Paymentus reported yesterday. Revenue growth slipped from 56% to 49% YoY, and it was also their lowest QoQ growth in at least 5 quarters (as long as I bothered to look back), at 6.7%. Net Income has been remaining flat while margin has been sliding for 3 quarters.
They guided for a 6% drop in quarterly revenue at the midline, which they have done for 5 straight quarters, so they clearly sandbag a ton. Their beat % has been dropping however, from 21.6% to 18.6% to 12.3% in the current quarter. If we follow this trend out for a few quarters, it leads to a sizable deterioration in their growth metrics (20% by end of the year).
Did anyone listen to the call and hear anything to reverse this trend? I could imagine things getting worse for them if the economy continues to contract. Right now I’m probably going to chop the position down or close it out completely.
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Prust
PAY represents 5.6% of my portfolio as of the weekend.
My comments:
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Revenue growth is not a concern for me- remains well above my minimum
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Slumping beats is not a concern - remains significant
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6% drop in revenue guidance is a concern - understanding the basis is important
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The market has examined the report and likes it, based on a decent positive on a down day
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My Metric Targets Achieved Rating for Pay improved with this report, but still ranks 19th among my 23 holdings
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I plan on maintaining my current position pending further examination of basis for guidance change
Gray
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I thought this was a decent quarter as the trend of pulling through large enterprise customers continues. They said it’s 2.5 quarters now of large billers signing up, but seem hesitant to bake any of that in to their guidance.
Some concerns were that gross profit is flat qoq, and gross margin is down again. However, this was balanced by a huge uptick and record in EBITDA as they scale. The large enterprises get better deals which they say is typical in the industry, so I’m still buying the explanation management gave.
I had more in depth video about the earnings if you are interested to catch up on some more details about the report,
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