Good day, and welcome to the Second Quarter 2024 Paymentus Earnings Conference Call. This call is being recorded. All participants are currently in a listen-only mode. [Operator Instructions]. At this time, I would now turn the call over to David Hanover, Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Paymentus second quarter 2024 earnings conference call. Joining me on the call today is Dushyant Sharma, our Founder and CEO; and Sanjay Kalra, our CFO. Following our prepared remarks, we'll take questions. Our press release was issued after the close of market today and is posted on our website where this call is being simultaneously webcast. The webcast replay of this call in the supplemental slides accompanying this presentation will be available on our company's website under the Investor Relations link at ir.paymentus.com. Statements made on this webcast includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements use words such as will, believe, expect, anticipate and similar phrases that denote future expectation or intent regarding our financial results and guidance, the impact of and our ability to address continued economic and geopolitical uncertainty, our market opportunities, business strategy, implementation timing, product enhancements, impact from acquisitions and other matters. These forward-looking statements speak as of today, and we undertake no obligation to update them. These statements are subject to risks, uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements, including the risks and uncertainties set forth under the captions Potential note regarding forward-looking statements and risk factors in our annual report on Form 10-K for the year-ended December 31, 2023, and our subsequent quarterly reports on Form 10-Q, including our Form 10-Q for the quarter ended June 30, 2024, which we expect to file with the SEC shortly and elsewhere in our other filings with the SEC. We encourage you to review these detailed forward-looking statements safe harbor and risk factor disclosures. In addition, during today's call, we will discuss certain non-GAAP financial measures, specifically, contribution profit, adjusted gross profit, non-GAAP operating expenses, adjusted EBITDA, adjusted EBITDA margin and non-GAAP net income and earnings per share. These non-GAAP financial measures, which we believe are useful in measuring our performance and liquidity should be considered in addition to and not as a substitute for or in isolation from GAAP results. We encourage you to review additional disclosures regarding these non-GAAP measures, including reconciliations of the most directly comparable GAAP measures in our earnings press release issued today and the supplemental slides for this webcast each available on the Investor Relations page of our website. With that, I'd like to turn the call over to Dushyant Sharma, our Founder and CEO. Dushyant?

Thanks, David. In the second quarter, we saw record revenue, contribution profit and adjusted EBITDA all exceeding our expectations. Our revenue was $197.4 million, up 32.6% year-over-year and our adjusted EBITDA was $22.5 million up 58.6% year-over-year. These results were once again ahead of our long-term targets of 20% revenue growth and 20% to 30% adjusted EBITDA growth. Contribution profit for the quarter was $76.5 million which was up 28.3% year-over-year. Almost half of all incremental contribution profit dollars dropped to the adjusted EBITDA line. We're very pleased with this performance given we also grew top line over 30%. As a result of our growth and operating leverage, based on the rule of 40, we were well ahead at 58. As you may recall, we had similar performance using this high level metric last quarter. We exited the second quarter with strong bookings, backlog and pipeline. And as a result, feel confident about the remainder of the year and our long-term outlook for success. It's quite remarkable that we have built a durable business where we have been able to consistently deliver solid growth, gain market share, expand our total addressable market and enhance our innovation framework, while at the same time expand profitability with our strong operating leverage. Let me now talk about our operational performance for the quarter. Demand remains strong for our differentiated platform and our proprietary IP and ecosystem. Clients are looking for a robust platform that allows them to continue to improve their customer engagement and experience while lowering their cost to serve by replacing unwieldy processes with Paymentus' advanced platform. So with our advanced technology platform, we offer our clients the ability to be more effective with less costs. In addition, as we have discussed in the past, we have a transaction based pricing…

Thanks, Dushyant, and thank you all for joining us today. Before I discuss our quarterly results and outlook, I'd like to remind everyone that the financial results I'd be referring to include non-GAAP financial measures. As David mentioned earlier, our Q2 press release and earnings presentation includes reconciliations of the non-GAAP financial measures discussed on this call to their corresponding GAAP measures. Both of these are available on our website. Turning to Slide 5. For the second quarter of 2024, we delivered another quarter of financial results that exceeded the top end of our guidance range. We think our ability to produce such results demonstrates the overall strength of our business. Our second quarter results included revenue of $197.4 million, up 32.6% year-over-year. Contribution profit of $76.5 million, up 28.3% year-over-year and adjusted EBITDA of $22.5 million up 58.6% year-over-year. We continue to experience strong customer activity and demand in the second quarter. This drove strong bookings, which allowed us to exit the quarter with a significant backlog. Based on our strong quarterly performance, the positive business trends Dushyant just mentioned and our expectations for the remainder of 2024, we are raising our full-year 2024 revenue, contribution profit and adjusted EBITDA guidance, which I will discuss shortly. Now let's review our second quarter financials in more detail. The number of transactions Paymentus processed grew to $140.4 million in the second quarter up 28.2% year-over-year. As mentioned, Q2 revenue was $197.4 million, up 32.6% year-over-year. This growth, which was ahead of our original expectations was driven by increased transactions from all of our revenue drivers, which includes same-store sales from existing billers, the launch of new billers and higher activity in our Instant Payment Network or IPN business. Our average price per transaction increased from $1.36 to $1.41 year-over-year, primarily due…

Thanks, Sanjay. Let me take a moment to briefly talk about our execution strategy. As you can see from these results, our business is doing really well. Our CAGR for revenue and adjusted EBITDA growth, since our IPO exceeds our long-term targets, as they do in our revised guidance for this year. We are also very excited about the future prospects of the business. We are capturing market share and winning large enterprise customers who historically preferred in house solutions. However, they are now getting comfortable partnering with Paymentus, because number one, we have a proven and differentiated technology platform combined with our unique IP and ecosystem that we believe is not replicable. And number two, we have a high growth, profitable public company profile with a strong balance sheet. With these tailwinds and this level of outperformance, it is even more important for us to stay disciplined in executing aggressively, while at the same time remaining grounded when forecasting our future projections. In addition, as you know, we primarily serve non-discretionary part of economy. People will always need to pay their bills and companies must always collect their revenues. And we are good at doing both. As a result, we believe we can do well in all seasons and not just during clear blue skies. I am proud of our team, and want to thank them for all their hard work and dedication. With that, I'll open the lineup for questions.

Thank you. We'll now open the line for questions. [Operator Instructions]. The first question comes from the line of Dave Koning with Baird. Your line is now open.

Yes. Hey, guys. Congrats on another great quarter.

Thank you, David.

Yes. I guess my first question, you've put together now a couple of quarters of about 30% net revenue growth after several that were kind of around 20%. What's the big difference, I guess, the last couple of quarters? Is same-store sales still about the same despite the macro? And is it just selling efforts, like just implementation selling efforts, et cetera? And is some of that sustainable?

Dave, great question. Thank you very much for asking that. So the situation here is, as you've seen from the trends and pretty clear from your question, and we are seeing those trends as well, business is actually firing on all cylinders, I would say. The bookings are strong as we've been reporting, since many quarters, and that cadence is continuing. The backlogs when we exit the quarter has always been on higher levels than what we were in the prior quarter. So we are seeing a spot business firing on all cylinders. At the same time, our revenues are continuing well. Our balance sheet is growing. So we believe we are in a very good position for execution in 2024. And when it comes to growth rates, we are pretty -- we are keeping a straight head. We are very grounded in terms of how we are heading, but the execution is very strong. We feel very good about how the business is going to grow. And should the growth rates continue, well, we are guiding to what we are guiding, but we are very confident that the business is running really well and the bookings are very strong, which should generate the right revenues and the growth rates in the market.

And if I may actually -- go ahead, please. Go ahead.

Well, I guess I was going to ask then, I guess, relatedly, I know you're guiding Q3 contribution profit to be down a touch despite your backlog being higher. I know it's very recurring billings. Like, what does it really take for contribution profit to be down sequentially when things are, like, really good?

Yes, Dave. Good question. So even though our business is growing and it's growing at a great pace, as you saw that we are raising the guidance for the full-year for all the three metrics, I would say it's like 290 basis points for our CP. We are raising 250 basis points for revenue, and 400 basis points for EBITDA for the full-year. At the same time, there is seasonality in the business, which we cannot ignore, because there is a cohort of the business, cohort of the pillars which performs really strong in one quarter and there's another cohort, which performs really strong in the other quarter. So I think seasonality will tell you that we should do a comparable year-over-year. And when it comes to CP, which actually is our secondary metric, the main idea of CP is to work together with the operating expenses, so we can calibrate them together in a way that it results into the desired EBITDA margins. And that's what's actually happening. So regardless, I would say, of what CP is doing, our primary metrics, which is revenue growth is continuing in Q3 and our EBITDA margins are also better. In fact, they are better by 90 basis points at midpoint in Q3 compared to last year's Q3. We feel pretty good. And as things move along and as we did in Q2, we could recalibrate the expenses how CP is coming. So I think we feel pretty good about it. And it's just a secondary metric. It doesn't impact our long-term strategy or vision.

Got you. Thanks. Great job.

Thank you.

Thank you. The next question is from the line of Will Nance with Goldman Sachs. Your line is now open.

Hey, guys. Good afternoon. Great to see another nice quarter here. I wanted to maybe follow-up on some of the commentary on volume based discounts. I think you had in the script that there's been some kind of pricing changes that has been accepted by your customers over the past few quarters and maybe there's a little benefit in there. So I guess I just wanted to make sure I'm understanding the commentary and kind of the dynamics around the volume-based discounts. Like should that accelerate over the next couple of quarters? Like or should we expect to see maybe a little bit more decoupling or narrowing of the spread between gross revenue and transactions? It seems like revenue is growing north of transactions in the most recent quarter. I'm just wondering if you're messaging like as we lap the prices, we might see the two converge a little bit more as some of those volume based discounts kick in. Thanks.

Thanks, Will. I would start by saying that looking at the process we discussed in the past few quarters of what we are working with all of our billers is primarily to look at how the billers are performing on a regular basis and are we getting the desired results in terms of the transactions and the transactions growth from them. And based on the results, we reach out to the billers and work on pricing strategies. This kind of was at the peak during the inflationary times when we had to go and work on the pricing. But that has now become a constant process in the company. A pretty good improvement, I would say in the process. There is kind of a disciplined way of reaching out to the billers and working on the pricing as to get our desired results. So that process really is now functioning. And we are working with the billers, which are helping us getting the desired pricing, I would say which you saw is pretty clear in ARPU increase from 136 to 141. So we saw that happening. Now on the other hand of the volume based discounts, as we are getting large billers, we are seeing that volume discounts are being given. But again, those volume discounts are not impacting as much the ARPUs, I would say as with the CP margins. But then there is a complete dynamic of how that works with our calibration of OpEx. So we get to the desired result on EBITDA margin, which is our primary metric, i.e. adjusted EBITDA margin as far as that's growing and in dollars, not only just percentage, I think, we want to show that growth and consistently march on that. So overall, I would say in the longer term, they should converge. Like if you look at our CAGRs for last four years, you will see they are pretty close. But in short periods of time, can they bounce around? Yes, they can. In Q1, you saw CP grew 30%. In Q2, you are seeing CP grew 28%. In Q1, you saw revenue was 20%, high 20s and in Q2, you were seeing early 30s or 32% in Q2. I think they are pretty much close to each other, but the kind of variability and the kind of diversity we have in the biller base and the verticals we are expanding to should give us that kind of flexibility to operate in. And I think we are still marching on the right path with achievement of primary metrics.

Got it. That is super helpful. And you mentioned running kind of well ahead of the rule of 40 targets over time. So just anything on the horizon that you expect or where you could see yourself kind of investing more heavily? Are there any kind of investment priorities that may come on board just given the strength and the financial profile right now? Or could we continue to see the really strong incremental margins and a lot of incremental CP falling into the bottom line? Thanks.

Well, we'll put the money where the mouth is, and we've started doing that already in this quarter. We believe we have a great opportunity in front of us. Our pipeline is very strong, and we want to convert that to bookings. And if we have to hire more sales and marketing or we have to invest more in partnerships and similar arrangements, we are opening those opportunities and working on that. So we see opportunity in front of us and the organic growth is number one priority, and we would not hesitate to spend there if the desired opportunity is going to be beneficial for us. Although staying very focused on our long-term metrics of the two primary metrics.

And if I may add to that, Will, and I think it may help Dave's question earlier as well, is that why we believe revenue, gross revenue and adjusted EBITDA are our two primary metrics. And the reason is we are still in building mode. We are basically market capture mode. We are fraction of the market, the total addressable market is huge. And frankly, with our product profile, the ecosystem profile, the IPN network reach, combined with our public company profitable growth and strong balance sheet profile, we are able to open up markets, which traditionally were somewhat elusive to us. And what we are trying to do is we're saying what is the number one metric which we can give to our investor which gives the comfort that Paymentus actually is differentiated for product offering and is able to capture the market. And that's our top line number. Adjusted EBITDA is, I mean, we are operating in a pretty interesting market as we all know. We want to demonstrate the operating leverage for the company that despite the CP moving around, as Sanjay rightly pointed out, quarter-to-quarter, we are able to balance our OpEx because within the context of the year, the OpEx is not as relevant to deliver the top line growth as we have shared in the past that we are actually, we are able to predict whatever revenues would be at the beginning of the year if, frankly, in some cases without signing a new client as we shared earlier this year and last year. So I think of us as a company, a very scaled, a decent sized business approaching, frankly, $1 billion of top line, but it's still just at the infancy of building its business, trying to capture the market. So from that perspective, we want to make sure we have utmost flexibility of doing the deal, the type of deal, the type of market we want to go after. And as a result, we are targeting the deals that make sense for us. And therefore, the best metric for us at the top line is gross revenue and adjusted EBITDA is how profitably can we serve the customers and can we deliver that margin. And our long-term strategy, as we have shared in the past is that we want to participate in the interchange economy. Interchange today is a expense center for us but not in all cases. And we, in the long-term, years out, you would see Paymentus participating in the interchange economy. So for us, this is a perfect opportunity. It's a perfect inflection point to demonstrate the differentiated offering and keep capturing market at the faster click as well as we can while at the same time demonstrating profitability.

Yes, it's all very clear. Appreciate all the details here and great to see the continued momentum in the business. Thanks for taking the questions.

Thank you.

Thank you. The next question is from the line of Darrin Peller with Wolfe Research. Your line is now open.

Guys, thanks. If you could just help us a little bit more color around new biller adds and maybe just a breakdown of the vertical sources that these billers are coming in from. I guess maybe just to add on, when we're thinking about the second half, what is the net number of billers you're embedding in the guide? You're just obviously converting them and moving them into go live much more quickly than I think maybe you did in the past in some cases. And so it'd be great to know a little more around what kind of cadence we're seeing already, what kind of biller numbers and maybe the expectations embedded.

Sanjay, go ahead.

Yes, so, Darren, we see in terms of the biller adds, we are seeing we don't actually discuss the numbers. That's an annual number of billers we disclose. So you will have to, I'd say wait for that for Q4 call. But I would say that the progress during the year, in fact, the first two quarters has been a very good progress. And we are pleased not only in Q2, actually Q1 is a full-year to-date. The billers have grown very well. And in all the verticals, I think Dushyant, in his prepared remarks, pointed out nine verticals where we had seen bookings in the quarter. And they are all diversified and they are all growing. Business is humming on all sides and that basically comes from the key strength we have in our platform that it could be used for any vertical. We don't specialize in any particular one. Although, as you know, utilities is our strongest backbone, but at the same time, we've got insurance, we've got many other verticals, which Dushyant mentioned. I won't be able to provide clarity on the number, as I said. One thing I can definitely share with you, maybe this will help, our implementation pace over the last six quarters has been the best in Q2. That has been growing every quarter, improving every quarter. I think our machinery in terms of how quickly we implement this, the processes are becoming very, very efficient, due to multiple reasons. So I would say that time period has reduced. So that is helping not only the revenue growth but should help later on as well.

And if I may add actually I was just going to say something quickly, Darren. I think it's quite interesting inflection point we are at as a business. We think of us as a disruptive engine, if you will. Disruptive engine relative to the current, for lack of a better word, orthodoxy that may exist in the current client environment. So you're going in as a with Paymentus' advanced platform and reimagining the entire workflow and the experience for the customers but also the back office operations for the large entities or any size and any vertical. So what we are trying to do is we are building our business in a very much agile methodology, if you will. We take a look at it, that this vertical looks interesting, could be very high margin generating. It may have incumbent one or two or few incumbents who actually may not be as sophisticated as our platform is. And we would go in and disrupt that particular vertical and just like we have done in many, many other verticals. So what you're seeing is we are a very industry agnostic platform approach with one single code base. We're going to different customers and able to offer them what they never thought was possible with one platform. And that's and as a result, what's happening is we're becoming better as a company in onboarding some of that experience as well just because of the automation and different functionality we have added to the platform.

Yes, that's great to hear. Just a quick one is just on also on I mean, your net cash is $190 million, I think continues to move higher. So if you could just remind us of the M&A strategy, what would be an area you booked to further invest into what's on the horizon? Thanks, guys. Nice job, by the way.

Thank you. Thank you so much. I think on M&A side, I think we will remain opportunistic. As you can see from our profile, frankly and we get hit by almost any book, which is of any size, whether it's small tuck-ins or larger companies, it's not easy to find companies which are accretive to our profile, the top line growth as well as the bottom line. But as we do take a look at them, we will remain opportunistic. There isn't a single functionality gap which we can think of that were necessities for us to actually make an acquisition, but we are opportunistic. We are taking a look at what is out there.

Got it. Thanks, guys.

Thank you.

Thank you. The next question is from the line of Andrew Bauch with Wells Fargo. Your line is now open.

Hey, guys. Thanks for taking the question. Just wanted to pick up the guide here. You beat contribution profit by 7.5% in the second quarter, raised 8.5% in the full-year, so about another $1 million in the back half. But then on the EBITDA side, you beat by 4.5% and raised by 8%, so 3.5% incremental. Any kind of thoughts around with those the incremental rates or just EBITDA? Is it just a function of the high incremental margins? Or if you run at these level of incremental margins, what is the motivation to kind of think about putting that back into sales?

Well, Andrew, I'd like to just say one thing which we both said in the prepared remarks. Business is doing great. The two quarters have been amazing, exceptionally well. We are on a path of executing really well. We're keeping our heads straight and being very thoughtful in terms of how we are giving the guidance. At the same time, how would we use the EBITDA and use it for our expense to rather find the future revenue or future bookings or conversion to pipeline. That would be our priority. And we will see how the CP turns out. It's a secondary metric. We don't think that's our focus. And over and over time, we have seen it that EBITDA margins can get better whether CP margins are getting better or not. Actually, they are getting better as well. But I mean even if they don't, we have a pretty solid model in terms of how closely we can manage the CP operation together with the operating expense and how we can calibrate that. I mean, I'll give you a very clear example in Q2 itself. We ended up spending a little bit more on OpEx, and we made a decision, a conscious decision to do that because our CP came in much better. And in the past, at times we have done, at times we have not. And we would manage the same strategy going forward as well. So I don't think CP is actually playing a significant role in driving our EBITDA margin. In fact, working off it together with OpEx is, but that all comes from revenue. So overall, I think the strategy and the message which we wanted to communicate in this regard is that the guidance is what we have and pretty thoughtful guidance. But at the same time, the focus is on two primary metrics, which are growing year-over-year at a good pace.

Nice to have that flexibility when the business is firing like it is. I guess just sticking back on the second quarter, the one thing that sticks out is that you accelerated from on a two year CAGR basis from 21% that you run at for the last two quarters to 25%. So significantly tougher comp on second quarter '23. And you called out the transactions being kind of the lead in that. But is there anything that you can point to that drove that transaction number higher, be it intra quarter, that that was visible to you?

I would say there are two things. One is we are seeing a very good same-store sales growth, okay. Our existing customers, they are -- we are seeing good transactions from them and much better than what we're originally expecting when we signed them up, okay. And the second thing I would say is that the new billers, which are coming, which are getting implemented, [indiscernible] as I said is probably one of the best at this point in time. So a combination of both these facts is generating a higher result in transactions.

Maybe if I could just kind of press you a little bit further on that. I mean, why do you think the same-store sales are coming in so strong?

Well, it's increased adoption by the billers who are rolling out our platform use to their customers and we help them in that as well. That's one part of it. And as this business generates, we are moving to a more digitalized world As more young generation comes on and start paying the bills, they would prefer using the platforms rather than the old method. So I think there is an inherent increase in the transactions, which is built in just based on the business model itself. And at the same time, other things like the new additional bookings and additional implementations are just adding an accelerator on top of it.

And we are making…

There are benefits there.

Yes, and we are also making conservative efforts to make sure that our clients are able to get the best from our platform by getting more and more customers on our platform.

Thanks. So very helpful detail.

Thank you.

Thank you. The next question is from the line of John Davis with Raymond James. Your line is now open.

Hey, good afternoon, guys. Sanjay, I wanted to hit a little bit more on incremental margins, very strong at 49% this quarter. I think the full-year implies like 46%. That is a little bit of a step down from last year. I think it was like 74%. I know this year you kind of talked about more balancing growth and investments and last year was kind of really showing the bottom line strength. But is this call it 45%, 50% incremental margins kind of the right way to think about this business where you can balance growth and investments? Or potentially would you step up investments and take incremental margins down if you saw the opportunity? Just trying to think about that longer-term and how you guys think about it.

John, that's a great question. Interesting part is as you grow and as you improve your EBITDA margin dollars and you increase your adjusted EBITDA margins itself, which is the whole goal, which is the entire goal of primary metrics in driving the business, it still leaves a question, okay, the incremental margins are kind of why are they not growing. Eventually, the business is growing. That's the bottom line. Adjusted EBITDA margins are growing. And overall, I would say, if like in Q1, we were 28.5% margin. In Q2, we are 29.5%. We are guiding to 26.2%. And last year in Q3, we were 25.2%. Every direction, there is a growth year-over-year as well. And for the full-year itself, we are raising. The bottom line is adjusted EBITDA margin should grow. Could incremental margins fluctuate? They could. But given that kind of flexibility we have, I think it gives us more opportunity to spend as and when we see the opportunity in front of us to generate future bookings, conversion of pipeline to bookings. That's the whole benefit of this operating leverage that when can we use it. And when we see opportunities, we will use it. But as of now, there is no proper guide I can give you to think about incremental adjusted margins. I can definitely give you a guide that our goal is to grow EBITDA dollars 20% to 30% every year. And that should generate in a very good Rule of 40 as well, which we have consistently delivered. At the same time, I would expect this should generate good EBITDA margins, too.

Okay. That's helpful. And then Dushyant, it was noteworthy in the prepared remarks you called out increase the IPN activity as one of the upside drivers. So just looking to get kind of an update there. Are we willing to kind of break out what kind of either percentage of revenue, percentage of transactions or just a general update there, but it was noticeable that you called that out?

Thank you, John, for the question. Actually, what I would say is at this stage, IPN is such an inherent part of our offering that it's not a separate or distinct product or solution, if you will. It's more or less like who are the participants and where they're coming from and how the transactions are being processed. So take an example, a bank originating a transaction or a credit union originating a transaction to a billing company that actually is on our system, that entire transaction is routed using our instant payment network. Likewise, to the biller who is on our platform, they are seeing the same benefit of receiving the transaction outside of their own ecosystem through IPN from a bank or credit union or other fintech providers. From our vantage point right now, this is one of the key reasons for what we are seeing is a inflection point, so to speak for our business where we are a signing large clients in diverse verticals, including the clients who actually used to be somewhat more focused on in-house solutions. And now they've concluded that a platform like Paymentus, with profile like Paymentus and ecosystem like IPN it's very hard to replicate, and they feel more and more comfortable going with us. So IPN is a differentiated sales tool for us as well as a differentiated product offering and not a separate product. However, it is catalyzing our sales. It is catalyzing our transaction growth. And frankly, long-term, as I've shared in the past, it will catalyze the interchange cost center into interchange revenues.

That's super helpful. Thanks guys.

Thank you. The next question is from the line of Andrew Polkowitz with JPMorgan. Your line is now open.

Good afternoon, guys, and congrats on the results.

Thank you.

I wanted to drill in a little bit on your comments. No problem. I wanted to drill in and ask, you guys about the increase in efficiency and implementation timing. I know you said there were several areas driving that. So I wanted to ask, is it having to do with just an increase in manpower, or are there certain areas you could point to that kind of increased your internal velocity?

Actually, great question, Andrew. And very pleased to provide additional color, because I think our team who has -- who might be on the call or they may read the script later on actually will be very pleased with these remarks, because it speaks to the hard work and dedication they've all put in. So if I take you back a couple of years, the reason some of the delays occurred was we were dealing with pandemic and not being able to meet the customers and so on. And now the fact that we are able to meet our customers, especially the customers who move the needle and the large clients, we are actually in their offices, we are whiteboarding their solutions and so on is contributing. But also, we have made a key decision that Paymentus is going to create a -- is a center of excellence in onboarding, which used to be our strength. But as we got into the largest end of the market, the complexity and the workflows required us to spend more time getting customers onboarded. And now based on those learnings, we are now automating, we are improving the workflow engine Paymentus already has by automating some of those capabilities. So all of that is coming to Fusion and adding to the capabilities of onboarding customers of diverse and complex workflows onto our platform with ease. I'm very pleased to say that vast majority of all of our customers get implemented on our platform without a single line of code change. I mean, meaning not even the integrations required any change, not any workflow or any business rules required any change. So and that's a constant pursuit. We'll continue to make investments there. But it is one of the key areas of the focus for the team.

That's great to hear. I had one follow-up. You mentioned the strong pipeline exiting the quarter. I wanted to ask, is there any potential for upside to bookings driving benefit to 2024, or is that more of a 2025 story? And sort of building on that question, what could be potential upside drivers or surprises, that would cause you to see benefit versus your implied second half outlook?

Well, Andrew, I would say that the pipeline which we see in front of us is more of a beyond 2024 revenue opportunity for us. For this current year, we are not making any expectations from the pipeline to convert the bookings and then to revenue for '24. That cycle, I would say very clearly, you should not pull that in your models. That is not possible. At the same time, I would say the pipeline in front of us could be converted to bookings and how we operate. And definitely, that's going to be an upside for 2025 and '26 and beyond depending upon how large and how big contracts we get and for how much duration. So short answer is no for '24, but '25 and beyond.

And as to 2024 itself, I think we are working very hard to onboard as many clients as we can and some of that is already factored into our guidance.

Great. Thanks.

Thank you.

Thank you. [Operator Instructions]. The next question is from the line of Matt O'Neil with FT Partners. Your line is now open. Matthew O’Neill: Yes. Thanks. And good evening, everybody. A lot of great questions already asked and answered and solid results here. Just curious, Dushyant, really understand the direction of the business financially and the targets that you and Sanjay have laid out. Kind of curious if we turn it more internally, how would you characterize the top strategic priorities? What are you telling the employees that are going to ultimately drive those financial outcomes that you've been executing so well against? Thank you.

Great question. Actually, I'm so glad this question is asked. I mean, we as a team, I think one of the key focus for us is being able, as you can imagine, our clients are trusting us with two of the most important assets they have in their business. Number one, their clients and number two, their revenues or money. Without that, there is no business. And as a result, increasingly, our business has become more and more central to any business who is partnering with Paymentus. And as a result, one of the key areas our team needs to continue to focus on and invest in is operational excellence and innovation. So my message to the team and we are basically all in this thing together where we are saying if we continue to innovate, continue to listen to our customers, continue to innovate as a result of those lessons from the clients, no one is perfect. We certainly are not, but we are very willing to listen and improve and innovate and bring those innovations to market to help our customers. And number two, we want to do it in a way that we are operationally excellent. We are efficient. We know that in this market, our investors are expecting us to do great things, which we are doing, but at the same time, they want us to do it profitably, and we just sign up a good business or in some ways a great business. And that's why we are pursuing and all teams are aligned on that. Matthew O’Neill: Thanks so much.

Thank you.

Thank you. There are no further questions in queue. I'd like to turn the call back over to Dushyant Sharma for concluding comments.

Well, thank you everyone. I really appreciate it. I appreciate your time. Have a great day. Bye-bye.

Thank you. Bye-bye.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.