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    PAY
    Earnings call· Jun 2026(Q2 FY26)

    Paymentus Holdings Q2 FY26 earnings call PAY

    Aug 3, 2026 Source

    Executive summary

    Paymentus Holdings, Inc. Q2 FY26 — Record Revenue and Adjusted EBITDA Growth

    Paymentus delivered a strong quarter, exceeding expectations with robust revenue and adjusted EBITDA growth driven by increased transactions and new client additions across diverse verticals. The company is strategically positioned with its AI-native Billeo suite, aiming to expand its market opportunity beyond traditional payments. Management expressed confidence in achieving its 2026 financial goals and long-term CAGR targets ahead of schedule, supported by strong bookings and backlog.

    Highlights

    5

    • Record revenue of $360.7 million, up 28.8% year-over-year.

    • Adjusted EBITDA grew 54% year-over-year to $48.8 million, with a 41.3% margin.

    • Generated $39 million in free cash flow.

    • Rule of 40 scale reached 68%, significantly better than 56% in the prior year period.

    • Full-year 2026 guidance for revenue, contribution profit, and adjusted EBITDA was raised, with adjusted EBITDA guidance increasing by approximately $11.5 million at the midpoint.

    Concerns

    2

    • AI disintermediation risk for billers and businesses

    • Payment delays due to customer dissatisfaction with billing experience

    Guidance & targets

    8
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $353 million to $363 million
    high materiality
    High
    Q3 FY26 Contribution Profit
    $112 million to $115 million
    medium materiality
    High
    Q3 FY26 Adjusted EBITDA
    $40 million to $45 million
    high materiality
    High
    Full Year FY26 Revenue
    $1.443 billion to $1.458 billion
    high materiality
    High
    Full Year FY26 Contribution Profit
    $460 million to $465 million
    medium materiality
    High
    Full Year FY26 Adjusted EBITDA
    $175 million to $185 million
    high materiality
    High
    Full Year FY26 Non-GAAP Tax Rate
    25%
    low materiality
    High
    Full Year FY26 Rule of 40 Scale
    59% to 60%
    medium materiality
    High

    Operational metrics

    23
    Adjusted EBITDA margin
    41.3%vs 33.9% in Q2 FY25
    Q2 FY26

    Record adjusted EBITDA margin for the quarter.

    Incremental adjusted EBITDA margin
    69.6%
    Q2 FY26

    Approximately 70% incremental EBITDA margin for the quarter.

    Rule of 40 scale
    68%vs 56% in Q2 FY25 and 64% in Q1 FY26
    Q2 FY26

    Exceeded the Rule of 40 for the quarter.

    Adjusted gross profit
    $100.2 millionup 28.6% year-over-year
    Q2 FY26

    Better than contribution profit growth due to economies of scale.

    Non-GAAP operating expenses
    $54.2 millionup 10.5% year-over-year
    Q2 FY26

    Increase primarily due to higher sales and marketing expenses.

    Non-GAAP net income
    $32.4 millionup 66.7% year-over-year
    Q2 FY26

    Compared to $19.3 million in the prior year period.

    Non-GAAP diluted EPS
    $0.25vs $0.15 in Q2 FY25
    Q2 FY26

    Compared to $0.15 per share in the prior year period.

    Cash and cash equivalents
    $379.7 millionvs $342.1 million at Q1 FY26 end
    Q2 FY26 end

    Sequential increase of $37.6 million.

    Cash generated from operations
    $48.9 million
    Q2 FY26

    Primary component of sequential cash increase.

    Cash used in investing and financing activities
    $11.2 million
    Q2 FY26

    Offset cash generated from operations.

    Capitalized software
    $9.7 million
    Q2 FY26

    Main component of cash used in investing and financing activities.

    Days sales outstanding
    27 daysvs 29 days at Q1 FY26 end
    Q2 FY26 end

    Better than expected range.

    Working capital
    $393.3 millionup 7.6% sequentially
    Q2 FY26 end

    Increased sequentially.

    Diluted shares outstanding
    129 millionvs 129.3 million in Q1 FY26
    Q2 FY26

    Relatively in line with prior quarter.

    Interest income from bank deposits
    $3 millionvs $2.3 million in Q2 FY25
    Q2 FY26

    Increased year-over-year.

    Contribution margin
    32.7%vs 33.4% in Q2 FY25
    Q2 FY26

    Change due to adding larger, higher-volume enterprise billers, offset by operating expense margin reduction.

    Long-term CAGR model (top line)
    20%
    Long-term

    Company is well ahead of this model.

    Long-term CAGR model (adjusted EBITDA)
    25%
    Long-term

    Company is well ahead of this model.

    2025 Revenue Growth
    37.3%
    FY25

    An excellent year for revenue growth.

    2025 Adjusted EBITDA Growth
    45.9%
    FY25

    An excellent year for adjusted EBITDA growth.

    FY26 Revenue Guidance Midpoint vs 2024 Revenue
    over 65% higher
    FY26 vs FY24

    Midpoint of 2026 revenue guidance compared to 2024 revenue.

    FY26 Adjusted EBITDA Guidance Midpoint vs 2024 Adjusted EBITDA
    over 90% higher
    FY26 vs FY24

    Midpoint of 2026 adjusted EBITDA guidance compared to 2024 adjusted EBITDA.

    Unique users
    53 million
    December last year

    Unique users who transacted in December last year, approaching a sizable portion of US households and businesses.

    Industry KPIs

    2
    MetricValueDetails
    Net revenue yield take rate$1.69USD
    Switched processed transactions213.4 milliontransactions

    Product announcements

    5
    ProductTypeDetails
    Billeo AI 360 intelligence enginelaunch
    Billeo Agentic Service Suitelaunch
    Intelligent data vault using Billeo AI 360 pipelinelaunch
    Transactional billing and reconciliation engine (Billeo Commerce Suite)launch
    BillWalletupdate

    Risks & headwinds

    2
    AI disintermediation risk for billers and businessesLong-term

    Discussed not quantified

    Mitigation: Paymentus' Billeo AI infrastructure and Commerce Suite, patented BillWallet and Billeo, and expertise in data security and sovereignty.

    Payment delays due to customer dissatisfaction with billing experienceOngoing

    Hundreds of billions of dollars in annual recurring revenue exposed

    Mitigation: Paymentus' mission to close the satisfaction gap through improved billing and payment experiences, leveraging its platform and AI capabilities.

    What to watch in Q3 FY26

    4

    Q3 FY26 Revenue Growth

    Q3 FY26
    CurrentQ2 FY26 revenue growth: 28.8%
    Target15.2% to 16.8% YoY growth

    Why it matters

    Verifying if the company meets its Q3 revenue guidance, which implies a deceleration from Q2, will indicate the impact of new customer onboarding and seasonal trends.

    For the third quarter 2026, we expect revenues to be in the range of $353 million to $363 million, representing 15.2% year-over-year growth at the midpoint and 16.8% at the high end.

    Q&A highlights

    4

    What are the key drivers behind the accelerated contribution profit dollar growth, and are there specific verticals contributing most? Also, how is user enrollment for the AI product suite progressing, when will it impact revenue, and will it require significant investment?

    Contribution profit growth is broad-based across all biller sizes and verticals, driven by strong bookings from new, highly profitable customers. User enrollment for BillWallet is going well, with more updates provided annually. The company aims to be a prudent operator, using its network to distribute innovations additively to margins and revenue. Revenue impact from AI products is expected in the next few years, built with existing investments.

    “Our goal remains to be a very prudent operator of the business. We want to make sure that we are able to consistently deliver growth while also delivering incremental margins.”

    asked by Madison Suhr · answered by Sanjay Kalra

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Positioning in the AI Economy

    Paymentus is leveraging its Billeo AI-native service commerce suite to become a premium AI and software company, addressing client concerns about AI disintermediation risk. The company anticipates clients will rely on Paymentus for AI infrastructure and data security needs, building on its patented BillWallet, Billeo, and other AI patents. Examples include Billeo AI 360 intelligence engine replacing internal BI tools, Billeo Agentic Service Suite augmenting human service centers, and an intelligent data vault for client data.

    02

    Customer Experience and Payment Journey Importance

    A recent study with PYMNTS Intelligence highlighted that customers view the billing experience as the new brand experience, significantly impacting loyalty and payment behaviors. Dissatisfaction with billing can lead to payment delays, exposing hundreds of billions of dollars in annual recurring revenue to risk. The study also found that younger customers, a fast-growing and long-tenured segment, are the most dissatisfied, underscoring the critical need for improved billing and payment experiences to secure future loyalty and cash flows.

    03

    Strong Bookings and Backlog Trends

    Paymentus experienced strong bookings in Q2 FY26, particularly in the large enterprise segment across multiple verticals, resulting in a substantial exit backlog. This backlog includes a diverse mix of small, mid-sized, and large enterprise customers, providing increased visibility for the remainder of 2026 and into 2027. The company's implementation timelines are also improving, leading to faster onboarding of new clients.

    04

    Operating Leverage and Profitability Focus

    The company demonstrated significant operating leverage, with adjusted EBITDA growing 54% year-over-year and an incremental adjusted EBITDA margin of approximately 70%. This performance is driven by economies of scale and the ability to attract large enterprise customers, where volume discounts are often offset by strong incremental adjusted EBITDA. Management maintains a focus on profitability and can recalibrate OpEx spending to achieve desired adjusted EBITDA levels.

    05

    Long-Term Growth Outperformance

    Paymentus is significantly ahead of its long-term CAGR model of 20% top-line and 25% adjusted EBITDA growth. The company has achieved a decade's worth of compounded annual growth three years ahead of schedule. The top end of the revised 2026 guidance implies 21.9% revenue growth and 34.6% adjusted EBITDA growth over 2025, far exceeding the CAGR model targets and outpacing many software and SaaS companies.

    AI-generated summary of the company’s earnings call. Not investment advice.