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Paymentus Holdings (PAY)
NYSE:PAY
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Paymentus Holdings
(NYSE:PAY)
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Rating:71Outperform
Price Target:
$27.00
▲(9.44% Upside)
Action:UpgradedDate:02/24/26
The score is driven primarily by strong financial quality (low leverage, improving profitability and cash generation) and a supportive earnings outlook with solid EBITDA margins and backlog momentum. Offsetting these positives are weak technicals (downtrend across key moving averages) and a high P/E valuation, while guidance indicates a meaningful deceleration in growth.
Positive Factors
Balance Sheet Strength
Exceptionally low leverage and a growing equity base give the company durable financial flexibility. This reduces refinancing risk, supports continued investments in product and sales ramps, and provides capacity to absorb cyclical revenue swings or pursue M&A without stressing liquidity.
Cash Generation
Consistent and sizable free cash flow provides a lasting foundation for reinvestment in technology, sales, and integrations that drive enterprise ramps. Strong cash balances and conversion improve resilience through cycles and fund strategic expansion without heavy external financing.
Scale & Diversification
Crossing the billion-dollar revenue mark reflects durable platform scale and diversified biller mix across utilities, telecom, banking, healthcare, and government. Scale supports pricing power, network effects, larger enterprise deals and backlog visibility that help sustain growth and expand wallet share over time.
Negative Factors
Growth Deceleration
A materially slower growth trajectory reduces the pace at which operating leverage and scale benefits can compound. If the deceleration persists, it could compress long-term revenue visibility, require sustained higher investment to reignite growth, and temper margin upside expectations.
Margin Compression & Variability
Sustained gross margin erosion limits how much revenue growth flows to operating profit. Payment-mix sensitivity and average-payment variability make contribution margins volatile, reducing predictability of long-term profitability and constraining the firm's ability to sustainably expand adjusted EBITDA margins.
Rising Opex & Execution Risk
Planned higher spending to enter new verticals and scale enterprise deployments raises execution and timing risk. If ramps or bookings lag, incremental investment can depress margins and cash conversion over several quarters, slowing the realization of anticipated long-term returns.
Paymentus Holdings (PAY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.93B
Dividend YieldN/A
Average Volume (3M)657.55K
Price to Earnings (P/E)46.6
Beta (1Y)1.16
Revenue Growth44.34%
EPS Growth45.96%
CountryUS
Employees1,307
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.20
Shares Outstanding55,578,760
10 Day Avg. Volume869,999
30 Day Avg. Volume657,552
Financial Highlights & Ratios
PEG Ratio1.29
Price to Book (P/B)7.29
Price to Sales (P/S)3.42
P/FCF Ratio25.26
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue2.27
Enterprise Value/Gross Profit9.18
Enterprise Value/Ebitda24.49
Forecast
1Y Price Target
$34.50Price Target Upside39.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)0.76
Revenue Forecast (FY)$1.43B
Paymentus Holdings Business Overview & Revenue Model
Company DescriptionPaymentus Holdings, Inc. provides cloud-based bill payment technology and solutions. The company offers electronic bill presentment and payment services, enterprise customer communication, and self-service revenue management to billers through a software-as-a-service technology platform. The company serves utility, financial service, insurance, government, telecommunication, and healthcare industries. The company was founded in 2004 and is based in Redmond, Washington.
How the Company Makes MoneyPaymentus generates revenue primarily through transaction fees charged to clients for each payment processed on its platform. The company operates on a subscription-based model as well, where clients pay a recurring fee for access to its services and technology. Additionally, Paymentus earns revenue from value-added services, such as analytics and reporting tools that help clients optimize their billing operations. Strategic partnerships with financial institutions and technology providers also bolster its revenue streams, enabling Paymentus to expand its offerings and reach a broader customer base.
Paymentus Holdings Key Performance Indicators (KPIs)
Any
Revenue by Geography
How revenue is distributed across regions (domestic vs. international or by country), indicating where demand, regulatory exposure, or competitive strength lies. Helps assess concentration risk, growth opportunities in new markets, and the impact of local economic conditions on future revenue.
How revenue is distributed across regions (domestic vs. international or by country), indicating where demand, regulatory exposure, or competitive strength lies. Helps assess concentration risk, growth opportunities in new markets, and the impact of local economic conditions on future revenue.
Data provided by:
The Fly
The FlyPaymentus Holdings Earnings Call Summary
Earnings Call Date:Feb 23, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 11, 2026
Earnings Call Sentiment Positive
The call conveys a positive overall picture: record revenue (> $1B) and strong profitability and cash generation in 2025, meaningful enterprise momentum, and a sizable backlog provide clear upside. The company is investing to convert a large pipeline and expand into new verticals, and management is prudently conservative in 2026 guidance because of limited full-quarter experience with recent large enterprise ramps and planned incremental spending. While guidance shows a deceleration in top-line growth and there is some margin/metric variability and higher near-term operating spend, the balance of evidence — strong growth, high adjusted EBITDA expansion, improved cash flow and a healthy balance sheet — suggests confidence in continued long-term progress.Q4-2025 Updates
Positive Updates
Record Revenue and Rapid Growth
Fiscal 2025 revenue reached $1.2 billion (first time > $1B), up 37.3% year-over-year. Fourth quarter revenue was a record $330.5 million, up 28.1% year-over-year. Management highlighted multi-year compounding (100% growth over recent multi-year periods).
Strong Profitability and Adjusted EBITDA Expansion
Fourth quarter adjusted EBITDA was $39.9 million, up 46.3% year-over-year, with a 37.3% adjusted EBITDA margin. Full year adjusted EBITDA was $137.4 million, up 45.9% year-over-year with a 35.6% margin. Non-GAAP net income for FY 2025 was $84.9 million, up 51.2%, and diluted EPS grew 50% to $0.66.
Robust Free Cash Flow and Balance Sheet Strength
Free cash flow for FY 2025 was $125 million (growth >360% year-over-year). Total cash at year-end was $324.5 million (up $115.1 million year-over-year). The company has no debt and generated $35.7 million of free cash flow in Q4.
Improving Operational Metrics
Fourth quarter transactions processed were 192.7 million, up 16.1% year-over-year. Average price per transaction rose to $1.72, an increase of ~11% YoY (from $1.55). Contribution profit per transaction increased to $0.55 (up from $0.52 prior year). Days sales outstanding improved to 28 days from 43 days year-over-year (down ~35%).
Strong Bookings, Backlog and Enterprise Momentum
Management reported strong bookings and a sizable backlog exiting 2025, and noted outsized revenue benefit from recently launched large enterprise billers. Company stated it can deliver the top end of 2026 revenue guidance without signing new clients.
Rule of 40 and Operating Leverage
Fourth quarter Rule of 40 came in at 61% (versus 59% last quarter and 62% prior year quarter). Management highlighted significant operating leverage: FY incremental adjusted EBITDA margin was ~58.2% of contribution profit growth flowed to adjusted EBITDA.
Customer and Vertical Diversification
Continued expansion across utilities, telecommunications, government, education, banking, property management, healthcare and insurance. New channel partners added in consumer finance and utilities verticals, supporting diversified growth vectors.
Proactive Positioning on AI
Management expressed optimism about AI-driven opportunities, positioning the platform to leverage AI for customer experience and operational advantages; views AI as a tailwind and strategic differentiator.
Negative Updates
Guidance Deceleration for 2026
Full year 2026 revenue guidance of $1.39–1.41 billion implies ~17% year-over-year growth at the midpoint, significantly lower than FY 2025 growth of 37.3%. Q1 2026 revenue guide implies ~22% YoY growth at midpoint, reflecting a more conservative growth profile.
Operating Expense Increases and Investment Spend
Fourth quarter non-GAAP operating expenses rose 11.4% YoY to $52.7 million, driven by higher sales & marketing, R&D, hiring and agency fees. Full year non-GAAP operating expenses were $195.4 million, up 11.1% YoY — indicating higher near-term spend to convert pipeline and expand verticals.
Contribution Margin Variability
Fourth quarter contribution margin was 32.3%, down from 33.4% in the prior year period (despite sequential improvement from the prior quarter). Management warned that payment mix, average payment amount and other variables can cause quarter-to-quarter variability in contribution profit.
Conservative Incremental Margin Assumptions
Q4 incremental adjusted EBITDA margin (reported at ~61.1%) is notably higher than the midpoint incremental margin implied by 2026 guidance (management indicated just over ~40% at midpoint). Management cites limited full-year ramp data for new large enterprise clients (1.5 quarters of experience) and deliberate prudence.
Execution and Timing Risks from Expansion
Management plans to invest in new verticals and expand sales/marketing to capture pipeline. These investments introduce short-term execution and timing risk and could temper near-term margin accretion if ramps or bookings slip.
Quarterly Noise and Seasonality Risks
Company reiterated that secondary metrics (pricing, payment mix, average payment amount) and seasonality can create noise in quarter-to-quarter performance, making short-term predictability of contribution profit more variable.
Company Guidance
Paymentus guided 1Q26 revenue of $330–340M (≈22% YoY at the midpoint, ≈24% at the high end), contribution profit of $103–105M (≈19–20% YoY), and adjusted EBITDA of $36–38M (≈23–27% YoY), implying adjusted EBITDA margins of ~35.6% (mid) to 36.2% (high) and a Rule of 40 of 52–56%; the guide assumes a 25% non‑GAAP tax rate. For full‑year 2026 the company expects revenue of $1.39–1.41B (≈17% YoY at the midpoint), contribution profit of $442–452M (≈15.7–17% YoY), and adjusted EBITDA of $157–167M (≈17.9–21.5% YoY) with margins of ~36.2–36.9% and an implied Rule of 40 of 50–54%; management noted the high end of the revenue range can be achieved without signing new clients.Paymentus Holdings Financial Statement Overview
Summary
Strong overall fundamentals: multi-year revenue scaling and improved profitability since 2022, backed by solid and improving free cash flow. Balance sheet is a major strength with very low leverage. Key financial watch items are decelerating growth and gross margin compression, which may limit operating leverage.Income Statement
Revenue has scaled materially over the period (2020: ~$302M to 2025: ~$1.20B), with continued growth in 2025 (6.5%), though the growth rate has clearly decelerated versus earlier years. Profitability has improved meaningfully from a small loss in 2022 to solid profitability in 2023–2025 (2025 net margin ~5.6%), and operating earnings are positive. However, gross margin has compressed over time (roughly ~30% in 2020–2022 down to ~24.8% in 2025), which limits operating leverage and is the key watch item.74
Positive
Balance Sheet
The balance sheet is conservatively positioned with very low leverage (2025 debt-to-equity ~0.01) and a growing equity base (equity up from ~$397M in 2022 to ~$560M in 2025). Assets have also increased steadily alongside scale. The main limitation is that the data provided does not show liquidity details (cash/current assets), but based on available figures the company appears financially resilient with ample balance-sheet flexibility.90
Very Positive
Cash Flow
Cash generation is strong and improving: 2025 operating cash flow is ~$162M and free cash flow is ~$162M, up ~28% year over year. Free cash flow conversion is high (free cash flow is ~1.0x net income in 2024–2025), indicating earnings are supported by cash. Volatility is the key drawback—free cash flow was negative in 2021–2022 before recovering sharply, so durability through cycles remains the main question.80
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.20B | 871.75M | 614.49M | 497.00M | 395.52M |
| Gross Profit | 296.34M | 238.17M | 182.34M | 149.68M | 121.38M |
| EBITDA | 126.33M | 81.34M | 48.69M | 6.39M | 23.67M |
| Net Income | 66.96M | 44.17M | 22.32M | -513.00K | 9.30M |
Balance Sheet | |||||
| Total Assets | 667.88M | 576.25M | 504.86M | 461.54M | 472.94M |
| Cash, Cash Equivalents and Short-Term Investments | 324.54M | 205.90M | 179.36M | 147.33M | 168.39M |
| Total Debt | 11.41M | 8.41M | 10.51M | 12.63M | 11.18M |
| Total Liabilities | 107.50M | 90.65M | 75.25M | 64.36M | 86.81M |
| Stockholders Equity | 560.39M | 485.60M | 429.62M | 397.18M | 386.13M |
Cash Flow | |||||
| Free Cash Flow | 161.77M | 63.18M | 34.53M | -11.43M | -916.00K |
| Operating Cash Flow | 162.13M | 63.63M | 68.83M | 19.87M | 19.49M |
| Investing Cash Flow | -36.52M | -36.76M | -34.30M | -34.56M | -77.81M |
| Financing Cash Flow | -10.58M | -207.00K | -1.20M | -37.28M | 213.49M |
Paymentus Holdings Technical Analysis
Negative
24.67
Price Trends
28.32
Negative
30.67
Negative
32.43
Negative
Market Momentum
-1.23
Negative
41.62
Neutral
67.53
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAY, the sentiment is Negative. The current price of 24.67 is below the 20-day moving average (MA) of 25.32, below the 50-day MA of 28.32, and below the 200-day MA of 32.43, indicating a bearish trend. The MACD of -1.23 indicates Negative momentum. The RSI at 41.62 is Neutral, neither overbought nor oversold. The STOCH value of 67.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PAY.
Paymentus Holdings Risk Analysis
Paymentus Holdings disclosed 57 risk factors in its most recent earnings report. Paymentus Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paymentus Holdings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $2.93B | 46.64 | 12.80% | ― | 44.34% | 45.96% | |
67 Neutral | $759.32M | 14.31 | 24.55% | ― | 12.94% | 356.32% | |
66 Neutral | $1.37B | 125.20 | -0.29% | ― | 22.71% | -111.24% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
47 Neutral | $345.35M | -2.98 | -15.59% | ― | -0.95% | -456.64% | |
46 Neutral | $243.74M | 43.95 | 13.73% | ― | 91.66% | 7.52% | |
44 Neutral | $233.61M | -1.36 | -18.81% | ― | -12.45% | -142.77% |
* Technology Sector Average
PAY
Paymentus Holdings
24.18
-3.07
-11.27%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.