held for financial institutions and the corresponding liability of financial institution funds in-transit represent the timing differences arising between the amounts the Company's sponsor bank receives from the sending financial institutions and the amounts disbursed to the recipient financial institutions. The restricted funds held for financial institutions' account is a transaction account maintained at the Company’s sponsor bank for clearing payments from financial institutions (as defined by the U.S. Treasury’s Financial Crimes Enforcement Network) to other financial institutions. Restricted funds held for financial institutions represent restricted cash that, based upon the Company's intent, are restricted solely for satisfying the corresponding obligations to send funds to the various financial institutions. During the fourth quarter 2022, the Company entered into an agreement with a financial institution whereby the financial institution would take over the legal ownership of these funds and operate as the custodial service provider. Once these funds were moved to custodial accounts, the Company no longer had legal ownership or control over these funds, and as such the Company no longer has Restricted Funds held for Financial Institutions and Financial Institution Funds In-Transit on the consolidated balance sheet as of September 30, 2023 and December 31, 2022.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk primarily consist of cash, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-quality financial institutions with investment-grade ratings. For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded in the consolidated balance sheets. No customer accounted for more than 10% of revenue for either of the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, one customer accounted for more than 10% of accounts receivable.

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to make operating decisions, allocate resources and assess performance. The Company has three operating segments based on geography. The United States segment represents the vast majority of the Company’s consolidated net sales and gross profit. The additional two operating segments, Canada and India, do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate. None of the operating segments qualified for aggregation. The Company’s CODM is its chief executive officer. The CODM evaluates the performance of the Company’s operating segments based on revenue and gross profit. The Company does not analyze discrete segment balance sheet information related to long-term assets. All other financial information is presented on a consolidated basis. For information regarding the Company’s long-lived assets and revenue by geographic area, see Note 5 and Note 3, respectively.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 included in the 2022 Form 10-K. There have been no significant changes to these policies during the three and nine months ended September 30, 2023.

Recently Adopted Accounting Standards

The Company is provided the option to adopt new or revised accounting guidance as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 either (1) within the same periods as those otherwise applicable to public business entities, or (2) within the same time periods as non-public business entities, including early adoption when permissible. With the exception of standards the Company elected to early adopt, when permissible, the Company has elected to adopt new or revised accounting guidance within the same time period as non-public business entities, as indicated below.

Accounting Standards Updates ("ASU") not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). ASU 2021-08 will require companies to apply the definition of a performance obligation under ASU 2014-09, Revenue from contracts with customers (“Topic 606”) to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASU Topic 606. The Company adopted this ASU on January 1, 2023, and its adoption did not have a material impact on its condensed consolidated financial statements.

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3. Revenue, Performance Obligations and Contract Balances

Disaggregation of Revenue

The following table presents a disaggregation of revenue from contracts with customers (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Payment transaction processing revenue	$	150,500	$	126,373	$	443,565	$	359,846
Other		1,923		1,779		6,125		4,979
Total revenue	$	152,423	$	128,152	$	449,690	$	364,825

Revenue by geographic area, based on the location of the Company’s users, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	149,526	$	125,655	$	441,029	$	357,088
Other		2,897		2,497		8,661		7,737
Total	$	152,423	$	128,152	$	449,690	$	364,825

Remaining Performance Obligations

As of September 30, 2023, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied was $8.4 million, of which the Company expects to recognize over 79% within the next two years, 18% between two to four years and the remainder thereafter. The timing of revenue recognition within the next four years is largely dependent upon the go-live dates of the Company's customers under the Company’s contracts.

As of September 30, 2023, the Company has contractual rights under its commercial agreements to receive $48.1 million of fixed consideration related to the future minimum guarantees through 2026. As permitted, the Company has elected to exclude from this disclosure any variable consideration that meets specified criteria. Accordingly, the total unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amount disclosed.

Contract Balances

Contract balances consist of the following:

	September 30,		December 31,
	2023		2022
Contract Assets
Costs to fulfill (prepaid expenses and other current assets)	$	2,893	$	2,732
Costs to fulfill (other long-term assets)		5,154		6,929
Total contract assets	$	8,047	$	9,661
Contract Liabilities
Contract liabilities	$	5,633	$	4,358
Contract liabilities, less current portion		2,782		2,826
Total contract liabilities	$	8,415	$	7,184

During the three months ended September 30, 2023 and 2022, the Company reduced revenue and the related contract assets by $0.8 million and $0.5 million, respectively. During the nine months ended September 30, 2023 and 2022, the Company reduced revenue and the related contract assets by $2.2 million and $1.3 million, respectively.

Revenue recognized during the three months ended September 30, 2023 and 2022 that was included in the contract liabilities balance at the beginning of each of the periods was $0.5 million and $0.5 million, respectively. Revenue recognized during the nine months ended September 30, 2023 and 2022 that was included in the contract liabilities balance at the beginning of each of the periods was $1.4 million and $0.6 million, respectively.

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4. Business Combinations

PROFIT Financial, Inc.

On December 19, 2022, the Company completed its acquisition of PROFIT Financial, Inc. (“PROFIT”) by acquiring all outstanding shares of PROFIT for a total purchase price of approximately $4.3 million, net of cash acquired, comprised of $3.3 million cash of which $0.1 million is included as a short term payable at December 31, 2022 and $0.6 million is being held back by the Company for a period of 12 to 24 months following the transaction close date and is recorded in finance leases and other finance obligations, net of current portion in the consolidated balance sheets. PROFIT is a financial and accounting software company with offerings to small business. The acquisition of PROFIT is expected to increase market opportunities for the Company's existing solutions while enhancing the PROFIT platform.

The Company will record adjustments to the fair value of net assets acquired and goodwill within 12 months of the measurement period, if necessary. There were no measurement period adjustments to the purchase price allocation during the three and nine months ended September 30, 2023.

The revenue and expenses of PROFIT have been included in the Company's consolidated financial results since the acquisition date. Pro forma results of operations related to the acquisition have not been presented for the three and nine months ended September 30, 2022 because the effects of this acquisition were not material to the Company's overall operations.

5. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	September 30,			December 31,
	2023			2022
Computer equipment	$	5,955		$	5,476
Furniture and fixtures		1,672			1,672
Leasehold improvements		391			419
Total property and equipment		8,018			7,567
Less: Accumulated depreciation		(6,342	)		(5,744	)
Property and equipment, net	$	1,676		$	1,823

Depreciation expense recorded for property and equipment was $0.2 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $0.7 million and $1.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Long-lived assets include property and equipment, net. The geographic locations of the Company’s long-lived assets, net, based on physical location of the assets were as follows (in thousands):

	September 30,		December 31,
	2023		2022
United States	$	627	$	706
Other		1,049		1,117
Total	$	1,676	$	1,823

6. Goodwill, Internal-use Software Development Costs and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by reporting unit were as follows (in thousands):

	United States		Other		Total
Balance as of December 31, 2022	$	131,028	$	823	$	131,851
Foreign currency translation adjustments		—		1		1
Balance as of September 30, 2023	$	131,028	$	824	$	131,852

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Internal-use Software Development Costs

During the three months ended September 30, 2023 and 2022, the Company capitalized $8.7 million and $7.8 million in software development and implementation costs, respectively, and during the nine months ended September 30, 2023 and 2022, the Company capitalized $25.3 million and $22.3 million in software development and implementation costs, respectively.

During the three months ended September 30, 2023 and 2022, the Company recorded $3.5 million and $2.4 million of amortization expense in cost of revenue, respectively, and $2.0 million and $1.4 million of amortization expense in operating expenses, respectively. During the nine months ended September 30, 2023 and 2022, the Company recorded $9.5 million and $6.1 million of amortization expense in cost of revenue, respectively, and $5.8 million and $4.3 million of amortization expense in operating expenses, respectively.

Intangible Assets

Intangible assets, net consisted of the following (in thousands):

	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology	$	21,834	$	(13,997	)	$	7,837
License		2,519		(2,519	)		—
Customer relationship		31,992		(12,649	)		19,343
Software		450		(402	)		48
Trademark		4,038		(2,087	)		1,951
Total	$	60,833	$	(31,654	)	$	29,179

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology	$	22,631	$	(11,965	)	$	10,666
License		2,503		(2,503	)		—
Customer relationship		33,788		(11,695	)		22,093
Software		1,212		(661	)		551
Trademark		4,238		(1,531	)		2,707
Total	$	64,372	$	(28,355	)	$	36,017

Amortization expense of intangible assets was $2.1 million and $2.0 million for the three months ended September 30, 2023 and 2022, respectively, and $6.4 million and $6.2 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, future expected amortization expense is as follows (in thousands):

Years Ending December 31,
2023 (remaining three months)	$	2,021
2024		8,082
2025		6,620
2026		3,738
2027		3,269
Thereafter		5,449
Total future amortization expense	$	29,179

There were no impairments of goodwill, internal-use software development costs or intangible assets in the three or nine months ended September 30, 2023 and 2022.

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7. Accrued Liabilities

The composition of accrued liabilities is as follows (in thousands):

	September 30,		December 31,
	2023		2022
Payroll and employee-related expenses	$	12,523	$	9,214
Finance leases and other financing obligations		—		1,813
Other accrued liabilities		6,236		4,782
Total	$	18,759	$	15,809

As of December 31, 2022, finance leases and other financing obligations included the then current portion of finance leases related to the acquisition of computer equipment and short-term insurance premium financing arrangements. As of September 30, 2023 the Company no longer had any finance leases or insurance premium financing arrangements.

8. Commitments and Contingencies

Other Commitments

The Company has entered into certain non-cancellable agreements for software and marketing services that specify all significant terms, including fixed or minimum services to be used, pricing provisions and the approximate timing of the transaction. Obligations under contracts that are cancellable or with remaining terms of 12 months or less are not included. There have been no material changes to the Company's contractual obligations or commitments outside of the ordinary course of business as compared to those described in the 2022 Form 10-K.

Legal Matters

The Company is involved from time to time in various claims and legal proceedings arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that, as of September 30, 2023, none of its current claims and legal proceedings will have a material adverse effect on its financial position, results of operations, or cash flows.

Indemnification

The Company enters into indemnification provisions under agreements with other parties in the ordinary course of business, including business partners, investors, contractors, customers, and the Company’s officers, directors, and certain employees. The Company has agreed to indemnify and defend the indemnified party claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claims due to the Company’s activities or non-compliance with obligations or representations made by the Company. The Company seeks to limit, or cap, its indemnification exposure in its commercial and other contracts. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.

9. Equity

Warrant

On May 13, 2021, the Company entered into a warrant agreement with JPMC Strategic Investments I Corporation (“JPMC”), an affiliate of J.P. Morgan Securities LLC, an underwriter in our 2021 initial public offering ("IPO"), pursuant to which the Company agreed to issue a warrant to JPMC for up to 509,370 shares of Class A common stock upon completion of the IPO at an exercise price of $18.38 per share (the “May 2021 warrant”). Upon completion of the IPO, 382,027 of the warrant shares vested and were exercisable. The vesting of the remaining 127,343 shares of Class A common stock underlying the warrant will be subject to the achievement of certain commercial milestones through December 31, 2025 pursuant to a related commercial agreement with JPMorgan Chase Bank, National Association (“JPM Chase”), an affiliate of JPMC. As discussed below, this commercial agreement was amended in August 2022, and the achievement of certain commercial milestones was extended through December 31, 2026 and minimum revenue commitments were set for each of the calendar years through 2026. On December 31, 2021 and 2022, 15,917 warrant shares and 19,101 warrant shares, respectively, vested and were exercisable under the May 2021 warrant. Consistent with classification guidance in ASU Topic 606, the Company accounts for the consideration payable in the form of warrants to a customer as a reduction of the transaction price and, therefore, of revenue as the revenue is earned. The warrant fair value was determined using the Black-Scholes pricing model in accordance with ASC 718, Compensation-Stock Compensation.

During 2021, the Company updated the May 2021 warrant value recognized based on the expectation that the probability of achievement of certain milestones would be achieved. The increase was recorded using the fair value determined at the time of grant

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multiplied by the estimated number of remaining warrants expected to vest. This increase was recorded as additional paid-in capital and as a contract asset included in prepaid expenses and other current assets and other long-term assets in the consolidated balance sheets. The increase made to the May 2021 warrant valuation in 2022 was not material.

On August 29, 2022, the Company entered into a second warrant agreement with JPMC, in connection with an amendment to the Company's existing commercial agreement with JPM Chase discussed above, pursuant to which the Company issued a warrant to JPMC for up to 684,510 shares of Class A common stock at an exercise price of $10.10 per share (the “August 2022 warrant agreement”). Upon signing the August 2022 warrant agreement, 171,128 of the warrant shares vested and were exercisable. The vesting of the remaining 513,382 shares of Class A common stock underlying the warrant will be subject to the achievement of certain commercial milestones through December 31, 2026 pursuant to the commercial agreement, as amended.

As of September 30, 2023, an aggregate of 588,173 warrants had vested and were exercisable under the outstanding warrant agreements.

10. Stock-Based Compensation

In May 2021, the Company’s board of directors (the "Board") adopted, and its stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective in connection with the IPO. The 2021 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any of its parent or subsidiary corporations’ employees, and for the grant of non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, and performance awards to the Company’s employees, directors and consultants and any of its parent or subsidiary corporations’ employees and consultants. A total of 10,459,000 shares of the Company’s Class A common stock have been reserved for issuance under the 2021 Plan in addition to (i) an annual increase of 4% of the outstanding shares of the Company's common stock, with Class A and Class B common stock taken together, on the first day of each fiscal year, subject to the Compensation Committee of the Board exercising discretion to increase or decrease such amount (the “Evergreen Addition”), and (ii) upon the expiration, forfeiture, cancellation, or reacquisition of any shares of Class B common stock underlying outstanding stock awards granted under the 2012 Equity Incentive Plan, an equal number of shares of Class A common stock, such number of shares not to exceed 7,563,990. On January 1, 2023, pursuant to the Evergreen Addition, 4,929,646 shares of Class A common stock were added to the 2021 Plan issuance reserve. At September 30, 2023, there were 17,834,251 remaining shares available for the Company to grant under the 2021 Plan.

Stock Options

A summary of the Company’s option activity during the nine months ended September 30, 2023 was as follows (in thousands, except share and per share amounts):

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
	Options			Exercise Price		Contractual		Intrinsic
	Outstanding			per Share		Life (years)		Value
Outstanding at December 31, 2022		4,155,640		$	7.52		5.87	$	4,420
Options granted		—			—
Options exercised		(131,500	)		3.31
Options forfeited		(34,146	)		8.73
Options expired		(84,660	)		0.03
Outstanding at September 30, 2023		3,905,334		$	7.82		5.29	$	34,306
Exercisable at September 30, 2023		3,606,020		$	7.74		5.25	$	31,947

There were no options granted during the three and nine months ended September 30, 2023 and 2022. Aggregate intrinsic value represents the difference between the exercise price of the options and the fair value of the Company’s common stock.

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Restricted Stock Units (“RSUs”)

A summary of the Company’s RSU activity during the nine months ended September 30, 2023 was as follows:

				Weighted-
				Average
	Number of			Grant Date
	RSUs Outstanding			Fair Value
Awarded and unvested at December 31, 2022		1,362,420		$	18.03
Awards granted		1,145,613			9.21
Awards vested		(319,275	)		17.91
Awards forfeited		(152,707	)		19.82
Awarded and unvested at September 30, 2023		2,036,051		$	12.95

The fair value of RSU grants is determined based upon the market closing price of the Company’s Class A common stock on the date of grant. RSUs vest over the requisite service period, which generally ranges between four years and five years from the date of grant for employees and one to three years for directors, subject to continued employment for employees and provision of services for nonemployees.

Stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	36	$	—	$	110	$	—
Operating expenses
Research and development		484		507		1,492		1,080
Sales and marketing		690		612		2,096		1,062
General and administrative		1,246		883		3,193		2,480
Total stock-based compensation	$	2,456	$	2,002	$	6,891	$	4,622

At September 30, 2023, there was $0.8 million of total unrecognized compensation cost related to unvested stock options granted under the 2012 Equity Incentive Plan, which is expected to be recognized over a remaining weighted-average period of 0.8 years.

At September 30, 2023, there was $24.2 million of total unrecognized compensation cost related to unvested RSUs granted under the 2021 Plan, which is expected to be recognized over a remaining weighted-average period of 3.1 years.

11. Income Taxes

The Company computes its tax provision for the three months ended September 30, 2023 by applying the year-to-date actual effective tax rate from recurring operations as the best estimate of its annual effective tax rate. The Company continues to record a valuation allowance against its net deferred tax assets (“DTA”) in the U.S. as it is not more likely than not to be realized given a history of near break-even operations and prior year significant tax deductions for stock-based compensation.

The Company’s effective tax rate for the three and nine months ended September 30, 2023 was 11.4% and 7.2%, respectively. The difference between the Company’s effective tax rate and the U.S. federal statutory rate of 21% was primarily the result of the full valuation allowance recorded against the Company's net U.S., deferred tax assets.

The Company’s effective tax rate for the three and nine months ended September 30, 2022 was (65.2)% and 62.3%, respectively. The difference between the Company's effective tax rate and the U.S. federal statutory rate of 21% was primarily the result of near break-even pre-tax operating results, excess tax benefits on stock-based compensation, the valuation allowance recorded against the Company’s net US deferred tax assets, state taxes, foreign income taxed at different rates and permanent tax adjustments related to nondeductible executive compensation.

12. Net Income per Share Attributable to Common Stock

Basic net income per share attributable to common stock is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period.

Diluted net income per share attributable to common stock is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. The dilutive effect of outstanding options, RSUs and warrants is reflected in diluted net

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income per share attributable to common stock by application of the treasury stock method. The calculation of diluted net income per share attributable to common stock excludes all anti-dilutive common shares.

The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net income per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis.

The following table sets forth the computation of basic and diluted net income per share attributable to common stock (in thousands except share and per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
Numerator:
Net income (loss)	$	6,377	$	(737	)	$	12,920	$	(1,470	)
Denominator:
Weighted-average shares of common stock — basic		123,620,260		122,740,982			123,430,652		121,765,509
Dilutive effect of stock options to purchase common stock		1,548,680		—			868,922		—
Dilutive effect of RSUs		429,863		—			153,330		—
Dilutive effect of warrants		41,076		—			4,456		—
Weighted-average shares of common stock — diluted		125,639,879		122,740,982			124,457,360		121,765,509
Net income (loss) per share
Basic	$	0.05	$	(0.01	)	$	0.10	$	(0.01	)
Diluted	$	0.05	$	(0.01	)	$	0.10	$	(0.01	)

The following table summarizes the weighted average securities that were excluded from the computation of diluted net income per share attributable to common stock as their inclusion would have been antidilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options to purchase common stock		—		4,705,323		103,804		5,693,398
RSUs		580,102		1,396,810		1,149,853		860,848
Warrants		417,045		428,803		417,045		418,630

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We are a leading provider of cloud-based bill payment technology and solutions. We deliver our next-generation product suite through a modern technology stack to more than 1,900 biller business and financial institution clients. Our platform was used by approximately 27 million consumers and businesses in North America in December 2022 to pay their bills, make money movements and engage with our clients. We serve billers of all sizes that primarily provide non-discretionary services across a variety of industry verticals, including utilities, financial services, insurance, government, telecommunications and healthcare. We also serve financial institutions by providing them with a modern platform that their customers use for bill payment, account-to-account transfers and person-to-person transfers. By powering this comprehensive network of billers and financial institutions, each with their own set of bill payment requirements, we believe we have created an enviable feedback loop that enables us to continuously drive innovation, grow our business and uniquely improve the electronic bill payment experience for participants in the bill payment ecosystem.

Our platform provides our clients with easy-to-use, flexible and secure electronic bill payment experiences powered by an omni-channel payment infrastructure that allows consumers to pay their bills using their preferred payment type and channel. Because our biller platform is developed on a single code base and leverages a SaaS infrastructure, we can rapidly deploy new features and tools to our entire biller base simultaneously. Through a single point of integration to our billers’ core financial and operating systems, our mission-critical solutions provide our billers with a payments operating system that helps them collect revenue faster and more profitably and empower their consumers with the information and transparency needed to control their finances.

Transactions Processed

	Three Months Ended September 30,							Nine Months Ended September 30,
	2023		2022		% Growth			2023		2022		% Growth
	(in millions)							(in millions)
Transactions processed		115.4		92.2		25.2	%		333.4		269.6		23.7	%

We define transactions processed as the number of revenue generating payment transactions, such as checks, credit card and debit card transactions, automated clearing house, or ACH, items and emerging payment types, which are initiated and generally processed through our platform during a period. The number of transactions also includes account-to-account and person-to-person transfers. The number of transactions processed during the three and nine months ended September 30, 2023 increased approximately 25.2% and 23.7%, respectively, as compared to the same periods in 2022. The increase was primarily driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions.

Other Key Factors and Trends Affecting Our Operating Results

The discussion below includes a number of forward-looking statements regarding our future performance. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from matters referred to below, see the discussions under “Risk Factors” and “Special Note Regarding Forward-Looking Statements” herein and in our Form 10-K for the year ended December 31, 2022 or the “2022 Form 10-K” and our subsequent Quarterly Reports on Form 10-Q.

Impact of Economic and Inflationary Trends

In 2022 and continuing into 2023, the United States economy has experienced inflationary conditions, increased interest rates and consecutive quarters of decreased gross domestic product. While we believe our business is resilient and can generally weather unusual levels of inflation, the economic uncertainty and continuing inflationary pressures, which have been particularly acute in the utility sector, impacted our fiscal 2022 and first half of 2023 financial performance and are expected to impact our 2023 financial performance. Inflationary pressure is resulting in higher average bills, particularly in the utility sector, and increased interchange fees. While we are seeking to adjust our prices to address the inflationary pressures, our ability to do so typically lags behind the impact of inflation on our clients, the increase in average bill amounts and increased interchange fees. We intend to continue to manage through this uncertain economic environment by working closely with clients on implementations and price adjustments.

Non-GAAP Measures

We use supplemental measures of our performance that are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles, or GAAP. These supplemental non-GAAP measures include contribution profit, adjusted gross profit, adjusted EBITDA and free cash flow.

Contribution Profit

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We calculate contribution profit as gross profit plus other cost of revenue. Other cost of revenue equals cost of revenue less interchange and assessment fees paid by us to our payment processors.

Adjusted Gross Profit

We calculate adjusted gross profit as gross profit adjusted for non-cash items, primarily stock-based compensation and amortization of acquisition-related intangible assets and capitalized software development costs.

Adjusted EBITDA

We calculate adjusted EBITDA as net income before other income (expense) (which consists of interest income (expense)), depreciation and amortization of acquisition-related intangible assets and capitalized software development costs, and income taxes, adjusted to exclude the effects of net and foreign exchange gain (loss), stock-based compensation expense and certain nonrecurring expenses that management believes are not indicative of ongoing operations.

Free Cash Flow

We calculate free cash flow as net cash provided by (used in) operating activities less capital expenditures, other intangible assets acquired, and capitalized internal-use software development costs.

How we use Non-GAAP Measures

We use non-GAAP measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management and our board of directors to more fully understand our consolidated financial performance from period to period and helps management project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP measures provide our investors with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period-to-period comparisons. In particular, we exclude interchange and assessment fees in the presentation of contribution profit because we believe inclusion is less directly reflective of our operating performance as we do not control the payment channel used by consumers, which is the primary determinant of the amount of interchange and assessment fees. We use contribution profit to measure the amount available to fund our operations after interchange and assessment fees, which are directly linked to the number of transactions we process and thus our revenue and gross profit. There are limitations to the use of the non-GAAP measures presented in this report. Our non-GAAP measures may not be comparable to similarly titled measures of other companies; other companies, including companies in our industry, may calculate non-GAAP measures differently than we do, limiting the usefulness of those measures for comparative purposes. These non-GAAP measures should not be considered in isolation from or as a substitute for financial measures prepared in accordance with GAAP.

We also urge you to review the reconciliation of these non-GAAP financial measures included below. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this report and to not rely on any single financial measure to evaluate our business.

Contribution Profit

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Gross Profit	$	46,910	$	37,857	$	132,850	$	108,539
Plus: other cost of revenue		14,583		13,277		41,764		38,704
Contribution Profit	$	61,493	$	51,134	$	174,614	$	147,243

In general, contribution profit is driven by the number of transactions we process offset by network fees associated with processing those transactions. The amount of contribution profit per transaction may vary due to a variety of factors substantially outside of our control, including client size, type and industry as well as whether the client is a biller, financial institution or other partner. Contribution profit for the three and nine months ended September 30, 2023 increased approximately 20.3% and 18.6%, respectively, as compared to the same periods in 2022. The increase was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions, together with improvements resulting from disinflation in the utility sector on a year over year basis, pricing improvements from customers related to our inflation management and implementing certain cost improvement measures.

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Adjusted Gross Profit

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Gross profit	$	46,910	$	37,857	$	132,850	$	108,539
Stock-based compensation		36		—		110		—
Amortization of capitalized software development costs		3,493		2,357		9,473		6,088
Amortization of acquisition-related intangibles		829		829		2,486		2,487
Adjusted gross profit	$	51,268	$	41,043	$	144,919	$	117,114

Adjusted gross profit for the three and nine months ended September 30, 2023 increased 24.9% and 23.7%, respectively, as compared to the same periods in 2022. Adjusted gross profit improved in line with contribution profit. Adjusted gross profit as a percentage improved as a result of economies of scale. Adjusted gross profit is driven primarily by the same factors that impact gross profit with the exception of excluding the amortization in cost of revenue. The increase in amortization was driven by additional capitalization of software costs.

Adjusted EBITDA

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(in thousands)
Net income (loss) — GAAP	$	6,377		$	(737	)	$	12,920		$	(1,470	)
Interest income, net		(1,905	)		(504	)		(5,003	)		(594	)
Provision for (benefit from) income taxes		822			296			1,004			(2,397	)
Amortization of capitalized software development costs		5,473			3,808			15,286			10,434
Amortization of acquisition-related intangibles		2,095			2,015			6,359			6,077
Depreciation		204			335			669			1,015
EBITDA	$	13,066		$	5,213		$	31,235		$	13,065
Adjustments
Foreign exchange loss (gain)		17			28			32			(52	)
Stock-based compensation		2,456			2,002			6,891			4,622
Other nonrecurring expense (1)		—			769			—			769
Adjusted EBITDA	$	15,539		$	8,012		$	38,158		$	18,404

____________

(1) Other nonrecurring expenses consist of an estimated liability booked in the three months ended September 30, 2022 related to the potential costs of terminating a commercial contract.

Adjusted EBITDA is a measure of profitability and generally is expected to move in line with revenue, contribution profit, gross profit and adjusted gross profit. Adjusted EBITDA increased 93.9% and 107.3% in the three and nine months ended September 30, 2023, respectively, as compared to the same periods in 2022. The increase was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions, together with improvements resulting from disinflation in the utility sector on a year over year basis, pricing improvements from customers related to our inflation management and implementing certain cost improvement measures.

Free Cash Flow

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(in thousands)
Net cash (used in) provided by operating activities	$	13,143		$	(1,949	)	$	44,387		$	5,143
Purchases of property and equipment and software		(158	)		(368	)		(511	)		(1,163	)
Other intangible assets acquired		—			(125	)		—			(248	)
Capitalized software development costs		(8,728	)		(7,793	)		(25,339	)		(22,257	)
Free cash flow	$	4,257		$	(10,235	)	$	18,537		$	(18,525	)
Net cash used in investing activities	$	(8,886	)	$	(8,286	)	$	(25,850	)	$	(23,668	)
Net cash (used in) provided by financing activities	$	234		$	18,722		$	(1,376	)	$	42,940

The increase in free cash flow for the three and nine months ended September 30, 2023 was driven by higher cash provided by operating activities.

21

Results of Operations

The following table sets forth our condensed consolidated statements of operations for the periods presented:

	Three Months Ended September 30,						Change						Nine Months Ended September 30,						Change
	2023			2022			$			%			2023			2022			$			%
	(Dollars in thousands)
Revenue	$	152,423		$	128,152		$	24,271			18.9	%	$	449,690		$	364,825		$	84,865			23.3	%
Cost of revenue		105,513			90,295			15,218			16.9	%		316,840			256,286			60,554			23.6	%
Gross profit		46,910			37,857			9,053			23.9	%		132,850			108,539			24,311			22.4	%
Gross margin (1)		30.8	%		29.5	%								29.5	%		29.8	%
Operating expenses
Research and development		11,035			10,350			685			6.6	%		33,595			30,925			2,670			8.6	%
Sales and marketing		21,481			19,048			2,433			12.8	%		63,344			53,089			10,255			19.3	%
General and administrative		9,083			9,376			(293	)		-3.1	%		26,958			29,038			(2,080	)		-7.2	%
Total operating expenses		41,599			38,774			2,825			7.3	%		123,897			113,052			10,845			9.6	%
Income (loss) from operations		5,311			(917	)		6,228		n/m				8,953			(4,513	)		13,466		n/m
Other income (expense)
Interest income, net		1,905			504			1,401			278.0	%		5,003			594			4,409			742.3	%
Foreign exchange (loss) gain		(17	)		(28	)		11		n/m				(32	)		52			(84	)	n/m
Income (loss) before income taxes		7,199			(441	)		7,640		n/m				13,924			(3,867	)		17,791		n/m
Benefit from (provision for) income taxes		(822	)		(296	)		(526	)		177.7	%		(1,004	)		2,397			(3,401	)		-141.9	%
Net income (loss)	$	6,377		$	(737	)	$	7,114		n/m			$	12,920		$	(1,470	)	$	14,390		n/m

____________

n/m - not meaningful

(1) Gross margin is calculated as gross profit divided by revenue.

The following table presents the components of our condensed consolidated statements of operations for the periods presented as a percentage of revenue:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenue		69.2	%		70.5	%		70.5	%		70.2	%
Gross profit		30.8	%		29.5	%		29.5	%		29.8	%
Operating expenses
Research and development		7.2	%		8.1	%		7.5	%		8.5	%
Sales and marketing		14.1	%		14.9	%		14.1	%		14.6	%
General and administrative		6.0	%		7.3	%		6.0	%		8.0	%
Total operating expenses		27.3	%		30.3	%		27.6	%		31.0	%
Income (loss) from operations		3.5	%		-0.7	%		1.9	%		-1.2	%
Other income (expense)
Interest income, net		1.2	%		0.4	%		1.1	%		0.2	%
Foreign exchange (loss) gain		0.0	%		0.0	%		0.0	%		0.0	%
Income (loss) before income taxes		4.7	%		-0.3	%		3.0	%		-1.1	%
Benefit from (provision for) income taxes		-0.5	%		-0.2	%		-0.2	%		0.7	%
Net income (loss)		4.2	%		-0.6	%		2.8	%		-0.4	%

Comparison of the Three Months Ended September 30, 2023 and 2022

Revenue

The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by the implementation of new billers and increased transactions from our existing billers. Revenue increase was also driven by pricing improvements related to our inflation management.

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Cost of Revenue, Gross Profit and Gross Margin

The increase in cost of revenue was driven by the increase in revenue and transactions processed, as it consists primarily of interchange fees and processor costs, as well as other direct costs associated with making our platform available to our billers. These higher costs were partially offset by cost improvement initiatives and deflation in the utility sector during the quarter ended September 2023.

Gross margin improved for the three months ended September 30, 2023 due to adjusted pricing for certain existing customers, cost improvement initiatives and deflation in the utility sector.

Research and Development Expenses

The increase in research and development expenses was primarily due to increased amortization cost of capitalized internal-use software development costs.

Sales and Marketing Expenses

The increase in sales and marketing expenses was primarily due to an increase in employee-related costs, including benefits, as we continued to expand our sales and marketing efforts with additional headcount in order to continue to drive our growth. In addition, we incurred increased agency commissions associated with new billers and favorable margin on existing billers.

General and Administrative Expenses

The decrease in general and administrative expenses was primarily due to lower costs for our directors and officers insurance and corporate premiums, lower acquisition related expenses, lower commercial contract termination costs, and lower legal expenses, which were offset by higher employee-related costs including benefits.

Other Income (Expense)

The changes in other income (expense) was primarily due to the increase in interest income, net as a result of increases in the Federal Reserve rates which increased interest income on our government issued securities, which are included in cash and cash equivalents on the balance sheet.

Income Taxes

The change in provision for income taxes for the three months ended September 30, 2023 as compared to the same period in the prior year, was primarily due to the change in the pre-tax earnings and the impact of the full valuation allowance.

Comparison of the Nine Months Ended September 30, 2023 and 2022

Revenue

The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by the implementation of new billers and increased transactions from our existing billers. Revenue increase was also driven by pricing improvements from customers related to our inflation management.

Cost of Revenue, Gross Profit and Gross Margin

The increase in cost of revenue was driven by the increase in revenue and transactions processed, as it consists primarily of interchange fees and processor costs, as well as other direct costs associated with making our platform available to our billers. These higher costs were partially offset by cost improvements resulting from disinflation in the utility sector and certain cost improvement initiatives.

Gross margin decreased for the nine months ended September 30, 2023 due to increases in cost of revenues for other direct costs associated with making our platform available to our billers.

Research and Development Expenses

The increase in research and development expenses was primarily due to increased amortization cost of capitalized internal-use software development costs and an increase in employee-related costs, including benefits due to an increase in headcount as we continued to invest in developing and adding additional features and functionality to our platform. Additionally, we incurred increased stock-based compensation expense associated with routine and new hire grants.

Sales and Marketing Expenses

The increase in sales and marketing expenses was primarily due to an increase in employee-related costs, including benefits, as we continued to expand our sales and marketing efforts with additional headcount in order to continue to drive our growth. We also incurred increased stock-based compensation associated with routine and new hire grants. In addition, we incurred increased agency commission associated with new billers and favorable margin on existing billers.

23

General and Administrative Expenses

The decrease in general and administrative expenses was primarily due to slower hiring, lower costs for our directors and officers insurance premiums, a reduction in lease costs, lower legal expenses, lower acquisition related expenses and lower commercial contract termination costs, which were offset by higher employee-related costs including benefits.

Other Income (Expense)

The changes in other income (expense) was primarily due to the increase in interest income, net as a result of increases in the Federal Reserve rates which increased interest income on our government issued securities, which are included in cash and cash equivalents on the balance sheet.

Income Taxes

The change in provision for income taxes for the nine months ended September 30, 2023 as compared to the same period in the prior year, was primarily due to the change in the pre-tax earnings and the impact of the full valuation allowance.

Liquidity and Capital Resources

Sources and Uses of Funds

As of September 30, 2023, we had $162.1 million of unrestricted cash and cash equivalents. We believe that existing unrestricted cash and cash equivalents will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. Since inception, we have financed operations primarily through the sale of equity securities and revenue from payment transaction fees and subscriptions. Our principal uses of cash are funding operations and capital expenditures.

From time to time, we may explore additional financing sources and means to lower our cost of capital, which could include equity, equity-linked and debt financing. We cannot assure you that any additional financing will be available to us on acceptable terms, or at all. The inability to raise capital would adversely affect our ability to achieve our business objectives. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of indebtedness, we may be subject to increased fixed payment obligations and could be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business or execute our growth strategy. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors.

Historical Cash Flows

The following table summarizes our condensed consolidated cash flows.

	Nine Months Ended September 30,
	2023			2022
	(in thousands)
Net cash provided by (used in)
Operating activities	$	44,387		$	5,143
Investing activities		(25,850	)		(23,668	)
Financing activities		(1,376	)		42,940
Effects of foreign exchange on cash		46			(329	)
Net increase in cash, cash equivalents and restricted cash	$	17,207		$	24,086

Net Cash Provided by Operating Activities

Our primary source of operating cash is revenue from payment transaction fees. Our primary uses of operating cash are personnel-related costs, payments to third parties to fulfill our payment transactions and payments to sales and marketing partners. Net cash provided by operating activities for the nine months ended September 30, 2023 was $44.4 million. Net income was $12.9 million, adjusted for non-cash charges of $32.9 million consisting primarily of depreciation and amortization, stock-based compensation, amortization of contract assets and non-cash lease expense, which contributed positively to operating activities. This was decreased by net cash outflows of $1.4 million used by changes in our operating assets and liabilities.

Net cash provided by operating activities for the nine months ended September 30, 2022 was $5.1 million. Net loss was $1.5 million, adjusted for non-cash charges of $22.0 million consisting primarily of depreciation and amortization, stock-based compensation, and non-cash lease expense, which contributed positively to operating activities. This was offset by net cash outflows of $15.5 million used by changes in our operating assets and liabilities.

24

Net Cash Used in Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2023 consisted of $25.3 million of capitalized software development costs and $0.5 million of purchases of property and equipment.

Net cash used in investing activities for the nine months ended September 30, 2022 consisted of $22.3 million of capitalized software development costs and $1.2 million for purchases of property and equipment.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2023 consisted of $1.7 million of payments on other financing obligations, $0.1 million of payments on finance leases and $0.4 million of proceeds from exercise of stock-based awards by employees.

Net cash provided by financing activities for the nine months ended September 30, 2022 consisted of an increase in financial institution funds in-transit of $44.2 million and proceeds from stock option exercises of $1.5 million, offset by $2.7 million of payments on finance leases and other financing obligations.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our significant accounting policies are described in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated financial statements included in our 2022 Form 10-K. There have been no material changes in our critical accounting policies and estimates since December 31, 2022.

Recent Accounting Pronouncements

See Note 2 “Basis of Presentation and Summary of Significant Accounting Policies” in the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a full description of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects on our condensed consolidated financial statements contained in Item 1 of this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes in our exposures to market risk since December 31, 2022. For details on the Company’s interest rate, foreign currency exchange, and inflation risks, see Part I, Item 7A. “Quantitative and Qualitative Information About Market Risk” in our 2022 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based on that evaluation, and as a result of the material weaknesses in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the unaudited condensed consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. As of September 30, 2023, our material weaknesses were as follows:

•We lacked a sufficient number of trained professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters, including accounting for capitalized internal-use software development costs, identification of reporting units, translation of foreign currency in consolidation, accounting for deferred compensation, calculation of earnings per share and classification of accounts in the financial statements.

25

Additionally, we did not design and maintain effective controls over verifying the appropriate review and approval of journal entries.

•We did not design and maintain effective controls relevant to the preparation of our financial statements with respect to certain information technology, or IT, general controls for information systems. Specifically, we did not design and maintain (1) program change management controls to ensure that IT program and data changes affecting certain IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; and (2) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs and data to appropriate company personnel.

Remediation Plan

We believe we have made significant progress toward remediation of the material weaknesses described above. We have completed the following remediation measures:

•updated the design of our general ledger accounting system to allow for effective restricted access and segregation of duties to govern the preparation and review of journal entries;

•implemented management review controls over journal entries and the identification and review of complex transactions;

•secured the general ledger accounting system by implementing Single Sign-On (SSO); and

•implemented additional change management and access controls for our relevant IT applications to further restrict privileged access.

Additional remediation measures are ongoing and include the following:

•implementing controls to review activities, which may materially affect our financial statements, for those users who have privileged access; and

•continuing to hire additional personnel with public company experience for our accounting and finance function.

While we believe these efforts will remediate the material weaknesses, these material weaknesses cannot be considered fully remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

26

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in claims, regulatory examinations or investigations and legal proceedings arising in the ordinary course of our business. The outcome of any such claims or proceedings, regardless of the merits, and the Company’s ultimate liability, if any, is inherently uncertain. Furthermore, we may become subject to stockholder inspection demands under Delaware law and derivative or other similar litigation. We are not currently party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors.

There have been no material changes in the risk factors previously disclosed in Item 1A. of our 2022 Form 10-K and our subsequent Form 10-Qs.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

During the quarter ended September 30, 2023, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S‑K.

27

Item 6. Exhibits.

(a) Exhibits

		Incorporated by Reference
Exhibit Number	Description		Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
3.1.1	Amended and Restated Certificate of Incorporation of Paymentus Holdings, Inc.		8-K	001-40429	3.1	May 28, 2021
3.1.2	Amendment to Amended and Restated Certificate of Incorporation of Paymentus Holdings, Inc.		10Q	001-40429	3.1	August 7, 2023
3.2	Amended and Restated Bylaws of Paymentus Holdings, Inc.		8-K	001-40429	3.2	November 14, 2022
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.						X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.						X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.						X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.						X
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* The certifications attached as Exhibit 32.1 and 32.2 that accompany this report are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Paymentus Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this report, irrespective of any general incorporation language contained in such filing.

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PAYMENTUS HOLDINGS, INC.
Date: November 6, 2023	By:	/s/ Dushyant Sharma
		Dushyant Sharma
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 6, 2023	By:	/s/ Sanjay Kalra
		Sanjay Kalra
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

I, Dushyant Sharma, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Paymentus Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2023	By:	/s/ Dushyant Sharma
		Dushyant Sharma
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sanjay Kalra, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Paymentus Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2023	By:	/s/ Sanjay Kalra
		Sanjay Kalra
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Paymentus Holdings, Inc. (the “Company”) for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.

Date: November 6, 2023	By:	/s/ Dushyant Sharma
		Dushyant Sharma
		Chairman, President and,
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Paymentus Holdings, Inc. (the “Company”) for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.

Date: November 6, 2023	By:	/s/ Sanjay Kalra
		Sanjay Kalra
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Nov. 01, 2023
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Document Quarterly Report	true
Document Transition Report	false
Entity Registrant Name	Paymentus Holdings, Inc.
Entity Central Index Key	0001841156
Entity File Number	001-40429
Entity Tax Identification Number	45-3188251
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	11605 North Community House Road
Entity Address Address Line2	Suite 300
Entity Address, City or Town	Charlotte
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	28277
City Area Code	888
Local Phone Number	440-4826
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	PAY
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock Shares Outstanding		20,390,502
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock Shares Outstanding		103,306,842

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 162,062	$ 147,334
Restricted cash and cash equivalents	4,830	2,351
Accounts and other receivables, net of allowance for expected credit losses of $234 and $370, respectively	74,851	67,789
Income tax receivable	1,910	1,493
Prepaid expenses and other current assets	11,415	9,994
Total current assets	255,068	228,961
Property and equipment, net	1,676	1,823
Capitalized internal-use software development costs, net	56,488	46,032
Intangible assets, net	29,179	36,017
Goodwill	131,852	131,851
Operating lease right-of-use assets	9,596	9,561
Deferred tax asset	117	116
Other long-term assets	5,365	7,178
Total assets	489,341	461,539
Current liabilities
Accounts payable	33,450	29,232
Accrued liabilities	18,759	15,809
Current portion of operating lease liabilities	1,669	1,462
Contract liabilities	5,633	4,358
Income tax payable	23	635
Total current liabilities	59,534	51,496
Deferred tax liability	957	680
Operating lease liabilities, less current portion	8,420	8,608
Contract liabilities, less current portion	2,782	2,826
Finance leases and other finance obligations, net of current portion	200	750
Total liabilities	71,893	64,360
Stockholders’ equity
Preferred stock, $0.0001 par value per share, 5,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; none issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	0	0
Additional paid-in capital	375,094	367,767
Accumulated other comprehensive income (loss)	0	(22)
Retained earnings	42,342	29,422
Total stockholders’ equity	417,448	397,179
Total liabilities and stockholders' equity	489,341	461,539
Class A Common Stock [Member]
Stockholders’ equity
Common Stock, Value, Issued	2	2
Class B Common Stock [Member]
Stockholders’ equity
Common Stock, Value, Issued	$ 10	$ 10

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Allowance for accounts and other receivables	$ 234	$ 370
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Class A Common Stock [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	883,950,000	883,950,000
Common stock, shares issued	20,385,106	19,934,331
Common stock, shares outstanding	20,385,106	19,934,331
Class B Common Stock [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	111,050,000	111,050,000
Common stock, shares issued	103,306,842	103,306,842
Common stock, shares outstanding	103,306,842	103,306,842

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenue	$ 152,423	$ 128,152	$ 449,690	$ 364,825
Cost of revenue	105,513	90,295	316,840	256,286
Gross profit	46,910	37,857	132,850	108,539
Operating expenses
Research and development	11,035	10,350	33,595	30,925
Sales and marketing	21,481	19,048	63,344	53,089
General and administrative	9,083	9,376	26,958	29,038
Total operating expenses	41,599	38,774	123,897	113,052
Income (loss) from operations	5,311	(917)	8,953	(4,513)
Other income (expense)
Interest income, net	1,905	504	5,003	594
Foreign exchange (loss) gain	(17)	(28)	(32)	52
Income (loss) before income taxes	7,199	(441)	13,924	(3,867)
(Provision for) benefit from income taxes	(822)	(296)	(1,004)	2,397
Net income (loss)	$ 6,377	$ (737)	$ 12,920	$ (1,470)
Net income (loss) per share
Basic	$ 0.05	$ (0.01)	$ 0.1	$ (0.01)
Diluted	$ 0.05	$ (0.01)	$ 0.1	$ (0.01)
Weighted-average number of shares used to compute net income per share
Basic	123,620,260	122,740,982	123,430,652	121,765,509
Diluted	125,639,879	122,740,982	124,457,360	121,765,509
Net Income (Loss)	$ 6,377	$ (737)	$ 12,920	$ (1,470)
Foreign currency translation adjustments, net of tax	(64)	(86)	22	(235)
Comprehensive income (loss)	$ 6,313	$ (823)	$ 12,942	$ (1,705)

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Shares [Member]	Common Shares [Member] Class A Common Stock [Member]	Additional Paid-In-Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Dec. 31, 2021	$ 386,132	$ 12		$ 356,017	$ 29,935	$ 168
Beginning balance (in shares) at Dec. 31, 2021		120,639,161
Stock-based compensation	1,276			1,276
Issuance of Class A common stock for stock-based awards( value)	13			13
Issuance of Class A common stock for stock-based awards ( shares)			412,222
Other comprehensive income (loss)	(45)					(45)
Net Income (Loss)	1,718				1,718
Ending balance at Mar. 31, 2022	389,094	$ 12		357,306	31,653	123
Ending balance (in shares) at Mar. 31, 2022		121,051,383
Beginning balance at Dec. 31, 2021	386,132	$ 12		356,017	29,935	168
Beginning balance (in shares) at Dec. 31, 2021		120,639,161
Issuance of warrant	3,524
Net Income (Loss)	(1,470)
Ending balance at Sep. 30, 2022	394,042	$ 12		365,632	28,465	(67)
Ending balance (in shares) at Sep. 30, 2022		122,989,902
Beginning balance at Mar. 31, 2022	389,094	$ 12		357,306	31,653	123
Beginning balance (in shares) at Mar. 31, 2022		121,051,383
Stock-based compensation	1,344			1,344
Issuance of Class A common stock for stock-based awards( value)	289			289
Issuance of Class A common stock for stock-based awards ( shares)			1,568,761
Other comprehensive income (loss)	(104)					(104)
Net Income (Loss)	(2,451)				(2,451)
Ending balance at Jun. 30, 2022	388,172	$ 12		358,939	29,202	19
Ending balance (in shares) at Jun. 30, 2022		122,620,144
Stock-based compensation	2,002			2,002
Issuance of warrant	3,478			3,478
Change in estimate of warrants expected to vest	46			46
Issuance of Class A common stock for stock-based awards( value)	1,167			1,167
Issuance of Class A common stock for stock-based awards ( shares)			369,758
Other comprehensive income (loss)	(86)					(86)
Net Income (Loss)	(737)				(737)
Ending balance at Sep. 30, 2022	394,042	$ 12		365,632	28,465	(67)
Ending balance (in shares) at Sep. 30, 2022		122,989,902
Beginning balance at Dec. 31, 2022	397,179	$ 12		367,767	29,422	(22)
Beginning balance (in shares) at Dec. 31, 2022		123,241,173
Stock-based compensation	2,159			2,159
Issuance of Class A common stock for stock-based awards( value)	5			5
Issuance of Class A common stock for stock-based awards ( shares)			104,991
Other comprehensive income (loss)	(7)					(7)
Net Income (Loss)	704				704
Ending balance at Mar. 31, 2023	400,040	$ 12		369,931	30,126	(29)
Ending balance (in shares) at Mar. 31, 2023		123,346,164
Beginning balance at Dec. 31, 2022	397,179	$ 12		367,767	29,422	(22)
Beginning balance (in shares) at Dec. 31, 2022		123,241,173
Issuance of warrant	0
Net Income (Loss)	12,920
Ending balance at Sep. 30, 2023	417,448	$ 12		375,094	42,342	0
Ending balance (in shares) at Sep. 30, 2023		123,691,948
Beginning balance at Mar. 31, 2023	400,040	$ 12		369,931	30,126	(29)
Beginning balance (in shares) at Mar. 31, 2023		123,346,164
Stock-based compensation	2,276			2,276
Issuance of Class A common stock for stock-based awards( value)	196			196
Issuance of Class A common stock for stock-based awards ( shares)			160,625
Other comprehensive income (loss)	93					93
Net Income (Loss)	5,839				5,839
Ending balance at Jun. 30, 2023	408,444	$ 12		372,403	35,965	64
Ending balance (in shares) at Jun. 30, 2023		123,506,789
Stock-based compensation	2,456			2,456
Issuance of Class A common stock for stock-based awards( value)	235			235
Issuance of Class A common stock for stock-based awards ( shares)			185,159
Other comprehensive income (loss)	(64)					(64)
Net Income (Loss)	6,377				6,377
Ending balance at Sep. 30, 2023	$ 417,448	$ 12		$ 375,094	$ 42,342	$ 0
Ending balance (in shares) at Sep. 30, 2023		123,691,948

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities
Net income (loss)	$ 12,920	$ (1,470)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	22,314	17,518
Deferred income taxes	278	(3,331)
Stock-based compensation	6,891	4,622
Non-cash lease expense	1,346	1,703
Amortization of contract asset	2,197	1,347
Provision for expected credit losses	(122)	219
Change in operating assets and liabilities
Accounts and other receivables	(6,941)	(19,143)
Prepaid expenses and other current and long-term assets	(1,797)	(854)
Accounts payable	4,279	2,975
Accrued liabilities	4,188	2,390
Operating lease liabilities	(1,364)	(1,398)
Contract liabilities	1,232	80
Income taxes receivable, net of payable	(1,034)	485
Net cash provided by operating activities	44,387	5,143
Cash flows from investing activities
Other intangible assets acquired	0	(248)
Purchases of property and equipment	(511)	(1,163)
Capitalized internal-use software development costs	(25,339)	(22,257)
Net cash used in investing activities	(25,850)	(23,668)
Cash flows from financing activities
Proceeds from exercise of stock-based awards	435	1,469
Financial institution funds in-transit	0	44,158
Payments on other financing obligations	(1,709)	(2,486)
Payments on finance leases	(102)	(201)
Net cash (used in) provided by financing activities	(1,376)	42,940
Effect of exchange rate changes on Cash and cash equivalents and Restricted cash	46	(329)
Net increase in cash, cash equivalents and Restricted cash	17,207	24,086
Cash, cash equivalents and restricted cash
Cash and cash equivalents and Restricted cash at beginning of period	149,685	201,829
Cash and cash equivalents and Restricted cash at end of period	166,892	225,915
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds	1,718	421
Property and equipment purchases in accounts payable	16	0
Prepaid insurance funded through short-term borrowings	0	4,425
Issuance of warrant and change in estimate of warrants expected to vest	0	3,524
Right-of-use assets obtained in exchange of operating lease obligations	1,356	4,151
Cash and Cash Equivalents [Member]
Cash, cash equivalents and restricted cash
Cash and cash equivalents and Restricted cash at beginning of period	147,334	168,386
Cash and cash equivalents and Restricted cash at end of period	162,062	148,314
Restricted Cash [Member]
Cash, cash equivalents and restricted cash
Cash and cash equivalents and Restricted cash at beginning of period	2,351	0
Cash and cash equivalents and Restricted cash at end of period	4,830	0
Restricted Funds Held for Financial Institutions [Member]
Cash, cash equivalents and restricted cash
Cash and cash equivalents and Restricted cash at beginning of period	0	33,443
Cash and cash equivalents and Restricted cash at end of period	$ 0	$ 77,601

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 6,377	$ 5,839	$ 704	$ (737)	$ (2,451)	$ 1,718	$ 12,920	$ (1,470)

XML

Insider Trading Arrangements

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2023

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

During the quarter ended September 30, 2023, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S‑K.

Title

directors or officers

Rule 10b5-1 Arrangement Adopted

false

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

XML

Organization and Description of Business

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

1. Organization and Description of Business

Description of Business

Paymentus Holdings, Inc. and its wholly owned subsidiaries (“Paymentus” or the “Company”) provides electronic bill presentment and payment services, enterprise customer communication and self-service revenue management to billers through a Software-as-a-Service (“SaaS”), secure, omni-channel technology platform. The platform seamlessly integrates into a biller’s core financial and operating systems to provide flexible and secure access to payment processing of credit cards, debit cards, eChecks and digital wallets across a significant number of channels including online, mobile, IVR, call center, chatbot and voice-based assistants. Paymentus was incorporated in the state of Delaware on September 2, 2011 with office locations in Charlotte, North Carolina, Richmond Hill, Ontario (Canada), and Delhi and Bangalore (India). The Company is currently headquartered in Charlotte, North Carolina.

XML

Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the United States Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and the related notes included in the Company's Form 10-K for the year ended December 31, 2022 filed with the SEC on March 3, 2023 (the “2022 Form 10-K”).

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position, results of operations and comprehensive income, changes in stockholders' equity and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates include revenue recognition, cost of revenue recognition, the allowance for credit losses, the lives of tangible and intangible assets, the valuation of acquired intangible assets and the recoverability or impairment of intangible assets, including goodwill, internal-use software development costs, valuation of stock warrants issued, stock-based compensation, and accounting for income taxes. The Company bases its estimates on historical experience and also on assumptions that management considers reasonable. The Company assesses these estimates on a regular basis; however, actual results could differ from these estimates.

Custodial Accounts

The Company has established a relationship with its merchant processors to act as collection and paying agents, whereby a merchant processor receives funds from customers and forwards such funds to the respective Paymentus client, based on the instructions received from the Company. These merchant processors act as custodians of the cash received, and the Company has no legal ownership rights to the funds held in such custodial accounts and does not control the use of these funds. As the Company does not take ownership of the funds, these custodial accounts are not included in the Company’s consolidated balance sheets. The balance of cash in the custodial accounts held by these merchant processors was $402.7 million and $353.9 million as of September 30, 2023 and December 31, 2022, respectively.

Restricted Funds Held for Financial Institutions and Financial Institution Funds In-Transit

Restricted funds held for financial institutions and the corresponding liability of financial institution funds in-transit represent the timing differences arising between the amounts the Company's sponsor bank receives from the sending financial institutions and the amounts disbursed to the recipient financial institutions. The restricted funds held for financial institutions' account is a transaction account maintained at the Company’s sponsor bank for clearing payments from financial institutions (as defined by the U.S. Treasury’s Financial Crimes Enforcement Network) to other financial institutions. Restricted funds held for financial institutions represent restricted cash that, based upon the Company's intent, are restricted solely for satisfying the corresponding obligations to send funds to the various financial institutions. During the fourth quarter 2022, the Company entered into an agreement with a financial institution whereby the financial institution would take over the legal ownership of these funds and operate as the custodial service provider. Once these funds were moved to custodial accounts, the Company no longer had legal ownership or control over these funds, and as such the Company no longer has Restricted Funds held for Financial Institutions and Financial Institution Funds In-Transit on the consolidated balance sheet as of September 30, 2023 and December 31, 2022.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk primarily consist of cash, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-quality financial institutions with investment-grade ratings. For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded in the consolidated balance sheets. No customer accounted for more than 10% of revenue for either of the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, one customer accounted for more than 10% of accounts receivable.

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to make operating decisions, allocate resources and assess performance. The Company has three operating segments based on geography. The United States segment represents the vast majority of the Company’s consolidated net sales and gross profit. The additional two operating segments, Canada and India, do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate. None of the operating segments qualified for aggregation. The Company’s CODM is its chief executive officer. The CODM evaluates the performance of the Company’s operating segments based on revenue and gross profit. The Company does not analyze discrete segment balance sheet information related to long-term assets. All other financial information is presented on a consolidated basis. For information regarding the Company’s long-lived assets and revenue by geographic area, see Note 5 and Note 3, respectively.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 included in the 2022 Form 10-K. There have been no significant changes to these policies during the three and nine months ended September 30, 2023.

Recently Adopted Accounting Standards

The Company is provided the option to adopt new or revised accounting guidance as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 either (1) within the same periods as those otherwise applicable to public business entities, or (2) within the same time periods as non-public business entities, including early adoption when permissible. With the exception of standards the Company elected to early adopt, when permissible, the Company has elected to adopt new or revised accounting guidance within the same time period as non-public business entities, as indicated below.

Accounting Standards Updates ("ASU") not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). ASU 2021-08 will require companies to apply the definition of a performance obligation under ASU 2014-09, Revenue from contracts with customers (“Topic 606”) to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASU Topic 606. The Company adopted this ASU on January 1, 2023, and its adoption did not have a material impact on its condensed consolidated financial statements.

XML

Revenue, Performance Obligations and Contract Balances

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue, Performance Obligations and Contract Balances

3. Revenue, Performance Obligations and Contract Balances

Disaggregation of Revenue

The following table presents a disaggregation of revenue from contracts with customers (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Payment transaction processing revenue	$	150,500	$	126,373	$	443,565	$	359,846
Other		1,923		1,779		6,125		4,979
Total revenue	$	152,423	$	128,152	$	449,690	$	364,825

Revenue by geographic area, based on the location of the Company’s users, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	149,526	$	125,655	$	441,029	$	357,088
Other		2,897		2,497		8,661		7,737
Total	$	152,423	$	128,152	$	449,690	$	364,825

Remaining Performance Obligations

As of September 30, 2023, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied was $8.4 million, of which the Company expects to recognize over 79% within the next two years, 18% between two to four years and the remainder thereafter. The timing of revenue recognition within the next four years is largely dependent upon the go-live dates of the Company's customers under the Company’s contracts.

As of September 30, 2023, the Company has contractual rights under its commercial agreements to receive $48.1 million of fixed consideration related to the future minimum guarantees through 2026. As permitted, the Company has elected to exclude from this disclosure any variable consideration that meets specified criteria. Accordingly, the total unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amount disclosed.

Contract Balances

Contract balances consist of the following:

	September 30,		December 31,
	2023		2022
Contract Assets
Costs to fulfill (prepaid expenses and other current assets)	$	2,893	$	2,732
Costs to fulfill (other long-term assets)		5,154		6,929
Total contract assets	$	8,047	$	9,661
Contract Liabilities
Contract liabilities	$	5,633	$	4,358
Contract liabilities, less current portion		2,782		2,826
Total contract liabilities	$	8,415	$	7,184

During the three months ended September 30, 2023 and 2022, the Company reduced revenue and the related contract assets by $0.8 million and $0.5 million, respectively. During the nine months ended September 30, 2023 and 2022, the Company reduced revenue and the related contract assets by $2.2 million and $1.3 million, respectively.

Revenue recognized during the three months ended September 30, 2023 and 2022 that was included in the contract liabilities balance at the beginning of each of the periods was $0.5 million and $0.5 million, respectively. Revenue recognized during the nine months ended September 30, 2023 and 2022 that was included in the contract liabilities balance at the beginning of each of the periods was $1.4 million and $0.6 million, respectively.

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Business Combinations

9 Months Ended

Sep. 30, 2023

Business Combinations [Abstract]

Business Combinations

4. Business Combinations

PROFIT Financial, Inc.

On December 19, 2022, the Company completed its acquisition of PROFIT Financial, Inc. (“PROFIT”) by acquiring all outstanding shares of PROFIT for a total purchase price of approximately $4.3 million, net of cash acquired, comprised of $3.3 million cash of which $0.1 million is included as a short term payable at December 31, 2022 and $0.6 million is being held back by the Company for a period of 12 to 24 months following the transaction close date and is recorded in finance leases and other finance obligations, net of current portion in the consolidated balance sheets. PROFIT is a financial and accounting software company with offerings to small business. The acquisition of PROFIT is expected to increase market opportunities for the Company's existing solutions while enhancing the PROFIT platform.

The Company will record adjustments to the fair value of net assets acquired and goodwill within 12 months of the measurement period, if necessary. There were no measurement period adjustments to the purchase price allocation during the three and nine months ended September 30, 2023.

The revenue and expenses of PROFIT have been included in the Company's consolidated financial results since the acquisition date. Pro forma results of operations related to the acquisition have not been presented for the three and nine months ended September 30, 2022 because the effects of this acquisition were not material to the Company's overall operations.

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

5. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	September 30,			December 31,
	2023			2022
Computer equipment	$	5,955		$	5,476
Furniture and fixtures		1,672			1,672
Leasehold improvements		391			419
Total property and equipment		8,018			7,567
Less: Accumulated depreciation		(6,342	)		(5,744	)
Property and equipment, net	$	1,676		$	1,823

Depreciation expense recorded for property and equipment was $0.2 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $0.7 million and $1.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Long-lived assets include property and equipment, net. The geographic locations of the Company’s long-lived assets, net, based on physical location of the assets were as follows (in thousands):

	September 30,		December 31,
	2023		2022
United States	$	627	$	706
Other		1,049		1,117
Total	$	1,676	$	1,823

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Goodwill, Internal-use Software Development Costs and Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Internal-use Software Development Costs and Intangible Assets

6. Goodwill, Internal-use Software Development Costs and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by reporting unit were as follows (in thousands):

	United States		Other		Total
Balance as of December 31, 2022	$	131,028	$	823	$	131,851
Foreign currency translation adjustments		—		1		1
Balance as of September 30, 2023	$	131,028	$	824	$	131,852

Internal-use Software Development Costs

During the three months ended September 30, 2023 and 2022, the Company capitalized $8.7 million and $7.8 million in software development and implementation costs, respectively, and during the nine months ended September 30, 2023 and 2022, the Company capitalized $25.3 million and $22.3 million in software development and implementation costs, respectively.

During the three months ended September 30, 2023 and 2022, the Company recorded $3.5 million and $2.4 million of amortization expense in cost of revenue, respectively, and $2.0 million and $1.4 million of amortization expense in operating expenses, respectively. During the nine months ended September 30, 2023 and 2022, the Company recorded $9.5 million and $6.1 million of amortization expense in cost of revenue, respectively, and $5.8 million and $4.3 million of amortization expense in operating expenses, respectively.

Intangible Assets

Intangible assets, net consisted of the following (in thousands):

	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology	$	21,834	$	(13,997	)	$	7,837
License		2,519		(2,519	)		—
Customer relationship		31,992		(12,649	)		19,343
Software		450		(402	)		48
Trademark		4,038		(2,087	)		1,951
Total	$	60,833	$	(31,654	)	$	29,179

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology	$	22,631	$	(11,965	)	$	10,666
License		2,503		(2,503	)		—
Customer relationship		33,788		(11,695	)		22,093
Software		1,212		(661	)		551
Trademark		4,238		(1,531	)		2,707
Total	$	64,372	$	(28,355	)	$	36,017

Amortization expense of intangible assets was $2.1 million and $2.0 million for the three months ended September 30, 2023 and 2022, respectively, and $6.4 million and $6.2 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, future expected amortization expense is as follows (in thousands):

Years Ending December 31,
2023 (remaining three months)	$	2,021
2024		8,082
2025		6,620
2026		3,738
2027		3,269
Thereafter		5,449
Total future amortization expense	$	29,179

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Accrued Liabilities

9 Months Ended

Sep. 30, 2023

Accrued Liabilities, Current [Abstract]

Accrued Liabilities

7. Accrued Liabilities

The composition of accrued liabilities is as follows (in thousands):

	September 30,		December 31,
	2023		2022
Payroll and employee-related expenses	$	12,523	$	9,214
Finance leases and other financing obligations		—		1,813
Other accrued liabilities		6,236		4,782
Total	$	18,759	$	15,809

As of December 31, 2022, finance leases and other financing obligations included the then current portion of finance leases related to the acquisition of computer equipment and short-term insurance premium financing arrangements. As of September 30, 2023 the Company no longer had any finance leases or insurance premium financing arrangements.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Other Commitments

The Company has entered into certain non-cancellable agreements for software and marketing services that specify all significant terms, including fixed or minimum services to be used, pricing provisions and the approximate timing of the transaction. Obligations under contracts that are cancellable or with remaining terms of 12 months or less are not included. There have been no material changes to the Company's contractual obligations or commitments outside of the ordinary course of business as compared to those described in the 2022 Form 10-K.

Legal Matters

The Company is involved from time to time in various claims and legal proceedings arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that, as of September 30, 2023, none of its current claims and legal proceedings will have a material adverse effect on its financial position, results of operations, or cash flows.

Indemnification

The Company enters into indemnification provisions under agreements with other parties in the ordinary course of business, including business partners, investors, contractors, customers, and the Company’s officers, directors, and certain employees. The Company has agreed to indemnify and defend the indemnified party claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claims due to the Company’s activities or non-compliance with obligations or representations made by the Company. The Company seeks to limit, or cap, its indemnification exposure in its commercial and other contracts. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision.

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Equity

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Equity

9. Equity

Warrant

On May 13, 2021, the Company entered into a warrant agreement with JPMC Strategic Investments I Corporation (“JPMC”), an affiliate of J.P. Morgan Securities LLC, an underwriter in our 2021 initial public offering ("IPO"), pursuant to which the Company agreed to issue a warrant to JPMC for up to 509,370 shares of Class A common stock upon completion of the IPO at an exercise price of $18.38 per share (the “May 2021 warrant”). Upon completion of the IPO, 382,027 of the warrant shares vested and were exercisable. The vesting of the remaining 127,343 shares of Class A common stock underlying the warrant will be subject to the achievement of certain commercial milestones through December 31, 2025 pursuant to a related commercial agreement with JPMorgan Chase Bank, National Association (“JPM Chase”), an affiliate of JPMC. As discussed below, this commercial agreement was amended in August 2022, and the achievement of certain commercial milestones was extended through December 31, 2026 and minimum revenue commitments were set for each of the calendar years through 2026. On December 31, 2021 and 2022, 15,917 warrant shares and 19,101 warrant shares, respectively, vested and were exercisable under the May 2021 warrant. Consistent with classification guidance in ASU Topic 606, the Company accounts for the consideration payable in the form of warrants to a customer as a reduction of the transaction price and, therefore, of revenue as the revenue is earned. The warrant fair value was determined using the Black-Scholes pricing model in accordance with ASC 718, Compensation-Stock Compensation.

During 2021, the Company updated the May 2021 warrant value recognized based on the expectation that the probability of achievement of certain milestones would be achieved. The increase was recorded using the fair value determined at the time of grant

multiplied by the estimated number of remaining warrants expected to vest. This increase was recorded as additional paid-in capital and as a contract asset included in prepaid expenses and other current assets and other long-term assets in the consolidated balance sheets. The increase made to the May 2021 warrant valuation in 2022 was not material.

On August 29, 2022, the Company entered into a second warrant agreement with JPMC, in connection with an amendment to the Company's existing commercial agreement with JPM Chase discussed above, pursuant to which the Company issued a warrant to JPMC for up to 684,510 shares of Class A common stock at an exercise price of $10.10 per share (the “August 2022 warrant agreement”). Upon signing the August 2022 warrant agreement, 171,128 of the warrant shares vested and were exercisable. The vesting of the remaining 513,382 shares of Class A common stock underlying the warrant will be subject to the achievement of certain commercial milestones through December 31, 2026 pursuant to the commercial agreement, as amended.

As of September 30, 2023, an aggregate of 588,173 warrants had vested and were exercisable under the outstanding warrant agreements.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

In May 2021, the Company’s board of directors (the "Board") adopted, and its stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective in connection with the IPO. The 2021 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any of its parent or subsidiary corporations’ employees, and for the grant of non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, and performance awards to the Company’s employees, directors and consultants and any of its parent or subsidiary corporations’ employees and consultants. A total of 10,459,000 shares of the Company’s Class A common stock have been reserved for issuance under the 2021 Plan in addition to (i) an annual increase of 4% of the outstanding shares of the Company's common stock, with Class A and Class B common stock taken together, on the first day of each fiscal year, subject to the Compensation Committee of the Board exercising discretion to increase or decrease such amount (the “Evergreen Addition”), and (ii) upon the expiration, forfeiture, cancellation, or reacquisition of any shares of Class B common stock underlying outstanding stock awards granted under the 2012 Equity Incentive Plan, an equal number of shares of Class A common stock, such number of shares not to exceed 7,563,990. On January 1, 2023, pursuant to the Evergreen Addition, 4,929,646 shares of Class A common stock were added to the 2021 Plan issuance reserve. At September 30, 2023, there were 17,834,251 remaining shares available for the Company to grant under the 2021 Plan.

Stock Options

A summary of the Company’s option activity during the nine months ended September 30, 2023 was as follows (in thousands, except share and per share amounts):

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
	Options			Exercise Price		Contractual		Intrinsic
	Outstanding			per Share		Life (years)		Value
Outstanding at December 31, 2022		4,155,640		$	7.52		5.87	$	4,420
Options granted		—			—
Options exercised		(131,500	)		3.31
Options forfeited		(34,146	)		8.73
Options expired		(84,660	)		0.03
Outstanding at September 30, 2023		3,905,334		$	7.82		5.29	$	34,306
Exercisable at September 30, 2023		3,606,020		$	7.74		5.25	$	31,947

There were no options granted during the three and nine months ended September 30, 2023 and 2022. Aggregate intrinsic value represents the difference between the exercise price of the options and the fair value of the Company’s common stock.

Restricted Stock Units (“RSUs”)

A summary of the Company’s RSU activity during the nine months ended September 30, 2023 was as follows:

				Weighted-
				Average
	Number of			Grant Date
	RSUs Outstanding			Fair Value
Awarded and unvested at December 31, 2022		1,362,420		$	18.03
Awards granted		1,145,613			9.21
Awards vested		(319,275	)		17.91
Awards forfeited		(152,707	)		19.82
Awarded and unvested at September 30, 2023		2,036,051		$	12.95

The fair value of RSU grants is determined based upon the market closing price of the Company’s Class A common stock on the date of grant. RSUs vest over the requisite service period, which generally ranges between four years and five years from the date of grant for employees and one to three years for directors, subject to continued employment for employees and provision of services for nonemployees.

Stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	36	$	—	$	110	$	—
Operating expenses
Research and development		484		507		1,492		1,080
Sales and marketing		690		612		2,096		1,062
General and administrative		1,246		883		3,193		2,480
Total stock-based compensation	$	2,456	$	2,002	$	6,891	$	4,622

At September 30, 2023, there was $0.8 million of total unrecognized compensation cost related to unvested stock options granted under the 2012 Equity Incentive Plan, which is expected to be recognized over a remaining weighted-average period of 0.8 years.

At September 30, 2023, there was $24.2 million of total unrecognized compensation cost related to unvested RSUs granted under the 2021 Plan, which is expected to be recognized over a remaining weighted-average period of 3.1 years.

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Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The Company computes its tax provision for the three months ended September 30, 2023 by applying the year-to-date actual effective tax rate from recurring operations as the best estimate of its annual effective tax rate. The Company continues to record a valuation allowance against its net deferred tax assets (“DTA”) in the U.S. as it is not more likely than not to be realized given a history of near break-even operations and prior year significant tax deductions for stock-based compensation.

The Company’s effective tax rate for the three and nine months ended September 30, 2023 was 11.4% and 7.2%, respectively. The difference between the Company’s effective tax rate and the U.S. federal statutory rate of 21% was primarily the result of the full valuation allowance recorded against the Company's net U.S., deferred tax assets.

The Company’s effective tax rate for the three and nine months ended September 30, 2022 was (65.2)% and 62.3%, respectively. The difference between the Company's effective tax rate and the U.S. federal statutory rate of 21% was primarily the result of near break-even pre-tax operating results, excess tax benefits on stock-based compensation, the valuation allowance recorded against the Company’s net US deferred tax assets, state taxes, foreign income taxed at different rates and permanent tax adjustments related to nondeductible executive compensation.

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Net (Loss) Income per Share Attributable to Common Stock

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Net Income per Share Attributable to Common Stock

12. Net Income per Share Attributable to Common Stock

Basic net income per share attributable to common stock is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period.

Diluted net income per share attributable to common stock is computed by giving effect to all potentially dilutive common stock equivalents to the extent they are dilutive. The dilutive effect of outstanding options, RSUs and warrants is reflected in diluted net

income per share attributable to common stock by application of the treasury stock method. The calculation of diluted net income per share attributable to common stock excludes all anti-dilutive common shares.

The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net income per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis.

The following table sets forth the computation of basic and diluted net income per share attributable to common stock (in thousands except share and per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
Numerator:
Net income (loss)	$	6,377	$	(737	)	$	12,920	$	(1,470	)
Denominator:
Weighted-average shares of common stock — basic		123,620,260		122,740,982			123,430,652		121,765,509
Dilutive effect of stock options to purchase common stock		1,548,680		—			868,922		—
Dilutive effect of RSUs		429,863		—			153,330		—
Dilutive effect of warrants		41,076		—			4,456		—
Weighted-average shares of common stock — diluted		125,639,879		122,740,982			124,457,360		121,765,509
Net income (loss) per share
Basic	$	0.05	$	(0.01	)	$	0.10	$	(0.01	)
Diluted	$	0.05	$	(0.01	)	$	0.10	$	(0.01	)

The following table summarizes the weighted average securities that were excluded from the computation of diluted net income per share attributable to common stock as their inclusion would have been antidilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options to purchase common stock		—		4,705,323		103,804		5,693,398
RSUs		580,102		1,396,810		1,149,853		860,848
Warrants		417,045		428,803		417,045		418,630

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the United States Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and the related notes included in the Company's Form 10-K for the year ended December 31, 2022 filed with the SEC on March 3, 2023 (the “2022 Form 10-K”).

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position, results of operations and comprehensive income, changes in stockholders' equity and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

Principles of Consolidation

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and balances have been eliminated upon consolidation.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates include revenue recognition, cost of revenue recognition, the allowance for credit losses, the lives of tangible and intangible assets, the valuation of acquired intangible assets and the recoverability or impairment of intangible assets, including goodwill, internal-use software development costs, valuation of stock warrants issued, stock-based compensation, and accounting for income taxes. The Company bases its estimates on historical experience and also on assumptions that management considers reasonable. The Company assesses these estimates on a regular basis; however, actual results could differ from these estimates.

Custodial Accounts

Custodial Accounts

The Company has established a relationship with its merchant processors to act as collection and paying agents, whereby a merchant processor receives funds from customers and forwards such funds to the respective Paymentus client, based on the instructions received from the Company. These merchant processors act as custodians of the cash received, and the Company has no legal ownership rights to the funds held in such custodial accounts and does not control the use of these funds. As the Company does not take ownership of the funds, these custodial accounts are not included in the Company’s consolidated balance sheets. The balance of cash in the custodial accounts held by these merchant processors was $402.7 million and $353.9 million as of September 30, 2023 and December 31, 2022, respectively.

Restricted funds held for financial institutions and financial institution funds-in transit

Restricted Funds Held for Financial Institutions and Financial Institution Funds In-Transit

Restricted funds held for financial institutions and the corresponding liability of financial institution funds in-transit represent the timing differences arising between the amounts the Company's sponsor bank receives from the sending financial institutions and the amounts disbursed to the recipient financial institutions. The restricted funds held for financial institutions' account is a transaction account maintained at the Company’s sponsor bank for clearing payments from financial institutions (as defined by the U.S. Treasury’s Financial Crimes Enforcement Network) to other financial institutions. Restricted funds held for financial institutions represent restricted cash that, based upon the Company's intent, are restricted solely for satisfying the corresponding obligations to send funds to the various financial institutions. During the fourth quarter 2022, the Company entered into an agreement with a financial institution whereby the financial institution would take over the legal ownership of these funds and operate as the custodial service provider. Once these funds were moved to custodial accounts, the Company no longer had legal ownership or control over these funds, and as such the Company no longer has Restricted Funds held for Financial Institutions and Financial Institution Funds In-Transit on the consolidated balance sheet as of September 30, 2023 and December 31, 2022.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk primarily consist of cash, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-quality financial institutions with investment-grade ratings. For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded in the consolidated balance sheets. No customer accounted for more than 10% of revenue for either of the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, one customer accounted for more than 10% of accounts receivable.

Segment Information

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to make operating decisions, allocate resources and assess performance. The Company has three operating segments based on geography. The United States segment represents the vast majority of the Company’s consolidated net sales and gross profit. The additional two operating segments, Canada and India, do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate. None of the operating segments qualified for aggregation. The Company’s CODM is its chief executive officer. The CODM evaluates the performance of the Company’s operating segments based on revenue and gross profit. The Company does not analyze discrete segment balance sheet information related to long-term assets. All other financial information is presented on a consolidated basis. For information regarding the Company’s long-lived assets and revenue by geographic area, see Note 5 and Note 3, respectively.

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 included in the 2022 Form 10-K. There have been no significant changes to these policies during the three and nine months ended September 30, 2023.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

The Company is provided the option to adopt new or revised accounting guidance as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 either (1) within the same periods as those otherwise applicable to public business entities, or (2) within the same time periods as non-public business entities, including early adoption when permissible. With the exception of standards the Company elected to early adopt, when permissible, the Company has elected to adopt new or revised accounting guidance within the same time period as non-public business entities, as indicated below.

Accounting Standards Updates ("ASU") not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). ASU 2021-08 will require companies to apply the definition of a performance obligation under ASU 2014-09, Revenue from contracts with customers (“Topic 606”) to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASU Topic 606. The Company adopted this ASU on January 1, 2023, and its adoption did not have a material impact on its condensed consolidated financial statements.

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Revenue, Performance Obligations and Contract Balances (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Summary of Disaggregation of Revenue

The following table presents a disaggregation of revenue from contracts with customers (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Payment transaction processing revenue	$	150,500	$	126,373	$	443,565	$	359,846
Other		1,923		1,779		6,125		4,979
Total revenue	$	152,423	$	128,152	$	449,690	$	364,825

Summary of Revenue by Geographic Area

Revenue by geographic area, based on the location of the Company’s users, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	149,526	$	125,655	$	441,029	$	357,088
Other		2,897		2,497		8,661		7,737
Total	$	152,423	$	128,152	$	449,690	$	364,825

Summary of Contract Asset and Liability

Contract balances consist of the following:

	September 30,		December 31,
	2023		2022
Contract Assets
Costs to fulfill (prepaid expenses and other current assets)	$	2,893	$	2,732
Costs to fulfill (other long-term assets)		5,154		6,929
Total contract assets	$	8,047	$	9,661
Contract Liabilities
Contract liabilities	$	5,633	$	4,358
Contract liabilities, less current portion		2,782		2,826
Total contract liabilities	$	8,415	$	7,184

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	September 30,			December 31,
	2023			2022
Computer equipment	$	5,955		$	5,476
Furniture and fixtures		1,672			1,672
Leasehold improvements		391			419
Total property and equipment		8,018			7,567
Less: Accumulated depreciation		(6,342	)		(5,744	)
Property and equipment, net	$	1,676		$	1,823

Long-lived Assets by Geographic Areas

Long-lived assets include property and equipment, net. The geographic locations of the Company’s long-lived assets, net, based on physical location of the assets were as follows (in thousands):

	September 30,		December 31,
	2023		2022
United States	$	627	$	706
Other		1,049		1,117
Total	$	1,676	$	1,823

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Goodwill, Internal-use Software Development Costs and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Goodwill by Reporting Unit

The changes in the carrying amount of goodwill by reporting unit were as follows (in thousands):

	United States		Other		Total
Balance as of December 31, 2022	$	131,028	$	823	$	131,851
Foreign currency translation adjustments		—		1		1
Balance as of September 30, 2023	$	131,028	$	824	$	131,852

Summary of Intangible Assets

Intangible assets, net consisted of the following (in thousands):

	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology	$	21,834	$	(13,997	)	$	7,837
License		2,519		(2,519	)		—
Customer relationship		31,992		(12,649	)		19,343
Software		450		(402	)		48
Trademark		4,038		(2,087	)		1,951
Total	$	60,833	$	(31,654	)	$	29,179

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology	$	22,631	$	(11,965	)	$	10,666
License		2,503		(2,503	)		—
Customer relationship		33,788		(11,695	)		22,093
Software		1,212		(661	)		551
Trademark		4,238		(1,531	)		2,707
Total	$	64,372	$	(28,355	)	$	36,017

Schedule of Expected Future Amortization Expense

As of September 30, 2023, future expected amortization expense is as follows (in thousands):

Years Ending December 31,
2023 (remaining three months)	$	2,021
2024		8,082
2025		6,620
2026		3,738
2027		3,269
Thereafter		5,449
Total future amortization expense	$	29,179

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Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Accrued Liabilities, Current [Abstract]

Summary of Accrued Liabilities

The composition of accrued liabilities is as follows (in thousands):

	September 30,		December 31,
	2023		2022
Payroll and employee-related expenses	$	12,523	$	9,214
Finance leases and other financing obligations		—		1,813
Other accrued liabilities		6,236		4,782
Total	$	18,759	$	15,809

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

A summary of the Company’s option activity during the nine months ended September 30, 2023 was as follows (in thousands, except share and per share amounts):

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
	Options			Exercise Price		Contractual		Intrinsic
	Outstanding			per Share		Life (years)		Value
Outstanding at December 31, 2022		4,155,640		$	7.52		5.87	$	4,420
Options granted		—			—
Options exercised		(131,500	)		3.31
Options forfeited		(34,146	)		8.73
Options expired		(84,660	)		0.03
Outstanding at September 30, 2023		3,905,334		$	7.82		5.29	$	34,306
Exercisable at September 30, 2023		3,606,020		$	7.74		5.25	$	31,947

Summary of RSU Activity

A summary of the Company’s RSU activity during the nine months ended September 30, 2023 was as follows:

				Weighted-
				Average
	Number of			Grant Date
	RSUs Outstanding			Fair Value
Awarded and unvested at December 31, 2022		1,362,420		$	18.03
Awards granted		1,145,613			9.21
Awards vested		(319,275	)		17.91
Awards forfeited		(152,707	)		19.82
Awarded and unvested at September 30, 2023		2,036,051		$	12.95

Summary of Stock Based Compensation Expense

Stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	36	$	—	$	110	$	—
Operating expenses
Research and development		484		507		1,492		1,080
Sales and marketing		690		612		2,096		1,062
General and administrative		1,246		883		3,193		2,480
Total stock-based compensation	$	2,456	$	2,002	$	6,891	$	4,622

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Net (Loss) Income per Share Attributable to Common Stock (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Net Income Per Share Attributable to Common Stock

The following table sets forth the computation of basic and diluted net income per share attributable to common stock (in thousands except share and per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
Numerator:
Net income (loss)	$	6,377	$	(737	)	$	12,920	$	(1,470	)
Denominator:
Weighted-average shares of common stock — basic		123,620,260		122,740,982			123,430,652		121,765,509
Dilutive effect of stock options to purchase common stock		1,548,680		—			868,922		—
Dilutive effect of RSUs		429,863		—			153,330		—
Dilutive effect of warrants		41,076		—			4,456		—
Weighted-average shares of common stock — diluted		125,639,879		122,740,982			124,457,360		121,765,509
Net income (loss) per share
Basic	$	0.05	$	(0.01	)	$	0.10	$	(0.01	)
Diluted	$	0.05	$	(0.01	)	$	0.10	$	(0.01	)

Schedule of Common Stock Equivalents Excluded from Income (Loss) Per Diluted Share

The following table summarizes the weighted average securities that were excluded from the computation of diluted net income per share attributable to common stock as their inclusion would have been antidilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options to purchase common stock		—		4,705,323		103,804		5,693,398
RSUs		580,102		1,396,810		1,149,853		860,848
Warrants		417,045		428,803		417,045		418,630

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Geographic Information (Tables)

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Summary of Revenue by Geographic Area

Revenue by geographic area, based on the location of the Company’s users, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	149,526	$	125,655	$	441,029	$	357,088
Other		2,897		2,497		8,661		7,737
Total	$	152,423	$	128,152	$	449,690	$	364,825

Long-lived Assets by Geographic Areas

Long-lived assets include property and equipment, net. The geographic locations of the Company’s long-lived assets, net, based on physical location of the assets were as follows (in thousands):

	September 30,		December 31,
	2023		2022
United States	$	627	$	706
Other		1,049		1,117
Total	$	1,676	$	1,823

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Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022	Sep. 30, 2023 USD ($) Segment	Sep. 30, 2022	Dec. 31, 2022 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Number of operating segment | Segment			3
Cash in custodial account | $	$ 402.7		$ 402.7		$ 353.9
Revenue [Member] | Customer Concentration Risk [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration risk, percentage	10.00%	10.00%	10.00%	10.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Minimum [Member] | One Customer [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration risk, percentage			10.00%		10.00%

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Revenue, Performance Obligations and Contract Balances - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Remaining performance obligation, aggregate amount of transaction price	$ 8,400		$ 8,400
Remaining performance obligation, percentage	18.00%		18.00%
Expected revenue period			2 years
Fixed consideration related to the future minimum guarantees, contract amount	$ 48,100		$ 48,100
Reduction in revenue and related contract asset	800	$ 500	2,200	$ 1,300
Contract asset balance	8,047		8,047		$ 9,661
Contract liabilities	$ 5,633		$ 5,633		4,358
Maximum [Member]
Disaggregation of Revenue [Line Items]
Expected revenue period			4 years
Minimum [Member]
Disaggregation of Revenue [Line Items]
Remaining performance obligation, percentage	79.00%		79.00%
Expected revenue period			2 years
Prepaid Expenses and Other Current Assets [Member]
Disaggregation of Revenue [Line Items]
Contract asset balance	$ 2,893		$ 2,893		2,732
Payment Transaction Processing Revenue [Member]
Disaggregation of Revenue [Line Items]
Contract With Customer Liability	500	$ 500	1,400	$ 600
Other Long-term Assets [Member]
Disaggregation of Revenue [Line Items]
Contract asset balance	$ 5,154		$ 5,154		$ 6,929

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Revenue, Performance Obligations and Contract Balances - Summary of Disaggregation of Revenue from Contracts with Customer (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation Of Revenue [Line Items]
Revenue	$ 152,423	$ 128,152	$ 449,690	$ 364,825
Payment Transaction Processing Revenue [Member]
Disaggregation Of Revenue [Line Items]
Revenue	150,500	126,373	443,565	359,846
Other [Member]
Disaggregation Of Revenue [Line Items]
Revenue	$ 1,923	$ 1,779	$ 6,125	$ 4,979

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Revenue, Performance Obligations and Contract Balances - Summary of Revenue by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 152,423	$ 128,152	$ 449,690	$ 364,825
United States
Disaggregation of Revenue [Line Items]
Revenue	149,526	125,655	441,029	357,088
Other
Disaggregation of Revenue [Line Items]
Revenue	$ 2,897	$ 2,497	$ 8,661	$ 7,737

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Revenue, Performance Obligations and Contract Balances - Summary of Contract Asset and Liability (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Contract Assets
Total contract assets	$ 8,047	$ 9,661
Contract Liabilities
Contract liabilities	5,633	4,358
Contract liabilities, less current portion	2,782	2,826
Total contract liabilities	8,415	7,184
Prepaid Expenses and Other Current Assets [Member]
Contract Assets
Total contract assets	2,893	2,732
Other Long-term Assets [Member]
Contract Assets
Total contract assets	$ 5,154	$ 6,929

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Business Combinations - Additional Information (Details) - PROFIT Financial, Inc. [Member] $ in Millions	Dec. 19, 2022 USD ($)
Restructuring Cost and Reserve [Line Items]
Cash	$ 3.3
Cash purchase price	4.3
Short-Term Bank Loans and Notes Payable	0.6
Cash held back for acquisition closing	$ 0.1

XML

Business Combinations - Schedule Of Assets Acquired And Liabilities Assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Dec. 19, 2022
Business Acquisition [Line Items]
Goodwill	$ 131,852	$ 131,851
PROFIT Financial, Inc. [Member]
Business Acquisition [Line Items]
Cash			$ 3,300

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Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property Plant And Equipment [Line Items]
Total property and equipment	$ 8,018	$ 7,567
Less: Accumulated depreciation	(6,342)	(5,744)
Property and equipment, net	1,676	1,823
Computer Equipment
Property Plant And Equipment [Line Items]
Total property and equipment	5,955	5,476
Furniture And Fixtures
Property Plant And Equipment [Line Items]
Total property and equipment	1,672	1,672
Leasehold Improvements
Property Plant And Equipment [Line Items]
Total property and equipment	$ 391	$ 419

XML

Property and Equipment, Net - Schedule Of Property and Equipment, Net Based On Physical Location (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 1,676	$ 1,823
United States
Property, Plant and Equipment [Line Items]
Property and equipment, net	627	706
Other
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 1,049	$ 1,117

XML

Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 0.2	$ 0.3	$ 0.7	$ 1.0

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Goodwill, Internal-use Software Development Costs and Intangible Assets - Summary of Goodwill by Reporting Units (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Goodwill [Line Items]
Beginning Balance	$ 131,851
Foreign currency translation adjustments	1
Ending Balance	131,852
United States
Goodwill [Line Items]
Beginning Balance	131,028
Foreign currency translation adjustments	0
Ending Balance	131,028
Other
Goodwill [Line Items]
Beginning Balance	823
Foreign currency translation adjustments	1
Ending Balance	$ 824

XML

Goodwill, Internal-use Software Development Costs and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill [Line Items]
Capitalized internal-use software development costs			$ 25,339	$ 22,257
Amortization of Intangible Assets, Total	$ 2,100	$ 2,000	6,400	6,200
Computer Software, Intangible Asset [Member]
Goodwill [Line Items]
Impairment of Intangible Assets (Excluding Goodwill)	0	0	0	0
Software and Software Development Costs [Member]
Goodwill [Line Items]
Capitalized internal-use software development costs	8,700	7,800
Software implementation costs			25,300	22,300
Cost Of Revenue [Member]
Goodwill [Line Items]
Amortizaion expense of capitalized software costs	3,500	2,400	9,500	6,100
Operating Expense [Member]
Goodwill [Line Items]
Amortizaion expense of capitalized software costs	$ 2,000	$ 1,400	$ 5,800	$ 4,300

XML

Goodwill, Internal-use Software Development Costs and Intangible Assets - Summary of Intagible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 60,833	$ 64,372
Accumulated Amortization	(31,654)	(28,355)
Total future amortization expense	29,179	36,017
Technology
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	21,834	22,631
Accumulated Amortization	(13,997)	(11,965)
Total future amortization expense	7,837	10,666
License
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,519	2,503
Accumulated Amortization	(2,519)	(2,503)
Total future amortization expense	0	0
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	31,992	33,788
Accumulated Amortization	(12,649)	(11,695)
Total future amortization expense	19,343	22,093
Software
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	450	1,212
Accumulated Amortization	(402)	(661)
Total future amortization expense	48	551
Trademark
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,038	4,238
Accumulated Amortization	(2,087)	(1,531)
Total future amortization expense	$ 1,951	$ 2,707

XML

Goodwill, Internal-use Software Development Costs and Intangible Assets - Schedule of Expected Future Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
2023 (remaining three months)	$ 2,021
2024	8,082
2025	6,620
2026	3,738
2027	3,269
Thereafter	5,449
Total future amortization expense	$ 29,179	$ 36,017

XML

Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accrued Liabilities, Current [Abstract]
Payroll and employee-related expenses	$ 12,523	$ 9,214
Finance leases and other financing obligations	0	1,813
Other accrued liabilities	6,236	4,782
Accrued liabilities	$ 18,759	$ 15,809

XML

Accrued Liabilities (Additional Information) (Details)	Sep. 30, 2023 USD ($)
Accrued Liabilities, Current [Abstract]
Accrued finance leases, current	$ 0

XML

Commitments and Contingencies - Additional Information (Details)	9 Months Ended
	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Other commitments, description	The Company has entered into certain non-cancellable agreements for software and marketing services that specify all significant terms, including fixed or minimum services to be used, pricing provisions and the approximate timing of the transaction. Obligations under contracts that are cancellable or with remaining terms of 12 months or less are not included. There have been no material changes to the Company's contractual obligations or commitments outside of the ordinary course of business as compared to those described in the 2022 Form 10-K.

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Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Aug. 29, 2022	Dec. 31, 2021	May 13, 2021
Class Of Stock [Line Items]
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001
Common stock, par value			$ 10.1		$ 18.38
Preferred stock, $0.0001 par value per share, 5,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; none issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	$ 0	$ 0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Warrant Issue		19,101	684,510	15,917	509,370
Fully Vested	588,173		171,128		382,027
Vesting of the Remaining Shares of the Warrant			513,382		127,343
Class A Common Stock [Member]
Class Of Stock [Line Items]
Common stock, shares authorized	883,950,000	883,950,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares issued	20,385,106	19,934,331
Class B Common Stock [Member]
Class Of Stock [Line Items]
Common stock, shares authorized	111,050,000	111,050,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares issued	103,306,842	103,306,842

XML

Stock-Based compensation - Additional Information (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	May 31, 2021	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jan. 01, 2023	Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted in period		0	0	0	0
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total unrecognized compensation cost		$ 24.2		$ 24.2
Total unrecognized compensation cost, recognition period				3 years 1 month 6 days
RSUs vested				319,275
Class A Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares reserved for issuance						4,929,646
Class A & Class B Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Percentage of annual increase of outstanding shares							4.00%
Maximum [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
RSUs vest over the requisite service period				5 years
Minimum [Member] | Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
RSUs vest over the requisite service period				4 years
Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total unrecognized compensation cost		$ 0.8		$ 0.8
Total unrecognized compensation cost, recognition period				9 months 18 days
Equity Incentive Plan [Member] | Class A Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares reserved for issuance	10,459,000
Options granted in period	7,563,990
2021 Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares reserved for issuance		17,834,251		17,834,251

XML

Stock-Based compensation - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Options Outstanding, Beginning			4,155,640
Options granted	0	0	0	0
Options exercised			(131,500)
Options forfeited			(34,146)
Options expired			(84,660)
Options Outstanding, Ending	3,905,334		3,905,334		4,155,640
Options Outstanding, Exercisable	3,606,020		3,606,020
Weighted Average Exercise Price, Beginning			$ 7.52
Weighted Average Exercise Price, Granted			0
Weighted Average Exercise Price, Exercised			3.31
Weighted Average Exercise Price, Forfeited			8.73
Weighted Average Exercise Price, Expired			0.03
Weighted Average Exercise Price, Ending	$ 7.82		7.82		$ 7.52
Weighted Average Exercise Price, Exercisable	$ 7.74		$ 7.74
Weighted Average Remaining Contractual Term (years)			5 years 3 months 14 days		5 years 10 months 13 days
Weighted Average Remaining Contractual Term (years), Exercisable			5 years 3 months
Aggregate Intrinsic Value, Beginning			$ 4,420
Aggregate Intrinsic Value, Ending	$ 34,306		34,306		$ 4,420
Aggregate Intrinsic Value, Exercisable	$ 31,947		$ 31,947

XML

Stock Based Compensation - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) [Member]	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Awarded and unvested, Beginning Balance | shares | shares	1,362,420
Awards, Granted | shares | shares	1,145,613
Awards, Vested | shares | shares	(319,275)
Awards,Forfeited | shares | shares	(152,707)
Awarded and unvested, Ending Balance | shares | shares	2,036,051
Weighted Average Grant-Date Fair Value, Unvested, Beginning Balance | $ / shares | $ / shares	$ 18.03
Weighted Average Grant-Date Fair Value, Granted | $ / shares | $ / shares	9.21
Weighted Average Grant-Date Fair Value, Vested | $ / shares | $ / shares	17.91
Weighted Average Grant-Date Fair Value, Forfeited | $ / shares | $ / shares	19.82
Weighted Average Grant-Date Fair Value, Unvested, Ending Balance | $ / shares | $ / shares	$ 12.95

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Stock-Based compensation - Summary of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	$ 2,456	$ 2,002	$ 6,891	$ 4,622
Cost Of Revenue
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	36	0	110	0
Research and Development [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	484	507	1,492	1,080
Sales and Marketing [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	690	612	2,096	1,062
General and Administrative [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	$ 1,246	$ 883	$ 3,193	$ 2,480

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Income Taxes - Additional Information (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Effective tax rate	11.40%	(65.20%)	7.20%	62.30%
Difference between effective tax rate and federal statutory rate			21.00%	21.00%

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Net (Loss) Income per Share Attributable to Common Stock - Schedule of Computation of Basic and Diluted Net Income Per Share Attributable to Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net income (loss)	$ 6,377	$ 5,839	$ 704	$ (737)	$ (2,451)	$ 1,718	$ 12,920	$ (1,470)
Denominator:
Weighter-average shares of common stock - basic	123,620,260			122,740,982			123,430,652	121,765,509
Dilutive effect of stock options to purchase common stock	1,548,680			0			868,922	0
Dilutive effect of RSUs	429,863			0			153,330	0
Dilutive effect of warrants	41,076			0			4,456	0
Weighter-average shares of common stock - diluted	125,639,879			122,740,982			124,457,360	121,765,509
Net (loss) income per share attributable to common stock
Basic	$ 0.05			$ (0.01)			$ 0.1	$ (0.01)
Diluted	$ 0.05			$ (0.01)			$ 0.1	$ (0.01)

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Net (Loss) Income per Share Attributable to Common Stock - Schedule of Common Stock Equivalents Excluded from Income (Loss) Per Diluted Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	0	4,705,323	103,804	5,693,398
RSU [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	580,102	1,396,810	1,149,853	860,848
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	417,045	428,803	417,045	418,630

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Geographic Information - Summary of Revenue by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	$ 152,423	$ 128,152	$ 449,690	$ 364,825
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	$ 149,526	$ 125,655	$ 441,029	$ 357,088

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Geographic Information - Summary of Long-lived Assets by Geographic Areas (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Revenues From External Customers And Long Lived Assets [Line Items]
Long-lived assets, comprising property and equipment assets	$ 1,676	$ 1,823
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Long-lived assets, comprising property and equipment assets	627	706
Other
Revenues From External Customers And Long Lived Assets [Line Items]
Long-lived assets, comprising property and equipment assets	$ 1,049	$ 1,117