Executive Summary

Q3 delivered a material top-line and profitability beat: revenue $231.6M (+51.9% YoY), adjusted EBITDA $24.6M (+58.2% YoY; 30.7% of CP), and non-GAAP EPS $0.15; beats were driven by stronger same‑store sales, faster onboarding, and early go‑lives of large enterprise customers originally slated for 2025 .
Management raised FY24 guidance across all primary metrics (revenue to $829–$834M; CP to $305–$307M; adj. EBITDA to $89–$91M) and introduced Q4 guidance (revenue $215–$220M; CP $79–$81M; adj. EBITDA $22–$24M), reflecting improved visibility and backlog strength .
Mix shift toward large enterprises lifted average price per transaction to $1.49 but compressed contribution margin to 34.5% (from 40.3% LY) due to higher network/interchange fees; lower OpEx intensity and scale effects offset this at EBITDA, lifting margin on CP to 30.7% .
Stock reaction catalyst: Actuals handily surpassed external consensus (Zacks) of $191.8M revenue and $0.09 EPS; day-after move was +27% around the print, highlighting sensitivity to onboarding velocity and guide raises .

What Went Well and What Went Wrong

What Went Well
- Early go-lives of a cohort of large enterprise customers (pulled forward from 2025) boosted revenue, strengthened the IPN moat, and de‑risked 2025 execution .
- Pricing/mix tailwinds: average price per transaction rose to $1.49 (from $1.32 LY) and transactions grew 34.6% YoY to 155.3M, supporting the revenue outperformance .
- Operating leverage: non-GAAP OpEx ratio fell YoY; incremental adjusted EBITDA margin was 49.2% in Q3, with Rule of 40 improving to 61, underscoring scalable economics .
What Went Wrong
- Contribution margin compressed to 34.5% (from 40.3% LY) as large enterprise mix carries higher network/interchange fees; CP/txn held at $0.52 vs $0.53 LY, limiting per‑unit profitability expansion .
- Seasonality/visibility: Q4 CP guide implies stable CP despite historical seasonal uplift; management cited limited seasonality read-through for newly onboarded enterprises .
- Free cash flow was negative in Q3 (–$2.2M) on elevated capitalized software spend, despite positive operating cash flow; total cash dipped modestly QoQ .

Financial Results

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($USD Millions)	$184.9	$197.4	$231.6
Non-GAAP Diluted EPS ($)	$0.10	$0.12	$0.15
Contribution Profit ($USD Millions)	$69.4	$76.5	$80.0
Adjusted EBITDA ($USD Millions)	$19.8	$22.5	$24.6
Adjusted EBITDA Margin (% of CP)	28.6%	29.5%	30.7%
Contribution Margin %	—	38.7%	34.5%

YoY growth (Q3): Revenue +51.9%, CP +30.1%, adj. EBITDA +58.2%, transactions +34.6% .
Balance sheet/KC: Total cash ~$190.8M; working capital ~$245.8M; DSO 44 days .

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
Transactions (Millions)	135.3	140.4	155.3
Avg Price per Transaction ($)	$1.37	$1.41	$1.49
CP per Transaction ($)	$0.51	$0.54	$0.52

Q3 Actual vs. Street (External Consensus; S&P Global unavailable)

Metric	Consensus	Actual
Revenue ($USD Millions)	$191.8	$231.6
Non-GAAP EPS ($)	$0.09	$0.15

Note: S&P Global consensus data could not be retrieved due to access limits; external Zacks/Nasdaq figures used for reference .

Segment breakdown: Not disclosed as reportable segments. Mix commentary emphasizes growing large-enterprise exposure and diversified vertical wins (utilities, insurance, government, education, telecom, FIs, property management) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	FY 2024	$770–$780	$829–$834	Raised
Contribution Profit ($M)	FY 2024	$293–$298	$305–$307	Raised
Adjusted EBITDA ($M)	FY 2024	$81–$85	$89–$91	Raised
Revenue ($M)	Q4 2024	—	$215–$220	New
Contribution Profit ($M)	Q4 2024	—	$79–$81	New
Adjusted EBITDA ($M)	Q4 2024	—	$22–$24	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Onboarding velocity / early go‑lives	Improved implementation pace; record large‑client onboarding in Q2	Cohort of large enterprises pulled forward from 2025 into Q3; de‑risks 2025 and boosts 2024	Improving
Pricing/volume discounts & unit economics	Repricing now embedded in process; volume discounts offset by operating leverage	Avg price/txn up; CP margin down on higher network fees for large enterprise mix; EBITDA margin up	Mixed (pricing tailwind; CP margin headwind)
IPN ecosystem moat	Highlighted as strategic differentiator and reseller catalyst	Reinforced as durable competitive moat and sales tool across banks/CUs and billers	Strengthening
Interchange TAM monetization	Strategic focus area; no near-term model impact	Explicit long-term plan to convert part of interchange cost center into revenue center	Long-term optionality
Rule of 40 / operating leverage	Rule of 40 ~58 in Q1/Q2; emphasis on EBITDA as primary metric	Rule of 40 61; incremental EBITDA margin 49.2%	Strengthening
FY outlook/2025 setup	Raised FY24 in Q1 & Q2; prudent approach to guidance	FY24 raised again; Q4 prudent due to limited seasonality reads for new large enterprises	Positive, with prudence

Management Commentary

“We had a phenomenal third quarter… we are raising our full year 2024 guidance… long-term CAGR targets remain 20% top line and 20%–30% adjusted EBITDA growth” — Dushyant Sharma, CEO .
“Q3 revenue was $231.6M (+51.9% YoY); CP $80.0M (+30.1%); adjusted EBITDA $24.6M (+58.2%). Transactions were 155.3M (+34.6% YoY); avg price/txn increased to $1.49” — Sanjay Kalra, CFO .
“We view today’s interchange expense as possible TAM… over time convert part of interchange from a cost center to a revenue center” — CEO .
“Incremental adjusted EBITDA margin for Q3 was 49.2% relative to 30.7% adjusted EBITDA margin” — CFO .
“Onboarding a cohort of large clients originally slated to go live in 2025” — CEO .
“Rule of 40 increased sequentially to 61” — CFO .

Non‑GAAP definitions (for context): Contribution profit adds “other cost of revenue” back to gross profit (excludes interchange/assessments); adjusted EBITDA excludes SBC, amortization of acquired intangibles and capitalized software, FX, and certain non‑recurring items; EBITDA margin is measured against CP, not revenue .

Q&A Highlights

Network/interchange fees and margin impacts: Large enterprise onboarding carried higher network fees (similar to their prior providers), compressing CP margin; management reiterated long‑term opportunity to monetize interchange; CP/txn held steady .
Q4 caution on CP seasonality: Limited read on seasonality for newly onboarded large enterprises led to prudent Q4 CP outlook despite historical seasonal strength .
Growth acceleration drivers and 2025 framing: 2024 acceleration stems from market share capture, earlier implementations, and strong bookings; for 2025 modeling, management emphasized a prudent approach akin to initial 2024 guide philosophy (no explicit 2025 guide) .
Long‑term margin potential: Operating leverage is durable; medium‑term margins can improve with scale and potential interchange monetization, but management resists extrapolating recent extremes into models .
IPN and go‑to‑market: IPN remains a differentiated multi‑sided network and sales asset, supporting vertical expansion and larger enterprise wins .

Estimates Context

S&P Global consensus could not be retrieved due to access limits at time of analysis. External consensus (Zacks/Nasdaq) ahead of Q3 was revenue ~$191.8M and EPS ~$0.09; actuals were $231.6M and $0.15, respectively — a substantial beat on both lines .
Post‑print commentary similarly highlighted significant surprises on revenue and EPS, reinforcing likely upward estimate revisions for FY24 and beyond given guidance raises .

Key Takeaways for Investors

Execution upside: Early enterprise go‑lives materially de‑risk 2025 and drove Q3 beats; monitor onboarding cadence as a primary stock driver .
Margin mix vs. leverage: Expect near‑term CP margin variability with enterprise mix/higher network fees, but EBITDA leverage should persist as OpEx scales; incremental EBITDA margins were ~49% in Q3 .
Guidance trajectory: FY24 raised again; Q4 prudence reflects limited seasonality read‑through for new large clients — set expectations accordingly for potential intra‑quarter beats vs. conservative guide .
Strategic optionality: Long‑term plan to convert part of interchange from cost to revenue could expand margins structurally; watch for product/partnership signals of this monetization .
Product momentum: Disbursements Accelerator in Guidewire Marketplace expands payout capabilities and deepens insurance vertical positioning .
Trading lens: The magnitude of the beat/raise has historically driven outsized next‑day moves (e.g., ~+27% on Q3’24), underscoring upside skew when onboarding and guide cadence inflect positively .
Medium‑term thesis: Durable share gains in non‑discretionary bill pay, a widening IPN moat, and disciplined OpEx calibration support the 20% revenue / 20–30% EBITDA CAGR framework through cycles .

Additional Press Releases Relevant to Q3

Paymentus Disbursements Accelerator (Guidewire Marketplace): Expands instant digital disbursements for insurance claims; supports customer experience and back‑office integration — a potential catalyst for vertical wins and IPN engagement .

Paymentus Holdings, Inc. (PAY)·Q3 2024 Earnings Summary