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Good day, and welcome to the Fourth Quarter and Full Year 2024 Paymentus Earnings Conference Call. This call is being recorded. All participants are currently in a listen-only mode. There will be an opportunity to ask questions following the management's prepared remarks. [Operator Instructions] At this time, I will now turn the call over to David Hanover, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon. Welcome, and thank you for joining the webcast to review our fourth quarter and full year 2024 results. Our earnings release documents are available on the Investor Relations section of the paymentus.com website. They include the earnings presentation that we'll make reference to during this webcast. This webcast is being recorded. I hope everyone has had a chance to review those documents. Our Founder and CEO, Dushyant Sharma, will make some opening comments before Sanjay Kalra, our CFO, discusses the details of the fourth quarter and full year and our guidance. Following our prepared remarks, we'll take questions. Let me just remind you that we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and we refer to non-GAAP financial measures during the webcast. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials and our SEC filings that are available both the SEC's and our website. Information about non-GAAP financial measures, including reconciliations to US GAAP, can also be found in our earnings materials that are available on the website. With that, I'd like to turn the webcast over to Dushyant Sharma. Dushyant?

Thanks David. 2024 was an outstanding year for Paymentus, and based on the vast stem of non-discretionary bills and our continued market momentum, we believe our best is yet to come and we are just getting started. As I have shared in the past, we operate our business on a two-year horizon and it is quite satisfying to see how well we have executed over last two years. Likewise, we are just as excited about our next two-year horizon and beyond. And this view is based on five factors: first, our continued sales momentum; second, our strong bookings in 2024; third, our significant exit backlog, net of large client launches in the third quarter; fourth, our continued onboarding success; and fifth, our phenomenal innovation framework that will continue to be disruptive in the broader fintech market. Despite our 2024 outperformance, we remain committed to our CAGR model of 20% top-line and 20% to 30% adjusted EBITDA growth for 2025. And based on our guidance philosophy that has served us very well over the last couple of years, I'm pleased to report that we believe we can deliver the top end of our 2025 guidance, that Sanjay will cover shortly, without signing any new clients, provided, of course, we deliver implementations as planned. With that context, let me now discuss our fourth quarter and full year 2024 results. We ended the year on a strong note with fourth quarter results that exceeded our expectations across all areas of our business. Fourth quarter 2024 revenue was a record $257.9 million, up 56.5% year-over-year. Fourth quarter contribution profit was $86.2 million, up 30% year-over-year. Our adjusted EBITDA, which as many of you know is a significant financial metric for us, was $27.3 million for the quarter, up 36.9% year-over-year. And on a Rule of 40 scale, we saw a sequential increase in the quarter to 62. For the full year 2024, revenue increased 41.9% over last year to $871.7 million, far exceeding our long-term target of 20% top-line growth. Adjusted EBITDA increased 62.2% for the year to $94.2 million, once again well ahead of our long-term target of 20% to 30% growth. Contribution profit for 2024 was $312.1 million, growing 29.5% annually. We also saw a great year for bookings in 2024. The multi-year commitments under our typical agreements from these bookings gives us a lot of confidence in our ability to achieve our CAGR model. As a reminder, our CAGR model is for our primary metrics of revenue and adjusted EBITDA only, and should not be confused with secondary metrics such as contribution profit and OpEx. As we have done very effectively so far, we will continue to use our strong operating leverage to calibrate contribution profit and OpEx as necessary to achieve these targets. In addition to the numbers we reported today, as noted on our last earnings call, there is a specific business strategy in play here. While today interchange only serves as a cost center for us, over time, our strategy is to have the interchange economy and associated life cycle flow through our P&L as we capture more market share. This will increase our scale, which also creates tremendous opportunities for modernization and cost reductions. So, longer-term, we will work to expand our margins by pursuing products and solutions that offer the ability to convert part of interchange from a cost center to a revenue center. Said differently, we think of interchange as a potential new expansion of the total addressable market for our business. Even though this is a long-term play, we wanted to make sure that investors are aware of the strategy behind our execution. Now, I'll review some of our key fourth quarter business highlights and accomplishments. As I mentioned earlier, we finished 2024 with a strong backlog and solid top-line growth as a result of our technology platform and our IPN ecosystem. During the fourth quarter, we signed clients in various industry verticals, including insurance, government agencies, utilities, banking and credit unions, consumer finance organizations and educational institutions, among others. We believe this extensive mix of new customers demonstrates the diversity of the businesses and the multiple industry verticals our platform can support. In addition, we signed several new channel partners in various industry verticals to deepen our partner ecosystem. These verticals include government services, utilities, insurance and healthcare. Our diverse and ever-expanding partner network is an excellent companion to our direct go-to-market strategy. And in addition to this strategy, we continue to focus on onboarding our strong backlog. Our onboarding enhancements, targeted incremental investments, as well as constantly improving face-to-face client engagement continue to be a tailwind for us. As part of this effort, like we have mentioned on past calls, we have continued to ramp up hirings in order to support our continued growth. During the quarter, we onboarded clients across multiple verticals, namely, insurance, property management, government services, utilities, banking and credit unions and telecommunications. Now, let me turn it over to Sanjay to review our financial results in greater detail.

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. Our earnings press release and presentation includes reconciliations of these non-GAAP financial measures to their corresponding GAAP measures. Both are available on our website. Turning to Slide 5, we ended 2024 with another quarter where we exceeded the top-end of our guidance range across all our key financial metrics. Our fourth quarter results included: record revenue of $257.9 million, up 56.5% year-over-year; contribution profit of $86.2 million, up 30%; and adjusted EBITDA of $27.3 million, up 36.9%. On a Rule of 40 basis, we came in at 62, our highest level to-date and our seventh consecutive quarter of exceeding the Rule of 40. During the quarter, we also continued to experience strong customer activity and demand, consistent with what we experienced throughout 2024. This drove robust bookings and we exited the year with solid momentum and a significant backlog and a greater cash position to support our continued growth strategies in 2025. Now, let's review our fourth quarter financials in more detail. As mentioned earlier, fourth quarter revenue grew 56.5% year-over-year to $257.9 million. This higher-than-anticipated growth was driven by two key factors: first, the successful launch of new billers, including the first full quarter benefit from large enterprise customers that launched during the third quarter; and second, increased same-store sales from existing billers. In the fourth quarter, we derived more revenue from these newly launched large enterprise customers with higher average payment amounts contributing to higher revenues. And while our original fourth quarter guidance contained some upside, we took a prudent approach, because at that time, the precise magnitude of this beneficial impact was uncertain. And you can see, it was quite substantial. Complementing this, in the fourth quarter, the number of transactions we processed grew to 166 million, up 33% year-over-year. Our average price per transaction increased during the fourth quarter to $1.55, up over 17% from $1.32 in the prior-year period. This was mainly due to the biller mix or, more specifically, the large enterprise billers that launched in the third quarter with higher average payment amounts. Fourth quarter 2024 contribution profit increased 30% year-over-year to $86.2 million This increase was also higher-than-expected and reflects increased transactions from existing billers, the launch of new billers and the change in biller mix I mentioned earlier. Contribution margin was 33.4% for the fourth quarter compared to 34.5% last quarter and 40.3% in the prior-year period. The 6.9% contribution margin reduction year-over-year reflects the continued addition of large, high-volume enterprise billers to our growing customer base. This was substantially offset by benefits from the economies of scale and year-over-year reduction in operating expense margin, both of which resulted in an improved adjusted EBITDA margin and a record Rule of 40 at 62. This is consistent with our continued focus on profitability, which I will elaborate on shortly. Contribution profit per transaction for the fourth quarter 2024 was $0.52, similar to $0.53 in the prior-year period, demonstrating our ability to expand market share with comparable contribution profit per transaction. As we've noted in the past, variables that are outside our control, such as an increase in the average payment amount or changes in payment mix, can affect contribution profit on a quarter-to-quarter basis, and therefore, we treat this as a secondary metric, while our gross revenue and adjusted EBITDA remain primary metrics for us. Fourth quarter adjusted gross profit grew 32.4% year-over-year to $71.8 million. We experienced adjusted gross profit growth greater than our contribution profit growth due to the economies of scale we can achieve by reducing other cost of goods sold. Fourth quarter non-GAAP operating expenses were up 28.8% year-over-year to $47.3 million, primarily reflecting higher sales and marketing expenses as well as research and development expenses. These increases were consistent with our expectations and were mainly driven by increased hiring and increased agency fees for businesses from resellers in order for us to convert our strong pipeline into bookings and also to enhance our technical strengths. Regarding taxes, we have determined that a non-GAAP tax rate of 25% for the fourth quarter of 2024 is appropriate based on our current expectation of our long-term projected tax rate. The rate is reflected in our 2025 guidance, which we will cover shortly. For comparative purposes, we have recast our fiscal 2024 and 2023 non-GAAP net income to reflect this tax rate, which is available in the tables included in our earnings release. Please note, this non-GAAP tax rate reflects currently available information and could be subject to change. Fourth quarter non-GAAP net income was $16.3 million or $0.13 per share compared to non-GAAP net income of $11.8 million or $0.09 per share in the prior-year period. Fourth quarter adjusted EBITDA grew 36.9% to $27.3 million compared to $19.9 million in the prior-year period. Adjusted EBITDA also represented 31.6% of contribution profit for the quarter compared to 30% in the prior-year period. The strong adjusted EBITDA performance was due to the same combination of positive factors I talked about earlier, all of which came together in the quarter. We believe the stronger adjusted EBITDA margin demonstrates the inherent operating leverage we have in the business. Interest income from our bank deposits was $2 million in the fourth quarter, consistent with the prior-year period. Related to overperformance, as mentioned earlier, we once again exceeded the Rule of 40 for the quarter, coming in at 62 compared to 61 last quarter and 53 in the prior-year period. Now, turning to Slide 6, I will summarize our full year 2024 financial results, which also came in higher than we originally expected. Revenue for the full year increased 41.9% to $871.7 million, driven by 30.3% increase in the transactions, primarily from new billers as well as transaction growth from existing billers. Contribution profit increased 29.5% to $312.1 million, primarily due to increased transactions. Lastly, adjusted gross profit increased 30.4% to $259.6 million. Non-GAAP operating expenses increased to $175.9 million, up 17.3% year-over-year, primarily due to higher sales and marketing expenses as we continue to focus resources on the execution of our go-to-market strategy. Non-GAAP net income was $56.2 million or $0.44 per share compared to non-GAAP net income of $32.2 million or $0.26 per share in the prior year. Adjusted EBITDA increased 62.2% to $94.2 million, primarily due to increased adjusted gross profit net of increased non-GAAP operating expenses. We exceeded the Rule of 40 for the full year, coming in at 60 for 2024 compared to 2023 when we ended at 44. We are also proud to report that in fiscal year 2024, $36.1 million of our $71.2 million contribution profit increase flowed through to adjusted EBITDA, representing a 51% incremental adjusted EBITDA margin. Now, I'll discuss our balance sheet and liquidity position on Slide 7. We ended the fourth quarter 2024 with total cash of $209.4 million compared to $190.8 million at the end of last quarter and $183.2 million in the prior-year period. The $18.6 million sequential increase is primarily comprised of $27.9 million of cash generated from operations, offset by $9.1 million cash used in investing activities primarily for capitalized software. The company does not have any debt. The free cash flow generated during the quarter was $19 million. For the full year 2024, we invested $36 million in capitalized software and $26 million in working capital as we scale the business. We paid $14.4 million in income taxes as we are now profitable and also generated $8.7 million from interest income. In 2025, our cash deployment priorities are unchanged. Driving organic growth remains our primary focus. Our strong cash position enables us to maintain financial flexibility to keep room for working capital investments as we scale. Additionally, our strong balance sheet enables us to explore attractive M&A opportunities that may arise in order to further increase our growth prospects. Our days sales outstanding at the end of fourth quarter was 43 days compared to 44 days last quarter. We had 128.7 million diluted shares outstanding during the fourth quarter compared to 127.6 million diluted shares outstanding during the third quarter. Now, I'll turn to our non-GAAP guidance for the first quarter and full year 2025 on Slide 8. Before discussing our 2025 guidance in detail, as mentioned on our last earnings call, we are continuing to follow the same prudent approach to first quarter and full year guidance that we followed when we provided our initial 2024 guidance around the same time last year, which I believe has served us quite well. Turning now to details. For the first quarter 2025, we expect revenues to be in the range of $241 million to $249 million, representing a 32.5 year-over-year growth at the mid-point and 34.7% at the high-end. This growth rate range is an improvement from prior year's first quarter growth rate of 24.6%. Contribution profit to range from $84 million to $86 million, which represents 22.5% year-over-year growth at the midpoint and 23.9% at the high-end, compared to the prior year's first quarter growth rate of 29.6%. This year-over-year change reflects our expanding market share and a more diversified customer base, which includes a growing number of large enterprise customers. Adjusted EBITDA of $24 million to $26 million representing growth of 26.3% year-over-year at the midpoint and 31.3% at the high end. This represents a 29.4% margin at midpoint and 30.2% margin at the high-end, an improvement to the prior year's first quarter adjusted EBITDA margin of 28.6%. On a Rule of 40 basis for the first quarter of 2025, our guidance implies a range of 50 to 54. Before moving to the details for our full year guidance, I want to provide further insight into our outlook for contribution profit growth rates and adjusted EBITDA margin. As our business continues to grow, we are receiving more inbound inquiries from large enterprise customers. As we have mentioned on prior calls, as expected, these customers often request volume discounts. This is standard within our industry and we are open to this where the deal economics support it. Our tremendous operating leverage allows us to do this as volume discounts for larger customers are typically more than offset by strong incremental adjusted EBITDA. We saw this in the second half of 2024. This increases our efficiency as our onboarding time per biller is declining, while our average customer size is simultaneously increasing. Furthermore, our operating model enables us to recalibrate OpEx spending relative to contribution profit in order to reach a desired adjusted EBITDA. For reference, our incremental adjusted EBITDA margin for the fourth quarter 2024 was 37% relative to adjusted EBITDA margin of 31.6%. Turning now to specific details for the full year 2025, we now expect revenue in the range of $1.04 billion to $1.06 billion, which represents 20.4% growth from the prior year at the midpoint and 21.6% growth at the high end. This top-line growth at the midpoint is higher than the initial top-line growth guidance we provided for 2024 around the same time last year. Contribution profit in the range of $358 million to $366 million This guidance represents 16% year-over-year growth at the midpoint and 17.3% at the high-end. It also reflects the same factors I mentioned earlier when discussing our first quarter 2025 guidance such as: the increasing number of large enterprise customers in our client base, favorable deal economics and our substantial operating leverage. Our expected 2025 contribution profit growth at midpoint is consistent with what we initially guided for 2024 contribution profit growth around the same time last year. Adjusted EBITDA to range from $112 million to $116 million This guidance represents 21% year-over-year growth at the midpoint and 23.2% at the high-end, an increase versus the initial adjusted EBITDA growth guidance we provided for 2024 at midpoint around the same time last year. This guidance also represents a 31.5% margin on contribution profit at midpoint. Our non-GAAP tax rate of 25%. And on a Rule of 40 basis, for the full year 2025, our guidance implies a range of 46 to 49, higher than the implied Rule of 40 initial guide we provided for 2024 around the same time last year. We believe based on the strong exit backlog and solid sales momentum, we have considerable visibility and we are well positioned to deliver solid growth in 2025. Our business continues to run on all cylinders. Lastly, I am pleased to report we significantly improved our internal controls over financial reporting during 2024, resulting in the remediation of the material weaknesses we previously reported in our SEC filings. And I would like to thank the team members that made it possible to accomplish that important objective. Thank you, everyone. And now, I'll turn it back to Dushyant.

Thanks, Sanjay. In closing, we are very proud of our fourth quarter and full year 2024 results, which were ahead of our original expectations. We ended the year with a strong backlog, which gives us confidence in our 2025 guidance. And of course, we intend to remain focused and disciplined in onboarding our strong backlog, which we expect to keep fueling our growth. What also gives us confidence is our track record of performance. In the three years since our IPO, we have more than doubled our revenues and more than tripled our adjusted EBITDA. As you may know, our performance even prior to IPO is also very exciting. We believe this performance illustrates the strength of our operating model and the historical resilience of our business and our ability to respond to macroeconomic headwinds and recessionary pressures. On that note, I also want to thank all of my team members for their continued efforts and dedication to Paymentus' success. That concludes our prepared remarks. I'll now open up the line for questions.

Thank you so much. We'll now be moving to our Q&A session. [Operator Instructions] We have a question from Dave Koning of Baird. Your line is now open.

Yeah. Hey, guys. Tremendous results again. And I guess, my first question, when I look -- I guess, I look at Q1 guidance, you're guiding gross revenue down kind of mid-single-digits sequentially. Historically, I think the lowest sequential growth we can see in Q1 was up 6% and more quarters were like up 12% or 10%. And I'm just wondering, was there anything non-recurring in some of the large billers that joined that would create a sequential fall off, or is it just guidance to try to make sure you hit numbers and continue to execute?

Dave, thanks for the question. Appreciate it. Q1, it's interesting. We are in a very similar situation where we were just a quarter ago when we were guiding Q4, because these new large enterprise customers have just newly been onboarded. It's been like just two quarters. They came in the middle of Q3 and Q4 was the first full quarter. So, we still actually have to go through a full cycle -- one-year cycle, I would say, to fully understand your trends before we start baking in the full year or maybe the quarterly guidance. But given Q1 and two months are kind of behind us, although the books don't get closed until after a few days as you would know. So, we've got some visibility into Q1 how they will trend. But we are not being very aggressive in terms of what we saw in Q4, I would say, because that could be just a short period of time to analyze trends. So, we've taken a prudent view in coming up with the guidance for the full year for sure, especially for these large customers. But even for Q1, we've been prudent in terms of how the quarter may shape up. That's the only variability. And other than that, I would say the business is doing great. Our sales momentum is going really well. Our exit backlog is strong. The pipeline is -- the pipeline actually is also pretty strong. And more large customers are also there in the pipeline. So, the trends could vary year-over-year and quarter-over-quarter as we ramp and as we scale. But overall, I would say, gross margin as one metric is not the only one. Whether you count gross margin or contribution profit, they all have to be considered together with the operating leverage we have in the business. And at the end of the day, our adjusted EBITDA should be better year over year. And I'll not go more on this. I think it's a long-winded answer to your question, but we exited the year with 30.2% for the full year adjusted EBITDA margin, and our next year guidance itself is 31.5% at midpoint. So, even in this prudent guidance, we've taken a step ahead on improving the adjusted EBITDA margin.

Yeah. No, that's great. And I guess, secondly, just macro sensitivity, I mean, we're looking at a lot of potential, I guess, volatility in the macro. How resilient is your consumer base? I mean, it seems like utility payments, all the monthly bills, it seems very recurring. Could you -- if we'd go into macro, like, slowdown, could you even benefit if gas prices -- like, basically utility prices came down at the same time as your payment streams were stable, it would actually be a net benefit potentially, but maybe walk through your macro sensitivity.

Yeah, actually, thank you, David. That's one of the reasons why we actually wanted to call out our historical resilience of our business relative to macroeconomic headwinds as well as recessionary pressures. We have been operating the business for quite some time and we have dealt with different headwinds. And frankly, in each of those, even though each macroeconomic environment or event has its own personality, but we have been able to grow the business during each of those primarily because of the non-discretionary nature of the household bills. Every industry we are operating in has non-discretionary part of the household economy involved. In terms of your question, there are certain scenarios where -- your question related to the benefits, there are certain scenarios we could see them benefit. Of course, if consumers start making payments, which are smaller but more frequently, that changes the dynamic for us. But we're not factoring any of that in. We are simply focused on trying to make sure our investors understand that you're investing and you have invested in a business that is dealing with non-discretionary household bills. People still need to have a roof on their -- over their heads, they still need to use electricity, water, gas to prepare food and so on or go to work in the car, et cetera. So, all of that non-discretionary side of the economy still needs to continue on regardless of what's happening in the macroeconomic environment.

Yeah. Thank you, guys. Good job.

Thank you, David.

Thank you. Our next question comes from Tien-Tsin Huang of JPMorgan. Your line is now open.

Thank you so much. Terrific results. I want to ask, for both of you, just thinking about the comment of your confidence to grow without new sales, is that comment more from the strong backlog that you have and confidence in converting the backlog, or are you also seeing higher penetration of on-network e-payments? Is that part of the equation as well? Just trying to better understand what's evolving.

It's combination of both. It's combination of both the same-store sales as well as the backlog. And as we pointed out actually, we are very proud of the year we have had in 2024 because of the foundation it sets not only for what we were able to achieve in 2024, but frankly, our next two-year horizon. So, we are very excited about that. And the strong backlog which was net of the billers which went live in the 3Q also gives us tremendous confidence. So, we just wanted to make sure that we follow the same prudence, same grounded guidance methodology which has served us very well that we want to be able to give the view to our investors that we can deliver the top-end of our guidance without signing a new client. And obviously, provided we implement, we continue to onboard our backlog and so on. Sanjay, do you want to add?

If I may just add together with the backlog and the same-store sales, I would also say our pipeline we see that very strong. And the pace at which we have seen the pipeline converting to backlog over the past one year has been moving at a very, very good pace. And assuming those trends continue, we will be in a good shape. I think we are confident because of all these factors.

Yeah. And just client decision making on the biller side to board in a timely way, I know the stock market is obviously gyrating a lot here, is there any influence? Does it help, hurt? It doesn't sound like you're seeing any change in decision making, but just wanted to check on this on the sensitivity there.

We are not seeing anything in that regard. Sometimes it can be actually these type of uncertain times could be beneficial because people are looking for efficient workflows and modernization to be able to bring about more efficiencies and reduce their cost to serve their customers, while also improving their customer experience.

Thank you, Dushyant. Thank you.

Thank you, Tien-Tsin.

Thank you. Our next question comes from John Davis of Raymond James. Your line is now open.

Hey, good afternoon, guys. Sanjay and Dushyant, it looks like there's been a pretty big step function change in your success with large enterprise billers over the last couple of quarters. So, just curious what you guys think have driven that. Is that an industry change? Is that something you guys are doing? And then, maybe highlight what verticals you're having success on the enterprise side?

Thank you, John. I think the main thing I would say is that what's transpiring right now is that the level of advancements that are taking place or the level of sophistication of the workflows the clients need to automate, what's happening is they're not able to do that in-house. Previously, some part of the biller segment, especially on the larger end, was beyond reach for any third-party service provider. And we used to think about legacy providers as the primary go-get for us. And now, we are looking at actually legacy infrastructure legacy installed base regardless of who it is; it could be in-house, it could be combination of in-house and other providers. And what we are seeing is as a result of that, combining our platform with our IPN ecosystem, it's not easy to create that type of a reach for any company, whether it is a player in similar space to Paymentus or actually our own potential clients, prospective clients. And that's what we are seeing. And other part which is also very important is, as the digital adoption is taking place and is becoming more and more a bigger part of a given client's payment ecosystem, there is a pressing need to look at the entire efficiency, the workflows and the efficiencies on -- throughout those workflows, throughout those organization -- throughout the organization, whether it's inbound, whether it's outbound flows of payments. So, all of that combined gives us a pretty strong leg up actually because we start on the revenue side of the house and then we can also help all of the other workflows. So, that is what is causing the shift in how clients feel that they now have a partner who can deliver cost efficiencies through innovation, but also improve the workflow through innovative framework as well.

Okay. Any color on verticals? Is it broad-based kind of across the board, or is it like one or two specific verticals where you're having success with enterprises?

Across the board, actually. All of our verticals are doing very well. We have been one of the key decision point we made early on as an organization was that we want to design our platform, which can scale to any vertical and any size of the biller. And you're seeing combination of both right now in action where large -- no biller is too large for us, no company is too small and no vertical is too far from our ability to implement them.

Okay, great. And just as a quick follow-up, I think Sanjay mentioned M&A on the prepared remarks. First time in a while I've heard you guys kind of mention M&A, obviously no debt, $200 million-plus of cash on the balance sheet. So, maybe just remind us kind of what would make sense, what would you target from an M&A perspective?

Thank you, John. I think that's one of the things -- the reason we called out M&A in the opening remarks was that there is just lot of activity, lot of books we get to see. And we are in a very fortunate situation that there is no functional gap, there is nothing really we need to go get, there are no gaps per se. And we are also operating with a pretty strong balance sheet and generating cash. So, all of those combination actually gives us the ability to be very selective. And one of the things which we are taking a look at is, are there entities out there, which could where we could be opportunistic and that are accretive both on the top-line or bottom-line or at least one of them, if not immediately, but in a short order. So, those are -- that's what we are looking at.

Okay. Appreciate it. Thanks, guys.

Thank you, John.

Thank you. [Operator Instructions] We'll now be moving on to our next question. Our next question comes from Andrew Bauch of Wells Fargo. Your line is now open.

Hey, guys. Nice set of results, and thanks for taking the question. Sanjay, you kind of teased this with the interchange potentially becoming a revenue center. I was hoping you can kind of just expand upon that a little bit more. Is it -- would that come in the form of new products, new partnerships? Is it a restructuring of how the existing model is organized today? Just want to better understand your bullishness around interchange.

Thank you, Andrew. This is Dushyant. I think the primary reason we wanted to bring this out in the open was we wanted to make sure our investors have a clear view how we are -- what is the strategy behind our business and why we have chosen the top-line and the bottom-line as our two primary metrics, while OpEx and CP are the secondary. In addition to that, I think all of the things you highlighted, the production solutions as we talked about in our opening remarks, we are looking at those -- even though this is a outer year, not immediate opportunity, but we are thinking through what production services and solutions we could be offering that can help monetize interchange. Partnerships is the other angle you talked about, absolutely. And third is the flows of payments, the outbound payments and even for inbound are other opportunities for partnership and frankly product and solutions. So, more to come on that, but that's where we see the opportunity in multiple dimensions.

Great. Thank you. And then, my follow-up question is, I don't know if we've spoken about this before, but does DOGE have any impact on your business? I know that you guys are more exposed on the local level than the federal level, but then again, too, budgets are kind of being shifted around and moved pretty rapidly. So, maybe, is there any kind of risk there or isn't there even maybe an opportunity as Elon and the team kind of find government legacy systems that a lot of these agencies are being run on?

Yeah. First of all, there is no risk to us. We don't deal with -- we don't have any contracts with federal government yet. But obviously, there could be opportunities as they look for modern systems versus the legacy solutions they've been operating with. In terms of the local municipalities and so on, which is where our focus has been, we actually are in a pretty unique situation where we are the source of revenues for all of these agencies. So, we feel very good about which part of the economy we are serving and which part of the workflow we are serving for them. So, we feel good about you still have to pay your bills, so whether it is water bills or property taxes and so on.

Great. Thank you.

Thank you, Andrew.

Thank you. Our next question comes from Matt O'Neill of FT Partners. Your line is now open.

Yeah. Hi. Good afternoon, gentlemen. Just curious to confirm, I believe the sort of methodology and philosophy around guidance is exactly the same as it's been in prior years. Dushyant, you mentioned at the beginning of this call before Sanjay went through the guide just that you'd be confident in your ability to hit the top end of the range without any new signings. I believe that's how you guys have contextualized the guide in prior years. If you could just confirm that first?

Yes, that's absolutely right, Matt. We are following the very similar guidance, same philosophy of coming with quarter and annual guide as we follow in the prior year. We want to be prudent in our approach. We want to remain grounded and execute well. And with the benefit of hindsight, this approach of guidance has served us well. And when we say top end is achievable, which means we don't need any new customer bookings to get there, but definitely we have to continue doing the implementations as planned. So, yeah, we remain committed to our CAGR model and that's the basis.

Understood. Appreciate that. And just two questions around the evolving mix of the business as it goes into larger enterprise and you mentioned in the prepared remarks, larger billers seeking volume-based discounts. We still saw the observable revenue per transaction tick higher. So, is it just that volume-based discounts are being more than offset by a mix of more card funded payments by consumers at newer partners? I just want to unpack kind of those dynamics. Thank you.

Yeah, Matt. So, what's happening is as we are adding these large enterprise customers, their revenue per transaction is higher than what we had before we started onboarding these large customers. So, our average revenue per transaction for the entire company is now increasing. As you saw, it's like $1.55. Our contribution profit per transaction is very similar, $0.52 per transaction as it came in Q4 versus $0.53 per transaction in the prior year same period. So overall, what we are seeing is we are getting the benefit of volume. Our profitability is further helping -- sorry, our profitability is growing because the contribution profit per transaction is very similar. And because we have very good operating leverage, we are able to increase our adjusted EBITDA and margins both. So, the revenue is higher. Maybe you'll see the network fees is also higher, but contribution profit per transaction is coming similar. So, this dynamic could change and shift as we onboard not only large-sized clients, but mid-size and small-sized, because we have a large TAM to capture as Dushyant mentioned in his opening remarks. And on our journey to market capture, we could be getting clients of different sizes, different verticals, and they could change our per transaction dynamics. And although we think per transaction is more of an output of our model rather than an input, our goal still remains that can we deliver good growth and provide a decent profitability. Rule of 40, which came to a record 62, is kind of indicative of our strategy that the contribution profit is not really meaningful in itself unless and until it's combined with the operating leverage. And that's the message we want to bring home. In the past few quarters, we've tried to do that. We want to make sure that's well understood by the entire investor base that our adjusted EBITDA growth and margin is a mix of contribution profit and operating leverage, which all starts from getting higher revenues. Hence, they are our primary metrics.

Understood. Thank you for the commentary. Appreciate it.

Sure.

Thank you. There seem to be no questions waiting at this time. So, I'll now pass it back over to the management team for any closing remarks.

Thank you, everyone. Have a great day. Thanks. Bye-bye.