PAY Q3 Deep Dive: Vertical Expansion and Enterprise Onboarding Drive Growth

Digital payment platform Paymentus (NYSE:PAY) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 34.2% year on year to $310.7 million. On top of that, next quarter’s revenue guidance ($309.5 million at the midpoint) was surprisingly good and 5.8% above what analysts were expecting. Its non-GAAP profit of $0.17 per share was 14.6% above analysts’ consensus estimates.

Is now the time to buy PAY? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Paymentus delivered a quarter of robust growth, as the market responded positively to its strong execution and outperformance against Wall Street’s expectations. Management attributed the momentum to a surge in onboarding new enterprise and mid-market clients, coupled with higher transaction values across a broadening array of industry verticals. CEO Dushyant Sharma emphasized the significance of recent onboarding activities and a solid bookings backlog, stating, “We ended the quarter with substantial bookings and a strong backlog, giving us visibility and further confidence not only for the balance of 2025, but also for 2026.”

Looking ahead, Paymentus’ guidance reflects management’s confidence in continued vertical expansion and deepening presence with large enterprise customers. The company is prioritizing investments in platform enhancements and onboarding capabilities, with CFO Sanjay Kalra highlighting that, “Our expectations for the remainder of 2025 and strong forward visibility” underpin the updated outlook. Management also pointed to new opportunities in business-to-business (B2B) payments and agent-driven commerce as potential drivers of long-term growth, signaling a focus on both immediate execution and strategic positioning for future industry shifts.

Key Insights from Management’s Remarks

Management credited the quarter’s results to accelerated onboarding of enterprise clients, expanded presence in new verticals, and successful execution of its go-to-market strategy.

• Enterprise onboarding momentum: Paymentus rapidly onboarded several large enterprise clients during the quarter, with some launches occurring earlier than forecast. This was enabled by improvements in implementation pace and deeper client engagement, supporting higher transaction volumes and increased platform adoption among larger organizations.
• Vertical diversification: The company expanded its footprint across multiple new verticals—including insurance, government, telecom, and property management—demonstrating the platform's broad applicability beyond its historical strength in utilities. Management noted that this diversification has attracted clients with more complex needs and higher transaction values.
• Contribution profit per transaction growth: Despite the shift toward high-volume enterprise clients, contribution profit per transaction rose 3.8% year-over-year. Management attributed this to a mix of better pricing in new verticals and increased adoption of value-added services, rather than reliance solely on transaction growth.
• Instant Payment Network (IPN) performance: The company cited its Instant Payment Network as a growing contributor, driving higher activity levels and supporting faster payment processing for clients. This network is emerging as a differentiator in competitive deal wins and client retention.
• Operating leverage and cash generation: Paymentus’ model continues to deliver strong operating leverage, as reflected in record adjusted EBITDA margin and high free cash flow conversion. Management pointed to improved days sales outstanding (DSO) and the quality of new billers as factors enhancing working capital efficiency.

Drivers of Future Performance

Management expects future performance to be driven by ongoing enterprise client wins, continued expansion into new verticals, and investments in platform innovation.

• Enterprise and B2B expansion: Management believes onboarding more large enterprise and B2B clients will sustain transaction growth and drive higher average revenue per transaction. CEO Dushyant Sharma emphasized the growing opportunity in B2B markets, noting that Paymentus’ platform flexibility enables entry into previously untapped verticals.
• Platform enhancements and agentic commerce: The company is investing in artificial intelligence (AI) and agent-driven commerce solutions, aiming to improve customer experiences and streamline workflows. Sharma described these capabilities as central to Paymentus’ long-term strategy, stating they will "catalyze even further opportunities for TAM [total addressable market] expansion."
• Margin variability and scaling: Management acknowledged that as the client base grows and becomes more enterprise-focused, pricing and contribution profit may fluctuate quarter-to-quarter. However, they project that long-term operating leverage and disciplined expense management will support sustained profitability and cash generation.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) the rate of enterprise and mid-market client onboarding, (2) Paymentus’ ability to maintain or grow contribution profit per transaction as client and vertical mix evolves, and (3) early evidence of platform traction in B2B payments and agentic commerce. Continued progress in operational efficiency and cash flow generation will also be important markers of sustained execution.

Paymentus currently trades at $31.94, up from $28.55 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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