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What changed in Paymentus Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Paymentus Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+261 added−245 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-05)

Top changes in Paymentus Holdings, Inc.'s 2024 10-K

261 paragraphs added · 245 removed · 212 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

145 edited+37 added−16 removed580 unchanged
Biggest changeOur effective tax rate could increase due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate due to differing statutory tax rates in various jurisdictions; • changes in tax laws, tax treaties and regulations or the interpretation thereof, including the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act and the Emergency Coronavirus Relief Act and the Inflation Reduction Act of 2022; • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations or administrative appeals; and • limitations or adverse findings regarding our ability to do business in some jurisdictions.
Biggest changeOur effective tax rate could increase due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate due to changes in our business or differing statutory tax rates in various jurisdictions; • changes in tax laws, tax treaties and regulations or the interpretation thereof, which may materially impact our results of operations, or the way we conduct our business; • changes to our assessment about our ability to realize our deferred tax assets that are based on our future results, sources of taxable income, the prudence and feasibility of possible tax planning strategies and the economic and political environments in which we do business; 38 • the outcome of current and future tax audits, examinations or administrative appeals and the impact on our ability to sustain our reporting positions; and • limitations or adverse findings regarding our ability to do business in some jurisdictions.
These payment types are gaining increasing traction with consumers, and as a result, are viewed as increasingly important by billers and financial institutions. Payment Channels: Our platform offers an omni-channel payment infrastructure, which means that it enables bill payments through all the traditional payment channels billers and consumers expect, as well as many emerging payment channels.
These payment types are gaining increasing traction with consumers, and as a result, are viewed as increasingly important by billers and financial institutions. Payment Channels: Our platform offers an omni-channel payment infrastructure, which means that it enables bill payments through all the traditional payment channels that billers and consumers expect, as well as many emerging payment channels.
Many billers avoid accepting payment information over the phone by directing consumers to websites or automated phone systems, which creates poor experiences and results in abandoned payments. Our Secure Service allows the biller’s employee and the consumer to remain connected throughout the process, while removing the biller’s employee from PCI-DSS scope by concealing payment details.
Many billers avoid accepting payment information over the phone by directing consumers to websites or automated phone systems, which creates poor experiences and results in abandoned payments. Our Secure Service allows the biller’s employee and the consumer to remain connected throughout the process, while removing the biller’s employee from the PCI-DSS scope by concealing payment details.
We also allow our billers financial institutions to adopt a hybrid approach that leverages our APIs for certain environments. • Configurable: Our platform can rapidly and cost-effectively reconfigure our business logic to accommodate the specific requirements of the different end markets we serve.
We also allow our billers and financial institutions to adopt a hybrid approach that leverages our APIs for certain environments. • Configurable: Our platform can rapidly and cost-effectively reconfigure our business logic to accommodate the specific requirements of the different end markets we serve.
Sales and marketing to large organizations involve risks that may not be present, or that are present to a lesser extent, with sales and marketing to other, smaller organizations. 20 We must invest significant time educating and selling to multiple management and technical decision-makers to obtain their support.
Sales and marketing to large organizations involve risks that may not be present, or that are present to a lesser extent, with sales and marketing to other, 20 smaller organizations. We must invest significant time educating and selling to multiple management and technical decision-makers to obtain their support.
The legislative and regulatory landscapes for privacy, data protection and information security continue to evolve in jurisdictions worldwide, with an increasing focus on privacy and data protection issues with the potential to affect our business.
The legislative and regulatory landscapes for privacy, data protection and information security continue to evolve in jurisdictions worldwide, with an increasing focus on privacy and data protection issues with the potential to affect our business.
The U.S. federal and various state and foreign governments have also adopted or proposed limitations on the collection, distribution, use and storage of data relating to individuals and businesses, including the use of contact information and other data for marketing, advertising and other communications with individuals and businesses.
The U.S. federal and various state and foreign governments have also adopted or proposed limitations on the collection, distribution, use and storage of data relating to individuals and businesses, including the use of contact information and other data for marketing, advertising and other communications with individuals and businesses.
In the United States, various laws and regulations apply to the security, collection, processing, storage, use, disclosure and other processing of certain types of data, including the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Gramm Leach Bliley Act, and state and local laws relating to privacy and data security.
In the United States, various laws and regulations apply to the security, collection, processing, storage, use, disclosure and other processing of certain types of data, including the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Gramm Leach Bliley Act, and state and local laws relating to privacy and data security.
Additionally, the FTC and many state attorneys general have interpreted and are continuing to interpret federal and state consumer protection laws to impose standards for the online collection, use, dissemination, processing and security of data.
Additionally, the FTC and many state attorneys general have interpreted and are continuing to interpret federal and state consumer protection laws to impose standards for the online collection, use, dissemination, processing and security of data.
However, if our privacy, data protection or information security measures or those of the previously mentioned third parties are inadequate, breached or otherwise compromised, including as a result of third-party action, employee or contractor error, malfeasance, malware, phishing, hacking, system error, software bugs or defects in our products, trickery, process failure, or otherwise, and, as a result, there is improper disclosure of, or someone obtains unauthorized access to or exfiltrates funds or accesses, modifies, corrupts, or destroys any sensitive and personal data on our systems or our partners’ systems, or if we suffer a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged.
However, if our privacy, data protection or information security measures or those of the previously mentioned third parties are inadequate, breached or otherwise compromised, including as a result of third-party action, employee or contractor error, malfeasance, malware, phishing, hacking, system error, software bugs or defects in our products, trickery, process failure, or otherwise, and, as a result, there is improper disclosure of, or someone obtains unauthorized access to or exfiltrates funds or accesses, modifies, corrupts, or destroys any sensitive or personal data on our systems or our partners’ systems, or if we suffer a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged.
Among other things, these provisions provide that: • we have a dual class common stock structure, with differing voting rights; 50 • the authorized number of directors may be changed only by resolution of the board of directors; • any vacancies on the board of directors and any newly created directorships may only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • our board of directors is divided into three classes, each of which stands for election once every three years; • there is no cumulative voting; • the board of directors may issue "blank check" preferred stock that our board of directors could use to implement a stockholder rights plan; • the board of directors may adopt, alter or repeal our bylaws; • the forum for certain litigation against us is restricted to Delaware; and • stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also meet specific requirements as to the form and content of a stockholder’s notice.
Among other things, these provisions provide that: • we have a dual class common stock structure, with differing voting rights; • the authorized number of directors may be changed only by resolution of the board of directors; • any vacancies on the board of directors and any newly created directorships may only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • our board of directors is divided into three classes, each of which stands for election once every three years; • there is no cumulative voting; • the board of directors may issue "blank check" preferred stock that our board of directors could use to implement a stockholder rights plan; • the board of directors may adopt, alter or repeal our bylaws; • the forum for certain litigation against us is restricted to Delaware; and • stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also meet specific requirements as to the form and content of a stockholder’s notice.
Any failure or perceived failure by us or our employees or contractors to comply with existing or new laws, rules, regulations, licensing schemes, industry standards or orders of any governmental authority (including changes to or expansion of the interpretation of those laws, regulations, standards or orders), may, among other things: • subject us to significant fines, penalties, criminal and civil lawsuits, license suspension or revocation, forfeiture of significant assets, audits, inquiries, whistleblower complaints, adverse media coverage, investigations and enforcement actions in one or more jurisdictions levied by federal, state, local or foreign regulators, state attorneys general and private plaintiffs who may be acting as private attorneys general pursuant to various applicable federal, state and local laws; • result in additional compliance and licensure requirements; • increase regulatory scrutiny of our business; • restrict our operations, product features, quality and breadth and depth of functionality; and • force us to change our business practices or compliance program, make product or operational changes or delay planned product launches or improvements.
Any failure or perceived failure by us or our employees or contractors to comply with existing or new laws, rules, regulations, licensing schemes, industry standards or orders of any governmental authority (including changes to or expansion of the interpretation of those laws, regulations, standards or orders), may, among other things: • subject us to significant fines, penalties, criminal and civil lawsuits, license suspension or revocation, forfeiture of significant assets, audits, inquiries, whistleblower complaints, adverse media coverage, investigations and enforcement actions in one or more jurisdictions levied by federal, state, local or foreign regulators, state attorneys general and private plaintiffs who may be acting as private attorneys general pursuant to various applicable federal, state and local laws; • result in additional compliance costs and licensure requirements; • increase regulatory scrutiny of our business; • restrict our operations, product features, quality and breadth and depth of functionality; and • force us to change our business practices or compliance program, make product or operational changes or delay planned product launches or improvements.
Our IPN promotes more rapid adoption of our platform through an extensive partnership ecosystem with leading business networks, including: • Banking Partners: We modernize the bill payment infrastructure of banks and credit unions of all sizes, empowering their digital banking consumers with fast, secure and omni-channel payment technology by seamlessly integrating our solution into their digital platforms. • eCommerce Partner: We power electronic bill payments through the mobile app and AI-assistant voice service of a leading global ecommerce retailer, enabling millions of its users to retrieve information about, and pay, their bills for all billers on our network. • PayPal: We enable PayPal’s U.S. consumers to pay their bills directly from PayPal apps. • Other Partners: Other partners benefit from our IPN in a variety of ways, such as enabling bill payment for consumers across the U.S.
Our IPN promotes more rapid adoption of our platform through an extensive partnership ecosystem with leading business networks, including: • Banking Partners: We modernize the bill payment infrastructure of banks and credit unions of all sizes, empowering their digital banking consumers with fast, secure and omni-channel payment technology by seamlessly integrating our solution into their digital platforms. • eCommerce Partners: We power electronic bill payments through the mobile app and AI-assistant voice service of a leading global ecommerce retailer, enabling millions of its users to retrieve information about, and pay, their bills for all billers on our network. • PayPal: We enable PayPal’s U.S. consumers to pay their bills directly from PayPal apps. • Other Partners: Other partners benefit from our IPN in a variety of ways, such as enabling bill payment for consumers across the U.S.
Such risks include, but are not limited to (1) extreme societal, economic and financial market volatility, resulting in business shutdowns and a global economic downturn, (2) uncertainty regarding the duration, timing and severity of the impact of such health issues on consumer behavior, (3) transitioning to and operating our business with a remote workforce, which can negatively impact employee productivity, training and collaboration as well as our sales and marketing efforts and our implementation cycles, (4) increased risks of security breaches or incidents due to remote operations and the costs associated with enhancing the security of our platform, data and internal information technology, or IT, infrastructure, and (5) the disruption of the operations of our billers, financial institutions and partners that may impact our operations.
Such risks include, but are not limited to (1) extreme societal, economic and financial market volatility, resulting in business shutdowns and a global economic downturn, (2) uncertainty regarding the duration, timing and severity of the impact of such health issues on consumer behavior, (3) operating our business with a remote workforce, which can negatively impact employee productivity, training and collaboration as well as our sales and marketing efforts and our implementation cycles, (4) increased risks of security breaches or incidents due to remote operations and the costs associated with enhancing the security of our platform, data and internal information technology, or IT, infrastructure, and (5) the disruption of the operations of our billers, financial institutions and partners that may impact our operations.
If we lose the services of one or more of our internet-hosting or bandwidth providers for any reason or if their services are disrupted, for example due to viruses, ransomware, denial of service or other attacks on their systems, or due to human error, intentional bad acts, power loss, hardware failures, telecommunications failures, fires, wars, terrorist attacks, floods, earthquakes, hurricanes, tornadoes or similar catastrophic events, we could experience disruption in our ability to offer our solutions and adverse perception of our solutions’ reliability, or we could be required to retain the services of replacement providers, which could increase our operating costs and materially and adversely affect our business, operating results and financial condition.
If we lose the services of one or more of our internet-hosting or bandwidth providers for any reason or if their services are disrupted, for example due to viruses, ransomware, 40 denial of service or other attacks on their systems, or due to human error, intentional bad acts, power loss, hardware failures, telecommunications failures, fires, wars, terrorist attacks, floods, earthquakes, hurricanes, tornadoes or similar catastrophic events, we could experience disruption in our ability to offer our solutions and adverse perception of our solutions’ reliability, or we could be required to retain the services of replacement providers, which could increase our operating costs and materially and adversely affect our business, operating results and financial condition.
We are an emerging growth company, and for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to "emerging growth companies," including: • exemption from the requirement to have our registered independent public accounting firm attest to management’s assessment of our internal control over financial reporting; • exemption from compliance with the requirement of the PCAOB regarding the communication of critical audit matters in the auditor’s report on the financial statements; • reduced disclosure about our executive compensation arrangements; and 49 • exemption from the requirement to hold non-binding advisory votes on executive compensation or golden parachute arrangements.
We are an emerging growth company, and for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to "emerging growth companies," including: • exemption from the requirement to have our registered independent public accounting firm attest to management’s assessment of our internal control over financial reporting; • exemption from compliance with the requirement of the PCAOB regarding the communication of critical audit matters in the auditor’s report on the financial statements; • reduced disclosure about our executive compensation arrangements; and • exemption from the requirement to hold non-binding advisory votes on executive compensation or golden parachute arrangements.
Completed and future acquisitions may result in unforeseen operational difficulties and expenditures associated with: • incorporating new businesses and technologies into our infrastructure; • consolidating operational and administrative functions; • coordinating outreach to our community; • maintaining morale and culture and retaining and integrating key employees; • maintaining or developing controls, procedures and policies (including effective internal control over financial reporting and disclosure controls and procedures); and • identifying and assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations, intellectual property issues, commercial disputes, taxes and other matters.
Completed and future acquisitions may result in unforeseen operational difficulties and expenditures associated with: • incorporating new businesses and technologies into our infrastructure; • consolidating operational and administrative functions; • coordinating outreach to our community; • maintaining morale and culture and retaining and integrating key employees; 28 • maintaining or developing controls, procedures and policies (including effective internal control over financial reporting and disclosure controls and procedures); and • identifying and assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations, intellectual property issues, commercial disputes, taxes and other matters.
These factors could include, among others, actual or perceived events such as liquidity constraints or failures such as the market-wide liquidity problems that were experienced after Silicon Valley Bank, Signature Bank and Silvergate Capital Corp. were each placed into receivership in 2023 (“Bank Events of 2023”), the ability to perform obligations under various types of settlement, financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry, companies that do business with such companies or companies that have customers or partners that do business with such companies.
These factors could include, among others, actual or perceived events 29 such as liquidity constraints or failures such as the market-wide liquidity problems that were experienced after Silicon Valley Bank, Signature Bank and Silvergate Capital Corp. were each placed into receivership in 2023 (“Bank Events of 2023”), the ability to perform obligations under various types of settlement, financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry, companies that do business with such companies or companies that have customers or partners that do business with such companies.
Any prolonged service disruption affecting our platform for any of the foregoing reasons could result in lengthy interruptions in the delivery 39 of our platform, products or services, cause system interruptions, prevent our billers, financial institutions, partners or consumers from accessing their accounts online, damage our reputation with current and potential billers, financial institutions, partners or consumers, expose us to liability, cause us to lose billers, financial institutions, partners or consumers, cause the loss or unavailability of critical data, prevent us from supporting our platform, products or services, result in regulatory investigations, enforcement actions and litigation or cause us to incur additional expense in investigating, remediating and responding to these disruptions and arranging for new facilities and support or otherwise harm our business.
Any prolonged service disruption affecting our platform for any of the foregoing reasons could result in lengthy interruptions in the delivery of our platform, products or services, cause system interruptions, prevent our billers, financial institutions, partners or consumers from accessing their accounts online, damage our reputation with current and potential billers, financial institutions, partners or consumers, expose us to liability, cause us to lose billers, financial institutions, partners or consumers, cause the loss or unavailability of critical data, prevent us from supporting our platform, products or services, result in regulatory investigations, enforcement actions and litigation or cause us to incur additional expense in investigating, remediating and responding to these disruptions and arranging for new facilities and support or otherwise harm our business.
Our business will be harmed if any provider of such software or other technologies: • discontinues or limits our access to its software or other technologies; • modifies its terms of service or other legal terms or policies, including fees charged to, or other restrictions on us; • changes how information is accessed by us or our billers, financial institutions or partners or their consumers; • has performance or other problems that affect the perception of our platform, products or services; 38 • establishes exclusive or more favorable relationships with one or more of our competitors; or • develops or otherwise favors its own competitive offerings over our platform or products.
Our business will be harmed if any provider of such software or other technologies: • discontinues or limits our access to its software or other technologies; • modifies its terms of service or other legal terms or policies, including fees charged to, or other restrictions on us; • changes how information is accessed by us or our billers, financial institutions or partners or their consumers; • has performance or other problems that affect the perception of our platform, products or services; • establishes exclusive or more favorable relationships with one or more of our competitors; or • develops or otherwise favors its own competitive offerings over our platform or products.
If our policies, procedures or measures relating to privacy, data protection, information security or the processing of data for marketing purposes or consumer 33 communications fail to comply with laws, regulations, policies, legal obligations or industry standards, we may be subject to governmental enforcement actions, litigation, regulatory investigations, fines, penalties and negative publicity, and could cause our application providers, billers, financial institutions and partners to lose trust in us, and have an adverse effect on our business, operating results and financial condition.
If our policies, procedures or measures relating to privacy, data protection, information security or the processing of data for marketing purposes or consumer communications fail to comply with laws, regulations, policies, legal obligations or industry standards, we may be subject to governmental enforcement actions, litigation, regulatory investigations, fines, penalties and negative publicity, and could cause our application providers, billers, financial institutions and partners to lose trust in us, and have an adverse effect on our business, operating results and financial condition.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our 51 bylaws also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States are the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our bylaws also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States are the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
Our bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, and also provide that the federal district courts are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, each of which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.
Our bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, and also provide that the federal district courts are the 51 exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, each of which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.
Chatbot: Enable billers to engage with consumers through an automated, AI-powered interface that constantly improves the customer service experience through data-driven insights. PayPal App: Leveraging our APIs, PayPal’s U.S. consumers can pay their bills directly from PayPal. Secure Service: Our patented Secure Service feature enables billers to accept payments over the phone while minimizing PCI-DSS compliance risk.
Chatbot: Enables billers to engage with consumers through an automated, AI-powered interface that constantly improves the customer service experience through data-driven insights. PayPal App: Leveraging our APIs, PayPal’s U.S. consumers can pay their bills directly from PayPal. Secure Service: Our patented Secure Service feature enables billers to accept payments over the phone while minimizing PCI-DSS compliance risk.
In late 2023, the CFPB proposed new federal oversight of large technology firms and providers of digital wallets and payment applications that would require large nonbank financial companies handling more than 5 million transactions per year to adhere to the same rules as large banks, credit unions, and other financial institutions already supervised by the CFPB.
Also, in late 2023, the CFPB proposed new federal oversight of large technology firms and providers of digital wallets and payment applications that would require large nonbank financial companies handling more than 5 million transactions per year to adhere to the same rules as large banks, credit unions, and other financial institutions already supervised by the CFPB.
In particular, under the GDPR, EU data protection authorities have the power to impose administrative fines for violations of the GDPR of up to a maximum of €20 million or 4% of the data controller’s or data processor’s total global turnover for the preceding fiscal year, whichever is higher, and violations of the GDPR may also lead to damages claims by data controllers and data subjects.
In particular, under the GDPR, EU data protection authorities have the power to impose administrative fines for violations of the GDPR of up to a maximum of €20 million or 4% of the data controller’s or data processor’s total global turnover for the preceding fiscal year, whichever is higher, and violations of the GDPR may 33 also lead to damages claims by data controllers and data subjects.
This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, operating results and financial condition. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business.
This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, operating results and financial condition. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect 34 the growth of our business.
Information security risks for technology companies such as ours have significantly increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of 43 organized crime, hackers, terrorists and other external parties as well as nation-state and nation-state-supported actors.
Information security risks for technology companies such as ours have significantly increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties as well as nation-state and nation-state-supported actors.
Sales of a substantial number of shares of our Class A common stock, particularly sales by our directors, executive officers and principal stockholders, or the perception that such sales may occur could cause the market price of our Class A common stock to fall or make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate.
Sales of a substantial number of shares of our Class A common stock, particularly sales by our directors, executive officers and principal stockholders, or the perception that such sales may occur could cause the market price of our Class 47 A common stock to fall or make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate.
In particular, if we are unable to adapt to the needs of our partners’ platforms, software and solutions, our billers’, financial institutions' and partners’ operations may be disrupted, which could result in disputes with our billers, financial institutions or partners or their consumers or other third parties and additional costs to address the situation.
In particular, if we are unable to adapt to the needs of our partners’ platforms, software and solutions, our billers’, financial institutions’ and partners’ operations may be disrupted, which could result in disputes with our billers, financial institutions or partners or their consumers or other third parties and additional 39 costs to address the situation.
Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours.
Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized 42 third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours.
For additional discussion of how intellectual property protection affects our business, see the section titled "Risk Factors—Risks Related to Our Technology and Intellectual Property." 16 Government Regulation Various aspects of our business and service areas are subject to U.S. federal, state, and local regulation, as well as regulation outside the United States.
For additional discussion of how intellectual property protection affects our business, see the section titled "Risk Factors—Risks Related to Our Technology and Intellectual Property." 16 Government Regulations Various aspects of our business and service areas are subject to U.S. federal, state, and local regulation, as well as regulation outside the United States.
By being connected to our IPN, our IPN partners provide their consumers with the full capabilities of our next-generation product suite, including the ability to engage with and make payments to our large and growing base of billers. Those partners in turn expand our platform’s reach to millions of additional consumers in the United States and globally.
By being connected to our IPN, our IPN partners provide their consumers and businesses with the full capabilities of our next-generation product suite, including the ability to engage with and make payments to our large and growing base of billers. Those partners in turn expand our platform’s reach to millions of additional consumers in the United States and globally.
Certain U.S. state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information than international, federal, or other state laws, 32 and such laws may differ from each other, which may complicate compliance efforts.
Certain U.S. state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information than international, federal, or other state laws, and such laws may differ from each other, which may complicate compliance efforts.
Even if we believe that these claims are without merit, litigation may be necessary to determine the scope and validity of intellectual property or proprietary rights of others or to protect or enforce our intellectual property rights. The ultimate outcome of any litigation is often uncertain.
Even if we believe that these claims are without merit, 45 litigation may be necessary to determine the scope and validity of intellectual property or proprietary rights of others or to protect or enforce our intellectual property rights. The ultimate outcome of any litigation is often uncertain.
To grow our business, we will seek to expand our existing and establish additional relationships with strategic, software and IPN partners. Establishing such relationships, particularly with financial institutions and other large enterprises, entails extensive sales and marketing efforts with no guarantee of success.
To grow our business, we will seek to expand our existing partnerships and establish additional relationships with strategic, software and IPN partners. Establishing such relationships, particularly with financial institutions and other large enterprises, entails extensive sales and marketing efforts with no guarantee of success.
In addition, if we have any such errors, defects or other performance problems, our billers, 40 financial institutions or partners could seek to terminate, or elect not to renew, their contracts with us, delay or withhold payment or assert claims against us.
In addition, if we have any such errors, defects or other performance problems, our billers, financial institutions or partners could seek to terminate, or elect not to renew, their contracts with us, delay or withhold payment or assert claims against us.
Accordingly, should the interests of our management and AKKR differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for New York Stock Exchange-listed companies.
Accordingly, should the interests of our management and AKKR differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are 50 subject to all of the corporate governance rules for New York Stock Exchange-listed companies.
Our business could 34 be adversely affected by changes to the application or interpretation of existing laws, rules and regulations governing our platform’s communication capabilities, or the enactment of new laws, rules and regulations, and by our and our billers’ and partners’ failure to comply with such laws, rules and regulations in using our platform.
Our business could be adversely affected by changes to the application or interpretation of existing laws, rules and regulations governing our platform’s communication capabilities, or the enactment of new laws, rules and regulations, and by our and our billers’ and partners’ failure to comply with such laws, rules and regulations in using our platform.
In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit billers’ and financial institutions' ability to implement our products in those countries.
In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit billers’ and 37 financial institutions’ ability to implement our products in those countries.
We generally control access to and use of our software and other proprietary or confidential information through the use of internal and external controls, including entering into non-disclosure and confidentiality agreements with both our employees and third parties who have access to our software and other confidential information.
We generally control access to and use of our software and other proprietary or confidential information through internal and external controls, including entering into non-disclosure and confidentiality agreements with both our employees and third parties who have access to our software and other confidential information.
We are subject to many risks associated with widespread health issues, such as the recent COVID-19 pandemic, which can result in significantly curtailed movement of people (both government-mandated and voluntary), goods and services.
We are subject to many risks associated with widespread health issues, such as the COVID-19 pandemic, which can result in significantly curtailed movement of people (both government-mandated and voluntary), goods and services.
Our billers, financial institutions and consumers store personal and business information, financial information and other sensitive information on our platform. In addition, we receive, store, handle, transmit, use and otherwise process personal and business information and other data from and about actual and prospective billers and financial institutions, as well as our employees and service providers.
Our billers, financial institutions and consumers store personal and business information, financial information and other sensitive information on our platform. In addition, we receive, store, handle, transmit, use and otherwise process 32 personal and business information and other data from and about actual and prospective billers and financial institutions, as well as our employees and service providers.
Any of these actions could result in liability, lost business, increased insurance costs, difficulty in collecting accounts receivable, costly litigation, regulatory actions, or adverse publicity, which could materially and adversely affect our business, operating results and financial condition.
Any of these actions could also result in liability, lost business, increased insurance costs, difficulty in collecting accounts receivable, costly litigation, regulatory actions, or adverse publicity, which could materially and adversely affect our business, operating results and financial condition.
Individuals that were involved in the development of intellectual property for 42 us or who had access to our intellectual property but who are not subject to invention assignment agreements may make adverse ownership claims to our current and future intellectual property.
Individuals that were involved in the development of intellectual property for us or who had access to our intellectual property but who are not subject to invention assignment agreements may make adverse ownership claims to our current and future intellectual property.
The Consumer Financial Protection Bureau, or CFPB, and several states have recently provided guidance or prohibitions against the use of convenience or similar "pay-to-pay" fees in certain industries that may impact us and our billers.
The Consumer Financial Protection Bureau, or CFPB, and several states have provided guidance or prohibitions against the use of convenience or similar "pay-to-pay" fees in certain industries that may impact us and our billers.
Factors that could cause fluctuations in the market price of our Class A common stock include the following: • market volatility and economic disruption caused by widespread health issues or pandemics; • actual or anticipated fluctuations in our operating results; • variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, such as annual guidance, and any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure and the significant voting control of Accel-KKR (“AKKR”) and our founder and chief executive officer; • additional shares of our Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, including if existing stockholders sell shares into the market; 46 • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors, such as the widespread market revaluation of technology companies generally in 2022; • price and volume fluctuations in the overall stock market, including as a result of trends in trading patterns or the economy as a whole; • lawsuits, claims or investigations threatened, filed or initiated against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
Factors that could cause fluctuations in the market price of our Class A common stock include the following: • market volatility and economic disruption; • actual or anticipated fluctuations in our operating results; • variations between our actual operating results, guidance, and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, such as annual guidance, and any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure and the significant voting control of Accel-KKR (“AKKR”) and our founder and chief executive officer; • additional shares of our Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, including if existing stockholders sell shares into the market; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors, such as the widespread market revaluation of technology companies generally in 2022; • price and volume fluctuations in the overall stock market, including as a result of trends in trading patterns or the economy as a whole; • lawsuits, claims or investigations threatened, filed or initiated against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
In addition, we, our employees, agents, representatives, business partners and third-party 37 intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.
In addition, we, our employees, agents, representatives, business partners and third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.
Any inability to 45 license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete.
Any inability to license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete.
These laws and regulations, such as the General Data Protection Regulation, or GDPR, are in certain cases more stringent than those in the United States.
These laws and regulations, such as the EU's General Data Protection Regulation, or GDPR, are in certain cases more stringent than those in the United States.
By powering this comprehensive network of billers and financial institutions, each with their own set of bill payment requirements, we believe we have created an enviable feedback loop that enables us to continuously drive innovation, grow our business and uniquely improve the electronic bill payment experience for participants in the bill payment ecosystem.
By powering this comprehensive network of billers and financial institutions, each with their own set of bill payment requirements, we believe we have created an enviable feedback loop with organic network effects that enables us to continuously drive innovation, grow our business and uniquely improve the electronic bill payment experience for participants in the bill payment ecosystem.
As we continue to grow and develop the infrastructure of a public company, we must effectively integrate, develop and motivate a growing number of new employees, who will be dispersed geographically, with our headquarters in Charlotte, North Carolina and a large employee presence across the United States and in Toronto, Canada and Delhi, India.
As we continue to grow and develop the infrastructure of a public company, we must effectively integrate, develop and motivate a growing number of new employees, who will be dispersed geographically, with our headquarters in Charlotte, North Carolina and a large employee presence across the United States, Canada and India.
Furthermore, up to 1,193,880 shares of Class A common stock may be issuable pursuant to warrant agreements with JPMC Strategic Investments I Corporation. These shares will become eligible for sale in the public market to the extent permitted by the vesting terms of the warrant, and Rules 144.
Furthermore, up to 1,193,880 shares of Class A common stock may be issuable pursuant to warrant agreements with JPMC Strategic Investments I Corporation. These shares will become eligible for sale in the public market to the extent permitted by the vesting terms of the warrant, and Rule 144.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, commerce in general and the global economy, and thus could harm our business. Our headquarters are located in Charlotte, North Carolina, and we have a large employee presence in the United States, Toronto, Canada and Delhi, India.
Natural disasters or other catastrophic events may cause damage or disruption to our operations, commerce in general and the global economy, and thus could harm our business. Our headquarters are located in Charlotte, North Carolina, and we have a large employee presence in the United States, Canada and India.
If our currently issued patents are maintained until the end of their terms, they will expire between 2025 and 2041. The expiration of these patents is not reasonably likely to have a material adverse effect on our business, financial condition or results of operations.
If our currently issued patents are maintained until the end of their terms, they will expire between 2025 and 2042. The expiration of these patents is not reasonably likely to have a material adverse effect on our business, financial condition or results of operations.
Item 1. Business Overview We are a leading provider of cloud-based bill payment technology and solutions. We deliver our next-generation product suite through a modern technology stack to more than 2,200 biller business and financial institution clients.
Item 1. Business Overview We are a leading provider of cloud-based bill payment technology and solutions. We deliver our next-generation product suite through a modern technology stack to more than 2,500 biller business and financial institution clients.
If we are unable to enhance our platform, add new payment methods or develop new products that keep pace with technological and regulatory change and achieve market acceptance, or if new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely than our products, our business, operating results and financial condition would be adversely affected.
If we are unable to enhance our platform, add new payment methods or develop or integrate new products that keep pace with technological and regulatory change and achieve market acceptance, or if new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently or more securely than our products, our business, operating results and financial condition could be adversely affected.
We simplify how bills are paid and help billers collect revenue faster and more profitably because our platform is: • Scalable: Enterprise-grade platform capable of supporting transaction growth for billers and financial institutions of all sizes across numerous industry verticals. • Innovative: Artificial intelligence, or AI, and machine learning, or ML, algorithms power an omni-channel, end-to-end solution that adapts to new technologies and continuously learns from transaction activity. • Flexible: Platform accessible through an array of application program interfaces, or APIs, software development kits, iFrames and fully hosted solutions that provide complete control over the user experience and real-time customer engagement experiences. 7 • Configurable: Reconfigurable business logic that allows us to quickly implement new functionality required by new and existing billers as we drive additional innovative solutions to our platform and beyond. • Integrated: Our significant and broad library of integrations to core accounting and billing software systems, including customer information systems, or CIS (which are software systems used to efficiently manage customer processes and data and often include bill pay, customer service and forecasting and analytics tools), and enterprise resource planning, or ERP, systems (which are software systems used to collect, store, manage and interpret data from many business activities, typically including accounting systems), as well as core financial institution processing platforms and certain digital banking providers, helps connect disparate systems across the electronic bill payment value chain. • Extensible: Adaptable to new technologies and emerging payment channels, such as pay-by-text, AI-based virtual assistants and social media payments. • Secure: Multi-layer intrusion detection and prevention system, multi-factor authentication and encryption and tokenization designed for trust and security of transaction activity and information.
We simplify how bills are paid and help billers collect revenue faster and more profitably because our platform is: • Scalable: Enterprise-grade platform capable of supporting transaction growth for billers and financial institutions of all sizes across numerous industry verticals. • Innovative and Learning Platform: Artificial intelligence, or AI, and machine learning, or ML, algorithms power an omni-channel, end-to-end solution that adapts to new technologies and continuously learns from transaction activity. • Flexible: Platform accessible through an array of application program interfaces, or APIs, software development kits, iFrames and fully hosted solutions that provide complete control over the user experience and real-time customer engagement experiences. • Customizable: Leveraging an advanced No Code Low Code (NCLC) framework, we are able to efficiently deploy business-specific workflows, user experiences and tailored analytics, 7 • Configurable: Reconfigurable business logic that allows us to quickly implement new functionality required by new and existing billers as we drive additional innovative solutions to our platform and beyond. • Integrated: Our significant and broad library of integrations to core accounting and billing software systems, including customer information systems, or CIS (which are software systems used to efficiently manage customer processes and data and often include bill pay, customer service and forecasting and analytics tools), and enterprise resource planning, or ERP, systems (which are software systems used to collect, store, manage and interpret data from many business activities, typically including accounting systems), as well as core financial institution processing platforms and certain digital banking providers, helps connect disparate systems across the electronic bill payment value chain. • Extensible: Adaptable to new technologies and emerging payment channels, such as pay-by-text, AI-based virtual assistants and social media payments. • Secure: Multi-layer intrusion detection and prevention system, multi-factor authentication and encryption and tokenization designed for trust and security of transaction activity and information.
Our platform incorporates software modules licensed to us by third-party authors under "open source" licenses, and we expect to continue to incorporate open source modules in our products and platform in the future.
Our platform incorporates software modules licensed to us by third-party authors under “open source” licenses, and we expect to continue to incorporate open source modules in our products and platform in the future.
Acquisitions also may require us to spend a substantial portion of our available cash, incur debt or other liabilities, amortize expenses related to intangible assets or incur write-offs of goodwill or other assets. In addition, integrating an acquired business or technology is risky.
Acquisitions also may require us to spend a substantial portion of our available cash, incur debt or other liabilities, amortize expenses related to intangible assets or incur write-offs of goodwill or other assets. In addition, integrating an acquired business or technology is risky and require unexpected investment.
As of December 31, 2023, the holders of approximately 105 million shares of our Class A common stock and Class B common stock, or certain permitted transferees, are entitled to require us to file registration statements under the Securities Act for the public resale of the shares of Class A common stock, including shares issuable upon conversion of their shares of Class B common stock, or to include such shares in registration statements that we may file, subject to certain conditions.
As of December 31, 2024, the holders of approximately 98 million shares of our Class A common stock and Class B common stock, or certain permitted transferees, are entitled to require us to file registration statements under the Securities Act for the public resale of the shares of Class A common stock, including shares issuable upon conversion of their shares of Class B common stock, or to include such shares in registration statements that we may file, subject to certain conditions.
In addition, several foreign countries and governmental bodies, including the EU, have established their own laws, rules and regulations addressing privacy, data protection and information security with regard to the handling and processing of sensitive and personal data obtained from their residents with which we or our billers, financial institutions or partners may need to comply.
In addition, several foreign countries and governmental bodies, including within the EU, China, Australia, and other countries, have established their own laws, rules and regulations addressing privacy, data protection and information security with regard to the handling and processing of sensitive and personal data obtained from their residents with which we or our billers, financial institutions or partners may need to comply.
We have elected to take advantage o f the "controlled company" exemption to the corporate governance rules for New York Stock Exchange-listed companies, which could make our Class A common stock less attractive to some investors or otherwise harm our stock price. AKKR controls a majority of the voting power of our outstanding common stock.
We may elect to take advantage o f the "controlled company" exemption to the corporate governance rules for New York Stock Exchange-listed companies, which could make our Class A common stock less attractive to some investors or otherwise harm our stock price. AKKR controls a majority of the voting power of our outstanding common stock.
For additional discussion on governmental regulation and payment network operating rules affecting our business, please see the section titled "Risk Factors—Risks Related to Regulation." Employees and Human Capital Resources As of December 31, 2023, we employed 1,273 full-time employees and a small number of part-time employees.
For additional discussion on governmental regulation and payment network operating rules affecting our business, please see the section titled "Risk Factors—Risks Related to Regulation." Employees and Human Capital Resources As of December 31, 2024, we employed 1,307 full-time employees and a small number of part-time employees.
Our platform offers cutting edge technology that enables partners to grow mind and wallet share with their consumers. Our Billers’, Financial Institutions' and Partners’ Consumers As our platform reaches more consumers, we capture and monetize more payment transactions. In December 2023, approximately 34 million consumers and businesses used our platform to pay their bills.
Our platform offers cutting edge technology that enables partners to grow mind and wallet share with their consumers. Our Billers’, Financial Institutions’ and Partners’ Consumers As our platform reaches more consumers, we capture and monetize more payment transactions. In December 2024, approximately 46 million consumers and businesses used our platform to pay their bills.
We have obtained or applied for patent protection in the United States and certain countries on certain material aspects of our proprietary technologies and we have registered or applied to register certain of our trademarks in the United States as well as certain countries.
We have obtained or applied for patent protection in the United States and certain countries on certain material aspects of our proprietary technologies and we have registered or applied to register certain of our trademarks in the United States and in specific countries.
These cybersecurity challenges, including threats to our own IT infrastructure or those of our billers, financial institutions or partners or their consumers or third-party service providers, may take a variety of forms ranging from stolen bank accounts, business email compromise, biller or financial institution employee fraud, account takeover, check fraud or cybersecurity attacks, to "mega breaches" targeting cloud-based services and other hosted software.
These cybersecurity challenges, including threats to our own IT infrastructure or those of our billers, financial institutions or partners or their consumers or third-party service providers, may take a variety of forms ranging from stolen bank accounts, business email compromises, biller or financial institution employee fraud, account takeover, check fraud or cybersecurity attacks, to “mega breaches” targeting cloud-based services and other hosted software.
Our platform is capable of posting payments directly to billers’ systems, which simplifies revenue operations and strengthens the relationship we have with billers.
Our platform is capable of posting payments directly to billers’ systems in real time, which simplifies revenue operations and strengthens the relationship we have with billers.
In addition, several foreign countries and governmental bodies, including the European Union, or EU, have established their own laws, rules and regulations addressing privacy, data protection and information security with regard to the handling and processing of sensitive and personal data obtained from their residents with which we or our billers, financial institutions or partners may need to comply.
Several foreign countries and governmental bodies, including China, Australia, the European Union, or EU, and other countries have also established their own laws, rules and regulations addressing privacy, data protection and information security with regard to the handling and processing of sensitive and personal data obtained from their residents with which we or our billers, financial institutions or partners may need to comply.
In the event of a major earthquake, hurricane or catastrophic event such as fire, power loss, telecommunications failure, vandalism, cyber-attack, war or terrorist attack affecting regions where we maintain operations or where our data centers are located, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our services, breaches of data security, security incidents, and unauthorized access to or loss, disclosure, modification, misuse, corruption, unavailability, or destruction of critical data, any of which could harm our business, operating results and financial condition.
In the event of a major earthquake, hurricane, flood or catastrophic event such as fire, power loss, telecommunications failure, vandalism, cyber-attack, war or terrorist attack affecting regions where we maintain operations, have a significant customer presence, or where our data centers are located, we may be unable to continue our operations, experience reduced transaction volumes, and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our services, breaches of data security, security incidents, and unauthorized access to or loss, disclosure, modification, misuse, corruption, unavailability, or destruction of critical data, any of which could harm our business, operating results and financial condition.
Certain other state laws impose similar privacy obligations, such as in New York, Nevada, Virginia, Colorado, Connecticut and Utah. All 50 states have laws including obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers and others.
Certain other state laws impose similar privacy obligations, such as in New York, Nevada, Virginia, Colorado, Connecticut and Utah to name a few. In addition, all 50 states have data breach laws including obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers and others.
While our business itself is not currently subject to financial services-related regulation, and we have received confirmation from multiple state regulators that we are not required to obtain money transmitter licenses in those states, the banks, payment networks and card networks that we partner with operate in a highly regulated landscape and there is a risk that those regulations could become directly applicable to us.
While our business itself is not currently subject to financial services-related regulation, and we have received confirmation from multiple state regulators that we are not required to obtain money transmitter licenses in those states, the banks, payment networks and card networks that we partner with operate in a highly regulated landscape and there is a risk that those regulations could become directly applicable to us, such as the Electronic Fund Transfer Act and the Bank Secrecy Act.
We may not be able to adjust our pricing to address the inflationary pressures, and our ability to do so typically lags behind the impact of inflation on our clients, the increase in average bill amounts and increased interchange fees.
We may not be able to adjust our pricing to fully address these pressures, and our ability to do so typically lags behind the impact of inflation on our clients, the rise in average bill amounts, and the increased interchange fees.
In 2023, we processed approximately 455 million payments and an average of 1.2 million payments were made each day using our platform. • Innovative: Our AI-enabled, SaaS architecture is the foundation of our unified platform. Our ML algorithms continuously learn and self-improve from transaction activity on our platform.
In 2024, we processed approximately 597 million payments and an average of 1.6 million payments were made each day using our platform. • Innovative: Our AI-enabled, SaaS architecture is the foundation of our unified platform. Our ML algorithms continuously learn and self-improve from transaction activity on our platform.
Our employees are located across the United States, in Canada as well as in India. None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have had no labor-related work stoppages. We believe that we have good relationships with our employees. Our employees are our most critical assets.
Our employees are located across the United States, in Canada as well as in India. None of our employees are represented by a labor union or are party to a collective bargaining agreement. We believe that we have good relationships with our employees. Our employees are our most critical assets.
However, as an emerging growth company, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an emerging growth company.
However, as an emerging growth company, our independent registered public accounting firm will not be required to audit the effectiveness of our internal control over financial reporting until we are no longer an emerging growth company.
Our platform was used by approximately 34 million consumers and businesses globally in December 2023 to pay their bills, make money movements and engage with our clients.
Our platform was used by approximately 46 million consumers and businesses globally in December 2024 to pay their bills, make money movements and engage with our clients.
Our proprietary transactional data creates workflow efficiencies and provides insights (such as payment methods depending on bill size and bill type) that strengthen the connection between billers and consumers. Our Platform and Solutions Our biller platform is purpose-built to transform the way billers get paid and engage with their consumers.
Our proprietary transactional and behavioral data sets include hundreds of millions of interactions, creates workflow efficiencies and provides insights (such as payment methods depending on bill size and bill type) that strengthen the connection between billers and consumers. Our Platform and Solutions Our biller platform is purpose-built to transform the way billers get paid and engage with their consumers.
As billers, financial institutions, partners and consumers adopt new consumer engagement and bill payment technologies, we intend to continue investing in our platform in order to create innovative features and add emerging payment types that further enhance the bill payment experience.
As billers, financial institutions, partners and consumers adopt new consumer engagement and bill payment technologies, we intend to continue investing in our platform in order to create innovative features and add emerging payment types and alternative payment methods that further enhance bill payment and commerce experiences.
In addition to disclosing changes that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting on a quarterly basis, we are required to make an annual assessment of our internal control over financial reporting pursuant to the rules of the SEC implementing Section 404 in our annual reports on Form 10-K.
In addition to disclosing changes that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting on a quarterly basis, we are required to make an annual assessment of the effectiveness of our internal control over financial reporting in our annual reports on Form 10-K.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Type Square Footage (approximate) Lease Expiration Charlotte, North Carolina Corporate Headquarters 26,700 March 31, 2027 Richmond Hill, Canada Office space 56,000 March 31, 2031 Richmond Hill, Canada Office space 3,000 May 31, 2025 54 Dallas, Texas Office space 10,100 March 15, 2027 Milpitas, California Office space 2,900 May 31, 2024 New York, New York Office space 700 December 31, 2023 (2) Delhi, India Office space 4,100 October 23, 2025 Gurugram, India Office space 19,800 February 1, 2029 Mohali, Punjab, India Office space 9,300 December 31, 2025 Bangalore, India Office space 4,000 December 31, 2023 (1) _______________ (1) Lease term converted to month-to-month upon expiration.
Biggest changeLocation Type Square Footage (approximate) Lease Expiration Charlotte, North Carolina Corporate Headquarters 26,700 March 31, 2027 Richmond Hill, Canada Office space 56,000 March 31, 2031 Richmond Hill, Canada Office space 4,050 May 31, 2030 Dallas, Texas Office space 10,100 March 15, 2027 Santa Clara, California Office space 3,900 September 30, 2027 New York, New York Office space 700 December 31, 2024 (1) Gurugram, India Office space 19,800 February 1, 2029 Mohali, Punjab, India Office space 4,850 December 31, 2025 Bangalore, India Office space 4,100 December 31, 2025 (1) Month to month lease of desk space in a co-working and flexible office concept building.
We believe that our facilities are adequate for our needs and believe that we should be able to renew any of the above leases or secure alternative suitable property without an adverse impact on our operations.
We believe that our facilities are adequate for our needs and believe that we should be able to renew any of the above leases or secure alternative suitable property without an adverse impact on our operations. 54
Item 2. P roperties We are headquartered in Charlotte, North Carolina. We lease office space in Charlotte, North Carolina; Richmond Hill, Canada (part of the Greater Toronto Area); Dallas, Texas; Milpitas, California; New York, New York and in Delhi, Gurugram, Mohali and Bangalore, India. The table below sets forth certain information regarding these properties, all of which are leased.
Item 2. Properties We are headquartered in Charlotte, North Carolina. We lease office space in Charlotte, North Carolina; Richmond Hill, Canada (part of the Greater Toronto Area); Dallas, Texas; Santa Clara, California; New York, New York and in Gurugram, Mohali and Bangalore, India. The table below sets forth certain information regarding these properties, all of which are leased.
(2) Month to month lease of desk space in a co-working & flexible office concept building. For leases that are scheduled to expire during the next 12 months, we may negotiate new lease agreements, renew existing lease agreements or relocate to alternate facilities.
For leases that are scheduled to expire during the next 12 months, we may negotiate new lease agreements, renew existing lease agreements or relocate to alternate facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFurthermore, we may become subject to stockholder inspection demands under Delaware law and derivative or other similar litigation.
Biggest changeFurthermore, we may become subject to stockholder inspection demands under Delaware law and derivative or other similar litigation. From time to time as appropriate, we accrue liabilities related to legal claims in our financial statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe performance graph and table shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act. 56 Fiscal Year 2021 Quarters May 26, 2021 December 31, 2021 December 31, 2022 December 31, 2023 Paymentus Holdings, Inc. $ 100.00 $ 166.57 $ 38.14 $ 85.10 S&P 500 Index 100.00 113.71 91.60 113.80 S&P Information Technology 100.00 125.60 89.29 139.65 We will neither make nor endorse any predictions as to future stock performance or whether the trends depicted in the graph above will continue or change in the future.
Biggest changeThe performance graph and table shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act. 56 May 26, 2021 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Paymentus Holdings, Inc. $ 100.00 $ 166.57 $ 38.14 $ 85.10 $ 155.57 S&P 500 Index 100.00 113.71 91.60 113.80 140.32 S&P Information Technology 100.00 125.60 89.29 139.65 189.48 We will neither make nor endorse any predictions as to future stock performance or whether the trends depicted in the graph above will continue or change in the future.
Stock Performance Graph The following graph and table compare the total stockholder return from May 26, 2021, the date on which our Class A common stock commenced trading on NYSE through December 31, 2023, based on an initial investment of $100 in each of: • our Class A common stock; • the Standard and Poor's 500 Stock Index, or S&P 500 Index; and • the Standard and Poor's 500 Information Technology Index, or S&P Information Technology.
Stock Performance Graph The following graph and table compare the total stockholder return from May 26, 2021, the date on which our Class A common stock commenced trading on NYSE through December 31, 2024, based on an initial investment of $100 in each of: • our Class A common stock; • the Standard and Poor's 500 Stock Index, or S&P 500 Index; and • the Standard and Poor's 500 Information Technology Index, or S&P Information Technology.
Issuer Purchases of Equity Securities Except as may have been previously reported in filings with the SEC, there were no repurchases of equity securities during the year ended December 31, 2023. We do not have any publicly announced or other repurchase plans regarding our Class A common stock.
Issuer Purchases of Equity Securities Except as may have been previously reported in filings with the SEC, there were no repurchases of equity securities during the year ended December 31, 2024. We do not have any publicly announced or other repurchase plans regarding our Class A common stock.
Recent Sales of Unregistered Securities Except as may have been previously reported in our filings with the SEC, there were no sales of unregistered securities during the fiscal year ended December 31, 2023.
Recent Sales of Unregistered Securities Except as may have been previously reported in our filings with the SEC, there were no sales of unregistered securities during the fiscal year ended December 31, 2024.
Holders Based on the records of our transfer agent, as of February 29, 2024, there were 36 record holders of our Class A common stock and 41 record holders of our Class B common stock.
Holders Based on the records of our transfer agent, as of March 6, 2025, there were 28 record holders of our Class A common stock and 34 record holders of our Class B common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe decrease in free cash flow for the year ended December 31, 2022 compared to 2021 was primarily as a result of an increase in our investment in research and development activities. 63 Results of Operations The following table sets forth our results of operations for the periods presented: Year Ended December 31, Change 2023 versus 2022 2023 2022 2021 $ % (in thousands) Revenue $ 614,490 $ 497,001 $ 395,524 $ 117,489 23.6 % Cost of revenue (1) 432,148 347,323 274,144 84,825 24.4 % Gross profit 182,342 149,678 121,380 32,664 21.8 % Gross margin 29.7 % 30.1 % 30.7 % Operating expenses Research and development (1) 44,248 41,220 34,122 3,028 7.3 % Sales and marketing (1) 83,996 73,295 43,917 10,701 14.6 % General and administrative (1) 36,005 38,139 32,968 (2,134 ) -5.6 % Total operating expenses 164,249 152,654 111,007 11,595 7.6 % Income (loss) from operations 18,093 (2,976 ) 10,373 21,069 n/m Other income (expense) Interest income, net 7,019 1,663 (6 ) 5,356 322.1 % Foreign exchange (loss) gain 12 5 (1 ) 7 n/m Income (loss) before income taxes 25,124 (1,308 ) 10,366 26,432 n/m Benefit from (provision for) income taxes (2,802 ) 795 (1,066 ) (3,597 ) -452.5 % Net income (loss) $ 22,322 $ (513 ) $ 9,300 $ 22,835 n/m (1) Stock-based compensation expense was allocated in cost of revenue and operating expenses as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Cost of revenue $ 156 $ — $ — Research and development 1,990 1,647 517 Sales and marketing 2,808 1,736 280 General and administrative 4,436 3,353 2,339 Total stock-based compensation $ 9,390 $ 6,736 $ 3,136 The following table presents the components of our consolidated statements of operations for the periods presented as a percentage of revenue: Year Ended December 31, 2023 2022 2021 Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 70.3 % 69.9 % 69.3 % Gross profit 29.7 % 30.1 % 30.7 % Operating expenses Research and development 7.2 % 8.3 % 8.6 % Sales and marketing 13.7 % 14.7 % 11.1 % General and administrative 5.9 % 7.7 % 8.4 % Total operating expenses 26.8 % 30.7 % 28.1 % Income (loss) from operations 2.9 % -0.6 % 2.6 % Other income (expense) Interest income, net 1.1 % 0.3 % 0.0 % Foreign exchange (loss) gain 0.0 % 0.0 % 0.0 % Income (loss) before income taxes 4.0 % -0.3 % 2.6 % Benefit from (provision for) income taxes -0.5 % 0.2 % -0.3 % Net income (loss) 3.5 % -0.1 % 2.3 % 64 Comparison of the Years Ended December 31, 2023 and 2022 Revenue The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by the implementation of new billers and increased transactions from our existing billers.
Biggest changeThe increase in free cash flow for the year ended December 31, 2023 compared to 2022 was primarily as a result of an increase in cash generated from operations. 63 Results of Operations The following table sets forth our results of operations for the periods presented: Year Ended December 31, Change 2024 versus 2023 2024 2023 2022 $ % (in thousands) Revenue $ 871,745 $ 614,490 $ 497,001 $ 257,255 41.9 % Cost of revenue (1) 633,575 432,148 347,323 201,427 46.6 % Gross profit 238,170 182,342 149,678 55,828 30.6 % Gross margin 27.3 % 29.7 % 30.1 % Operating expenses Research and development (1) 51,334 44,248 41,220 7,086 16.0 % Sales and marketing (1) 105,052 83,996 73,295 21,056 25.1 % General and administrative (1) 36,927 36,005 38,139 922 2.6 % Total operating expenses 193,313 164,249 152,654 29,064 17.7 % Income (loss) from operations 44,857 18,093 (2,976 ) 26,764 147.9 % Interest income, net 8,742 7,019 1,663 1,723 24.5 % Other income 345 12 5 333 n/m Income (loss) before income taxes 53,944 25,124 (1,308 ) 28,820 114.7 % (Provision for) benefit from income taxes (9,775 ) (2,802 ) 795 (6,973 ) 248.9 % Net income (loss) $ 44,169 $ 22,322 $ (513 ) $ 21,847 97.9 % (1) Stock-based compensation expense was allocated in cost of revenue and operating expenses as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 251 $ 156 $ — Research and development 3,100 1,990 1,647 Sales and marketing 5,639 2,808 1,736 General and administrative 3,865 4,436 3,353 Total stock-based compensation $ 12,855 $ 9,390 $ 6,736 The following table presents the components of our consolidated statements of operations for the periods presented as a percentage of revenue: Year Ended December 31, 2024 2023 2022 Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 72.7 % 70.3 % 69.9 % Gross profit 27.3 % 29.7 % 30.1 % Operating expenses Research and development 5.9 % 7.2 % 8.3 % Sales and marketing 12.1 % 13.7 % 14.7 % General and administrative 4.2 % 5.9 % 7.7 % Total operating expenses 22.2 % 26.8 % 30.7 % Income (loss) from operations 5.1 % 2.9 % (0.6 )% Interest income, net 1.0 % 1.1 % 0.3 % Other income 0.0 % 0.0 % 0.0 % Income (loss) before income taxes 6.1 % 4.0 % (0.3 )% (Provision for) benefit from income taxes (1.1 )% (0.5 )% 0.2 % Net income (loss) 5.0 % 3.5 % (0.1 )% 64 Comparison of the Years Ended December 31, 2024 and 2023 Revenue The increase in revenue was primarily driven by an increase in the number of transactions processed, which was driven by the implementation of new billers and increased transactions from our existing billers.
Our non-GAAP measures may 61 not be comparable to similarly titled measures of other companies; other companies, including companies in our industry, may calculate non-GAAP measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Our non-GAAP measures may not be comparable to similarly titled measures of other companies; other companies, including companies in our industry, 61 may calculate non-GAAP measures differently than we do, limiting the usefulness of those measures for comparative purposes.
We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, in assessing the need for a valuation allowance. Our tax positions are subject to income tax audits by multiple tax jurisdictions such as USA, Canada and India.
We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income, in assessing the need for a valuation allowance. 69 Our tax positions are subject to income tax audits by multiple tax jurisdictions such as USA, Canada and India.
Expected Term —The expected life of options granted to employees was determined by using management’s best estimation of exercise activity. 69 Risk-free Interest Rate —We use a risk-free interest rate in the option valuation model based on U.S. Treasury zero-coupon issues, with remaining terms similar to the expected term of the options.
Expected Term —The expected life of options granted to employees was determined by using management’s best estimation of exercise activity. Risk-free Interest Rate —We use a risk-free interest rate in the option valuation model based on U.S. Treasury zero-coupon issues, with remaining terms similar to the expected term of the options.
Under the acquisition method, once control is obtained of a business, the assets acquired, and liabilities assumed are recorded at fair value. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.
Under the acquisition method, once control is obtained of a business, the assets acquired, and liabilities assumed are recorded at fair value. We use our best estimates and assumptions to assign fair value 67 to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.
Goodwill impairment is recognized when the quantitative assessment results in the carrying value of the reporting unit exceeding its fair value, in which case an impairment charge is recorded to goodwill to the extent the carrying value exceeds the fair value, limited to the amount of goodwill.
Goodwill impairment is recognized when the quantitative assessment results in the carrying value of the reporting unit exceeding its fair value, in which case an impairment charge is recorded to goodwill to the extent the carrying value exceeds 68 the fair value, limited to the amount of goodwill.
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding recently issued accounting pronouncements. 70
Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding recently issued accounting pronouncements.
We expect our sales and marketing expenses to increase in absolute dollars, but they may fluctuate as a percentage of revenue from period to period. General and Administrative General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expenses for finance, risk management, legal and compliance, human resources, information technology and facilities personnel.
We expect our sales and marketing expenses to increase in absolute dollars alongside revenue growth, but they may fluctuate as a percentage of revenue from period to period. General and Administrative General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expenses for finance, risk management, legal and compliance, human resources, information technology and facilities personnel.
A discussion of changes in our results of operations from fiscal year 2021 to fiscal year 2022 and a discussion of our liquidity and capital resources for 2021 has been omitted from this Annual Report on Form 10-K but may be found under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of the Years Ended December 31, 2022 and 2021" and "—Liquidity and Capital Resources—"Sources and Uses of Funds" and "—Historical Cash Flows" in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 3, 2023, which is available free of charge on the SECs website at www.sec.gov and our website at https://ir.paymentus.com/home/default.aspx.
A discussion of changes in our results of operations from fiscal year 2022 to fiscal year 2023 and a discussion of our liquidity and capital resources for 2022 has been omitted from this Annual Report on Form 10-K but may be found under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of the Years Ended December 31, 2023 and 2022" and "—Liquidity and Capital Resources—"Sources and Uses of Funds" and "—Historical Cash Flows" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 5, 2024, which is available free of charge on the SECs website at www.sec.gov and our website at https://ir.paymentus.com/home/default.aspx .
Overview We are a leading provider of cloud-based bill payment technology and solutions. We deliver our next-generation product suite through a modern technology stack to more than 2,200 biller business and financial institution clients.
Overview We are a leading provider of cloud-based bill payment technology and solutions. We deliver our next-generation product suite through a modern technology stack to more than 2,500 biller business and financial institution clients.
We expect that cost of revenue will increase in absolute dollars, but it may fluctuate as a percentage of revenue from period to period, as our transaction mix changes and we continue to invest in growing our business across all geographical segments, including through the acquisition of other businesses.
We expect that cost of revenue will increase in absolute dollars alongside revenue growth, but it may fluctuate as a percentage of revenue from period to period, as our transaction mix changes and we continue to invest in growing our business across all geographical segments, including through the potential acquisition of other businesses.
Adjusted EBITDA We calculate adjusted EBITDA as net income before other income (expense), which consists of interest income (expense), depreciation and amortization of acquisition-related intangible assets and capitalized software development costs, and income taxes, adjusted to exclude the effects of net foreign exchange gain (loss), stock-based compensation expense and certain nonrecurring expenses that management believes are not indicative of ongoing operations.
Adjusted EBITDA We define adjusted EBITDA as net income before interest income (expense), net, other income (expense), depreciation and amortization of acquisition-related intangible assets and capitalized software development costs, and income taxes, adjusted to exclude the effects of net foreign exchange gain (loss), stock-based compensation expense and certain nonrecurring expenses that management believes are not indicative of ongoing operations.
The increase in 2023 was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions, together with improvements resulting from disinflation in the utility sector on a year over year basis, pricing improvements from customers related to our inflation management, the implementation of certain cost improvement measures and lower general and administrative expenditures primarily driven by lower insurance premiums and acquisition related costs.
Adjusted EBITDA increased from 2022 to 2023 due to growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions, together with improvements resulting from disinflation in the utility sector on a year over year basis, pricing improvements from customers related to our inflation management, the implementation of certain cost improvement measures and lower general and administrative expenditures primarily driven by lower insurance premiums and acquisition related costs.
Transactions Processed Year Ended December 31, 2023 2022 2021 (in millions) Transactions processed 458.2 366.8 280.5 We define transactions processed as the number of revenue generating payment transactions, such as checks, credit card and debit card transactions, automated clearing house, or ACH, items and emerging payment types, which are initiated and generally processed through our platform during a period.
Transactions Processed Year Ended December 31, 2024 2023 2022 (in millions) Transactions processed 597.0 458.2 366.8 We define transactions processed as the number of revenue generating payment transactions, such as checks, credit card and debit card transactions, automated clearing house, or ACH, items and emerging payment types, which are initiated and generally processed through our platform during a period.
General and administrative expenses also include costs incurred for external professional services, leasing of office buildings and other corporate expenses. We expect to continue to incur additional general and administrative expenses to support the growth in our business.
General and administrative expenses also include costs incurred for external professional services, leasing of office buildings and other corporate expenses. We expect to continue to incur additional general and administrative expenses to support the growth in our business and to meet regulatory compliance requirements.
The increase in 2023 was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions, together with improvements resulting from disinflation in the utility sector on a year over year basis, pricing improvements from customers related to our inflation management and the implementation of certain cost improvement measures.
The increase in 2023 was primarily driven by the addition of new billers and increased transactions from our existing billers, together with improvements resulting from disinflation in the utility sector on a year over year basis, pricing improvements from customers related to our inflation management and the implementation of certain cost improvement measures.
The number of transactions also includes account-to-account and person-to-person transfers. The number of transactions processed during the year ended December 31, 2023 increased approximately 24.9% as compared to 2022. The number of transactions processed during the year ended December 31, 2022 increased approximately 30.8% as compared to 2021.
The number of transactions also includes account-to-account and person-to-person transfers. The number of transactions processed during the year ended December 31, 2024 increased approximately 30.3% as compared to 2023. The number of transactions processed during the year ended December 31, 2023 increased approximately 24.9% as compared to 2022.
Net cash provided by operating activities mainly consists of our net income (loss) adjusted for certain non-cash items, including depreciation and amortization, stock-based compensation, other non-cash income and expense items, and net changes in operating assets and liabilities. Net cash provided by operating activities for the year ended December 31, 2023 was $68.8 million.
Net cash provided by operating activities mainly consists of our net income (loss) adjusted for certain non-cash items, including depreciation and amortization, stock-based compensation, other non-cash income and expense items, and net changes in operating assets and liabilities. Net cash provided by operating activities for the year ended December 31, 2024 was $63.6 million.
We had more than 2,200 billers and financial institution clients as of December 31, 2023, including billers of all sizes and across numerous vertical markets and financial institutions of all sizes.
We had more than 2,500 billers and financial institution clients as of December 31, 2024, including billers of all sizes and across numerous vertical markets and financial institutions of all sizes.
We acquire new billers through direct sales channels, software and strategic partnerships and our Instant Payment Network, or IPN, which together promote rapid adoption of our platform through partnerships with leading business networks. Through these channels, our platform reaches millions of consumers, driving transaction growth. Our revenue is highly visible.
We acquire new billers through direct sales channels, software and strategic partnerships and our Instant Payment Network, or IPN, which together promote rapid adoption of our platform through partnerships with leading business networks. Through these channels, our platform reaches millions of consumers, driving transaction growth. Our revenue is predictable to a certain degree.
There are external factors that impact interchange fees, such as the average transaction amount in a particular month or quarter. For example, hot summers and cold winters tend to increase utility bills, and property taxes result in two larger payments per year, each of which increases our interchange cost. Gross profit is equal to our revenue less cost of revenue.
There are external factors that impact interchange fees, such as the average transaction amount in a particular month or quarter. For example, hot summers and cold winters tend to increase utility bills, and property taxes result in two larger payments per year, each of which increases our interchange cost in line with the seasonal nature of our business.
Adjusted gross profit is driven primarily by the same factors that impact gross profit with the exception of excluding the amortization in cost of revenue, as well as stock based compensation. The 2023 increase in amortization was driven by the additional capitalization of software costs.
Adjusted gross profit is driven primarily by the same factors that impact gross profit with the exception of excluding the amortization in cost of revenue, as well as stock-based compensation.
Components of Results of Operations Revenue We generate substantially all of our revenue from payment transaction fees. Transaction fees are fees collected for each transaction processed through our platform, on either a fixed basis or variable basis based on the transaction value, with the actual fees dependent on type of transaction, payment or transaction channel and industry vertical.
Transaction fees are fees collected for each transaction processed through our platform, on either a fixed basis or variable basis based on the transaction value, with the actual fees dependent on type of transaction, payment or transaction channel and industry vertical.
Contribution Profit Year Ended December 31, 2023 2022 2021 (in thousands) Gross profit $ 182,342 $ 149,678 $ 121,380 Plus: other cost of revenue 58,606 51,622 37,098 Contribution profit $ 240,948 $ 201,300 $ 158,478 In general, contribution profit is driven by the number of transactions we process offset by network fees associated with processing those transactions.
Contribution Profit Year Ended December 31, 2024 2023 2022 (in thousands) Gross profit $ 238,170 $ 182,342 $ 149,678 Plus: other cost of revenue 73,898 58,606 51,622 Contribution profit $ 312,068 $ 240,948 $ 201,300 In general, contribution profit is driven by the number of transactions we process offset by network fees associated with processing those transactions.
Contribution profit for the year ended December 31, 2023 increased approximately 19.7% as compared to 2022 and increased approximately 27.0% for the year ended December 31, 2022 as compared to 2021.
Contribution profit for the year ended December 31, 2024 increased approximately 29.5% as compared to 2023 and increased approximately 19.7% for the year ended December 31, 2023 as compared to 2022.
(1) Consists of operating lease liabilities for office space and data centers. (2) Consists of purchase obligations which were not recognized on the balance sheet as of December 31, 2023, related primarily to infrastructure services and IT software and maintenance service costs. (3) Consists of Acquisition holdback payments due to the former owners of Finovera and PROFIT.
(2) Consists of purchase obligations which were not recognized on the balance sheet as of December 31, 2024, related primarily to infrastructure services and IT software and maintenance service costs. (3) Consists of Acquisition holdback payments due to the former owners of PROFIT.
We also typically contract directly with our billers and have complete pricing latitude on the processing fees charged to our billers. As such, we bear the credit risk for network fees and transactions charged back to the biller.
We have concluded that we are typically the principal in our payment processing arrangements as we control the service on our platform. We also typically contract directly with our billers and have complete pricing latitude on the processing fees charged to our billers. As such, we bear the credit risk for network fees and transactions charged back to the biller.
Adjusted Gross Profit Year Ended December 31, 2023 2022 2021 (in thousands) Gross profit $ 182,342 $ 149,678 $ 121,380 Stock-based compensation 156 — — Amortization of capitalized software development costs 13,341 8,761 4,900 Amortization of acquisition-related intangibles 3,314 3,316 1,105 Adjusted gross profit $ 199,153 $ 161,755 $ 127,385 Adjusted gross profit for the year ended December 31, 2023 increased 23.1% as compared to 2022 and increased 27.0% for the year ended December 31, 2022 as compared to 2021.
Adjusted Gross Profit Year Ended December 31, 2024 2023 2022 (in thousands) Gross profit $ 238,170 $ 182,342 $ 149,678 Stock-based compensation 251 156 — Amortization of capitalized software development costs 17,911 13,341 8,761 Amortization of acquisition-related intangibles 3,313 3,314 3,316 Adjusted gross profit $ 259,645 $ 199,153 $ 161,755 Adjusted gross profit for the year ended December 31, 2024 increased 30.4% as compared to 2023 and increased 23.1% for the year ended December 31, 2023 as compared to 2022.
Free Cash Flow Year Ended December 31, 2023 2022 2021 (in thousands) Net cash (used in) provided by operating activities $ 68,828 $ 19,867 $ 19,493 Purchases of property and equipment and software (600 ) (1,257 ) (979 ) Other intangible assets acquired — (280 ) (130 ) Capitalized software development costs (33,699 ) (29,763 ) (19,300 ) Free cash flow $ 34,529 $ (11,433 ) $ (916 ) Net (cash used in) provided by investing activities $ (34,299 ) $ (34,560 ) $ (77,809 ) Net cash (used in) provided by financing activities $ (1,195 ) $ (37,283 ) $ 213,487 The increase in free cash flow for the year ended December 31, 2023 compared to 2022 was primarily as a result of increases in cash generated from operations.
Free Cash Flow Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 63,634 $ 68,828 $ 19,867 Purchases of property and equipment (457 ) (600 ) (1,257 ) Other intangible assets acquired — — (280 ) Capitalized internal-use software development costs (36,119 ) (33,699 ) (29,763 ) Free cash flow $ 27,058 $ 34,529 $ (11,433 ) Net cash used in investing activities $ (36,761 ) $ (34,299 ) $ (34,560 ) Net cash used in financing activities $ (207 ) $ (1,195 ) $ (37,283 ) The decrease in free cash flow for the year ended December 31, 2024 compared to 2023 was primarily as a result of a decrease in cash generated from operations, together with increases in capitalized software development costs.
Net income was $22.3 million, adjusted for non-cash charges of $45.3 million consisting primarily of depreciation and amortization, stock-based compensation, amortization of contract assets and non-cash lease expense, which contributed positively to operating activities. This was decreased by net cash outflows of $1.2 million used in changes in our operating assets and liabilities.
Net income was $44.2 million, adjusted for non-cash charges of $55.4 million consisting primarily of depreciation and amortization, stock-based compensation, amortization of capitalized contract acquisition costs and warrants cost, and non-cash lease expense, which contributed positively to operating activities. This was decreased by net cash outflows of $36.0 million for changes in our operating assets and liabilities.
For example, if we received information that indicated the useful life of all internally developed software was one year rather than three to five, our capitalized software balance would materially decrease and our expense would materially increase. 68 We determine the amount of internal-use software development costs to be capitalized based on the amount of time spent by our developers on projects.
For example, if we received information that indicated the useful life of all internally developed software was one year rather than three to five, our capitalized software balance would materially decrease and our expense would materially increase.
We expect this trend to continue, providing us with a greater opportunity to provide next-generation bill and digital payment technology and power more transactions, further fueling our growth.
We have observed that consumers demand a frictionless electronic bill payment experience and increasingly prefer more flexible and innovative digital payment options. We expect this trend to continue, providing us with a greater opportunity to provide next-generation bill and digital payment technology and power more transactions, further fueling our growth.
In addition, our modern platform architecture allows us to provide integration, implementation, maintenance and upgrades at no additional cost to billers. Impact of Economic and Inflationary Trends In 2022 and 2023, the United States economy experienced inflationary conditions, increased interest rates and consecutive quarters of decreased gross domestic product.
In addition, our modern platform architecture allows us to provide integration, implementation, maintenance and upgrades at no additional cost to billers. Impact of Economic and Inflationary Trends The United States economy experienced inflationary conditions in 2022 and 2023, with some moderation throughout 2024. Interest rates remained relatively stable in 2024, and were cut near the end of the year.
Net cash used in investing activities for the year ended December 31, 2023 consisted of $33.7 million of capitalized internal-use software development costs, and $0.6 million of purchases of property and equipment and intangible assets. 66 Net cash used in investing activities for the year ended December 31, 2022 consisted of $29.8 million of capitalized internal-use software development costs, $3.3 million of cash paid for acquisitions, net of cash acquired and $1.3 million of purchases of property and equipment and intangible assets.
Net cash used in investing activities for the year ended December 31, 2023 consisted of $33.7 million of capitalized internal-use software development costs and $0.6 million of purchases of property and equipment. Net Cash Used in Financing Activities Cash used in financing activities consists primarily of option exercises and payments related to holdback liabilities related to acquisitions.
Gross profit as a percentage of our revenue is referred to as gross margin. Our gross margin has been and will continue to be affected by a number of factors, including average transaction value, payment type and payments and transactions through our IPN.
Our gross margin has been and will continue to be affected by a number of factors, including addition of large, high-volume enterprise billers with lower margins in our biller mix, average transaction value, payment type and payments and transactions through our IPN.
The increase in 2022 was primarily driven by the addition of new billers and increased transactions from our existing billers. For 2022 and 2023, contribution profit increased at a slower rate than transactions processed due to a continued mix shift to larger, high volume clients.
For 2023 and 2024, contribution profit increased at a slower rate than transactions processed due to a continued mix shift to larger, high volume clients.
Complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting. Specifically, the determination of whether we are a principal to a transaction or an agent can require considerable judgment. We have concluded that we are typically the principal in our payment processing arrangements as we control the service on our platform.
Revenue Recognition Application of the accounting principles in GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates. Complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting. Specifically, the determination of whether we are a principal to a transaction or an agent can require considerable judgment.
Net cash provided by operating activities for the year ended December 31, 2022 was $19.9 million, primarily consisting of our net loss of $0.5 million, adjusted for non-cash charges of $32.3 million consisting primarily of depreciation and amortization, non-cash lease expense related to our operating right-of-use assets, amortization of contract asset and stock-based compensation, which contributed positively to operating activities.
Net cash provided by operating activities for the year ended December 31, 2023 was $68.8 million. Net income was $22.3 million, adjusted for non-cash charges of $46.1 million consisting primarily of depreciation and amortization, stock-based compensation, amortization of capitalized contract acquisition costs and warrants cost, and non-cash lease expense, which contributed positively to operating activities.
Net Cash Used in Investing Activities Cash used in our investing activities consists primarily of cash paid for acquisitions, capitalized internal-use software development costs, purchases of property and equipment and intangible assets.
This was increased by net cash inflows of $0.4 million for changes in our operating assets and liabilities. Net Cash Used in Investing Activities Cash used in our investing activities consists primarily of cash paid for capitalized internal-use software development costs and purchases of property and equipment and change in interest-bearing deposits.
We expect that our general and administrative expenses will increase in absolute dollars, but they may fluctuate as a percentage of revenue from period to period. Over the longer 59 term, we expect general and administrative expenses to decrease as a percentage of revenue as we leverage the scale of our business.
This includes the transition from an emerging growth company to a large accelerated filer for SEC compliance. We expect that 59 our general and administrative expenses will increase in absolute dollars, but they may fluctuate as a percentage of revenue from period to period.
The critical accounting policies and estimates that we believe have the most significant impact on our consolidated financial statements are described below.
The critical accounting policies and estimates that we believe have the most significant impact on our consolidated financial statements are described below. See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by (used in) Operating activities $ 68,828 $ 19,867 $ 19,493 Investing activities (34,299 ) (34,560 ) (77,809 ) Financing activities (1,195 ) (37,283 ) 213,487 Effects of foreign exchange on cash 176 (168 ) (8 ) Net increase in cash, cash equivalents and restricted cash $ 33,510 $ (52,144 ) $ 155,163 Net Cash Provided by Operating Activities Our primary source of operating cash is revenue from payment transaction fees.
Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. 65 Historical Cash Flows The following table summarizes our consolidated cash flows: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by (used in) Operating activities $ 63,634 $ 68,828 $ 19,867 Investing activities (36,761 ) (34,299 ) (34,560 ) Financing activities (207 ) (1,195 ) (37,283 ) Effects of foreign exchange on cash (450 ) 176 (168 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ 26,216 $ 33,510 $ (52,144 ) Net Cash Provided by Operating Activities Our primary source of operating cash is revenue from payment transaction fees.
A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods. Valuation of Goodwill and Intangibles The valuation of assets acquired in a business combination and asset impairment reviews require the use of significant estimates and assumptions.
Valuation of Goodwill and Intangibles The valuation of assets acquired in a business combination and asset impairment reviews require the use of significant estimates and assumptions.
Net cash used in financing activities for the year ended December 31, 2022 consisted of a decrease in financial institution funds in-transit of $33.4 million, $5.3 million of payments on finance leases and other financing obligations, offset by proceeds of $1.5 million from the exercise of stock options.
Net cash used in financing activities for the year ended December 31, 2024 consisted of $0.5 million of payments related to holdback liabilities settlement offset by $0.3 million proceeds from the exercise of stock options.
See Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding these acquisitions. 62 Adjusted EBITDA Year Ended December 31, 2023 2022 2021 (in thousands) Net income (loss) — GAAP $ 22,322 $ (513 ) $ 9,300 Interest income, net (7,019 ) (1,663 ) 6 Provision for (benefit from) income taxes 2,802 (795 ) 1,066 Amortization of capitalized software development costs 21,349 14,621 9,376 Amortization of acquisition-related intangibles 8,380 8,176 2,812 Depreciation 871 1,266 1,107 EBITDA 48,705 21,092 23,667 Adjustments Foreign exchange loss (gain) (12 ) (5 ) 1 Stock-based compensation 9,390 6,736 3,136 Other nonrecurring expense (1) — 769 2,711 Adjusted EBITDA $ 58,083 $ 28,592 $ 29,515 (1) Other nonrecurring expenses consists of indirect costs incurred associated with completion of our IPO in 2021 and an estimated liability booked in 2022 related to the cost of terminating a commercial contract.
The increase in amortization for 2024 and 2023 was driven by the additional capitalization of software costs. 62 Adjusted EBITDA Year Ended December 31, 2024 2023 2022 (in thousands) Net income (loss) — GAAP $ 44,169 $ 22,322 $ (513 ) Interest income, net (8,742 ) (7,019 ) (1,663 ) Other income (1) (213 ) — — Provision for (benefit from) income taxes 9,775 2,802 (795 ) Amortization of capitalized software development costs 27,586 21,349 14,621 Amortization of acquisition-related intangibles 8,081 8,380 8,176 Depreciation 817 871 1,266 EBITDA $ 81,473 $ 48,705 $ 21,092 Adjustments Foreign exchange gain (132 ) (12 ) (5 ) Stock-based compensation 12,855 9,390 6,736 Other nonrecurring expenses (2) — — 769 Adjusted EBITDA $ 94,196 $ 58,083 $ 28,592 (1) Other income consists of a remeasurement adjustment relating to the purchase price of a prior acquisition.
Costs associated with building or significantly enhancing our platforms are capitalized, while costs associated with planning new developments and maintaining our platform are expensed as incurred. There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project.
We determine the amount of internal-use software development costs to be capitalized based on the amount of time spent by our developers on projects. Costs associated with building or significantly enhancing our platforms are capitalized, while costs associated with planning new developments and maintaining our platform are expensed as incurred.
Factors Affecting Our Performance Increased Adoption of Electronic Bill Payment Solutions As the number of financial transactions online continues to increase, electronic bill payment is becoming a greater share of the bill payment market. We have observed that consumers demand a frictionless electronic bill payment experience and increasingly prefer more flexible and innovative digital payment options.
Over the longer term, we expect general and administrative expenses to decrease as a percentage of revenue as we leverage the scale of our business. Factors Affecting Our Performance Increased Adoption of Electronic Bill Payment Solutions As the number of financial transactions online continues to increase, electronic bill payment is becoming a greater share of the bill payment market.
We also serve financial institutions by providing them with a modern platform that their customers use for bill payment, account-to-account transfers and person-to-person transfers.
We serve billers of all sizes that primarily provide non-discretionary services across a variety of industry verticals, including utilities, financial services, insurance, government, telecommunications, real estate management, education, consumer finance, healthcare and small business. We also serve financial institutions by providing them with a modern platform that their customers use for bill payment, account-to-account transfers and person-to-person transfers.
Research and Development Expenses The increase in research and development expenses was primarily due to increased amortization cost of capitalized internal-use software development costs and acquired intangibles relating to our PROFIT acquisition, and an increase in employee-related costs, including benefits due to an increase in headcount as we continued to invest in developing and adding additional features and functionality to our platform.
Research and Development Expenses The increase in research and development expenses was primarily due to increased amortization of capitalized internal-use software development costs, an increase in employee-related costs, including an increase in stock-based compensation and an increase in subscription cost for operational third party services.
Net cash used in financing activities for the year ended December 31, 2023 consisted of $1.7 million of payments on other financing obligations, $0.1 million of payments on finance leases and $0.6 million proceeds from exercise of stock-based awards by employees.
Net cash used in financing activities for the year ended December 31, 2023 consisted of $1.7 million of payments on other financing obligations, $0.1 million of payments on finance leases, offset by $0.6 million proceeds from exercise of stock-based awards by employees. 66 Contractual Obligations and Other Commitments The following table summarizes our contractual obligations and commitments in cash as of December 31, 2024: Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Operating lease liabilities (1) 9,046 2,424 3,833 1,853 936 Purchase obligations (2) 10,943 7,716 3,227 Other (3) 412 412 20,401 10,552 7,060 1,853 936 (1) Consists of operating lease liabilities for office space.
As adjusted EBITDA is a measure of profitability, it would generally be expected to move in line with revenue, contribution profit, gross profit and adjusted gross profit. Adjusted EBITDA increased 103.1% for the year ended December 31, 2023 compared to 2022 and decreased 3.1% for the year ended December 31, 2022 compared to 2021.
(2) Other nonrecurring expenses represent an estimated liability booked in 2022 related to the cost of terminating a commercial contract. As adjusted EBITDA is a measure of profitability, it is generally expected to move in line with revenue, contribution profit, gross profit and adjusted gross profit.
Income Taxes The change in benefit from (provision for) income taxes, as well as the decrease in our effective tax rate, which decreased to 11% for the year ended December 31, 2023 as compared to 60.8% for the same period in the prior year, was primarily due to the increase in pre-tax income from the prior year, which had the effect of causing rate impact items to have a lower percentage impact on the rate overall given the higher base of pre-tax income.
Income Taxes The change in provision for income taxes, as well as the increase in our effective tax rate, which increased to 18.1% for the year ended December 31, 2024 as compared to 11.2% for the same period in the prior year, was primarily due to an increase in taxable income after utilizing a significant amount of net operating losses (NOLs), which were previously subject to a full valuation allowance.
Other Income (Loss) The changes in other income (expense) were primarily due to the increase in interest income, net as a result of increases in the Federal Reserve rates which increased interest income on our cash held with the banks.
General and Administrative Expenses The marginal increase in general and administrative expenses was primarily due to increases in professional fees and legal fees, which were offset by lower cost of insurance premiums of certain business policies. Interest income, net The changes in interest income, net was a result of higher cash balances held with banks.
Our platform was used by approximately 34 million consumers and businesses in North America in December 2023 to pay their bills, make money movements and engage with our clients. We serve billers of all sizes that primarily provide non-discretionary services across a variety of industry verticals, including utilities, financial services, insurance, government, telecommunications, real estate management and healthcare.
Our platform was used by approximately 46 million consumers and businesses globally in December 2024 to pay their bills, make money movements and engage with our clients.
In addition, the lack of excess tax benefits on stock-based compensation, utilization of net operating losses and the valuation allowance recorded against the net U.S. deferred tax assets had the largest impact on the effective tax rate. 65 Liquidity and Capital Resources Sources and Uses of Funds As of December 31, 2023, we had $179.4 million of unrestricted cash and cash equivalents.
Additionally, the increase in our effective tax rate was influenced by permanent differences for disallowed stock-based compensation pursuant to IRC Section 162(m) and state taxes, which were partially offset by the release of the valuation allowance. Liquidity and Capital Resources Sources and Uses of Funds As of December 31, 2024, we had $205.9 million of unrestricted cash and cash equivalents.
Removed
While we believe our business is resilient and can generally weather unusual levels of inflation, the economic uncertainty and continuing inflationary pressures, which have been particularly acute in the utility sector, negatively impacted our fiscal 2023 and 2022 financial performance.
Added
Gross domestic product showed growth, reflecting an improving economic environment. However, the impacts of prior years' inflation and economic uncertainty persists and may continue to pose challenges to our performance through 2025. In addition, the introduction of new tariffs or the escalation of trade disputes with other countries could potentially affect our future performance.
Removed
Although inflationary pressures lessened to some extent in the second half of 2023, economic uncertainty and inflationary conditions remain high and could have an adverse impact on our 2024 performance. Inflationary pressure is resulting in higher average bills, particularly in the utility sector, and increased interchange fees.
Added
While inflationary conditions have stabilized, elevated costs—particularly in the utility sector—and higher interchange fees continue to impact our operations. To mitigate these pressures, we are proactively adjusting our pricing strategies; however, the timing of these adjustments typically lags behind the inflationary effects experienced by our clients.
Removed
Where appropriate, we seek to adjust our prices to address the inflationary pressures, however our ability to do so typically lags behind the impact of inflation on our clients, 58 the increase in average bill amounts and increased interchange fees.
Added
We remain 58 committed to monitoring the economic landscape closely and will implement further pricing adjustments as needed to address ongoing market dynamics and maintain the resilience of our business. Components of Results of Operations Revenue We generate substantially all of our revenue from payment transaction fees.
Removed
While we made several price adjustments in 2023 as a result of the inflationary impacts on our business, we will continue to monitor and manage the economic environment in 2024 and by working closely with clients on implementations and further price adjustments as necessary.
Added
Gross profit is equal to our revenue less cost of revenue. Gross profit as a percentage of our revenue is referred to as gross margin.
Removed
The 2022 increase in amortization was driven by additional amortization of capitalization of software costs as well as amortization of acquired intangibles associated with the 2021 acquisitions of Payveris and Finovera.
Added
The increase in 2024 was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions.
Removed
Adjusted EBITDA decreased from 2021 to 2022 due to our investment in sales and marketing and research and development in order to drive future growth of the business as well as the increased costs associated with being a public company and the impact of the Payveris and Finovera acquisitions.
Added
Adjusted EBITDA increased 62.2% for the year ended December 31, 2024 compared to 2023 and increased 103.1% for the year ended December 31, 2023 compared to 2022.
Removed
Revenue increase was also driven by pricing improvements related to our inflation management.
Added
The increase in 2024 was primarily driven by growth in transaction count and volume driven by the addition of new billers and financial institutions and increased transactions from our existing billers and financial institutions.
Removed
These higher costs were partially offset by cost improvements resulting from disinflation in the utility sector and certain cost improvement initiatives. Gross margin decreased due to increases in cost of revenues for other direct costs associated with making our platform available to our billers.
Added
Cash generated from operations decreased in 2024 compared to 2023 primarily due to increased income taxes and investment in working capital during 2024 as we scaled significantly.
Removed
Additionally, we incurred increased stock-based compensation expense associated with routine and new hire grants. See Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our acquisition of PROFIT Financial, Inc.
Added
Gross margin experienced a decrease, driven by changes in customer mix resulting primarily from the addition of large, high-volume enterprise billers with lower margins in our biller mix. This decline was partially offset by cost improvement initiatives and the realization of economies of scale.
Removed
Sales and Marketing Expenses The increase in sales and marketing expenses was primarily due to an increase in employee-related costs, including benefits, as we continued to expand our sales and marketing efforts with additional headcount in order to continue to drive our growth. We also incurred increased stock-based compensation associated with routine and new hire grants.
Added
Sales and Marketing Expenses Sales and marketing expenses increased mainly due to a $16.7 million rise in reseller commissions, including the amortization of warrants aligned with the growth in our revenue. Additionally, employee-related costs grew as a result of increased hiring and higher stock-based compensation expenses.
Removed
In addition, we incurred increased agency commissions associated with new billers.
Added
Net cash used in investing activities for the year ended December 31, 2024 consisted of $36.1 million of capitalized internal-use software development costs, $0.5 million of purchases of property and equipment and $0.2 million of net change in interest-bearing deposits.
Removed
General and Administrative Expenses The decrease in general and administrative expenses was primarily due to lower costs for our directors and officers insurance premiums, a reduction in lease costs, lower legal expenses, lower acquisition related expenses and lower commercial contract termination costs, which were offset by higher employee-related costs including benefits and increased stock-based compensation expense associated with new hire grants.
Added
There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods.
Removed
Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. Historical Cash Flows The following table summarizes our consolidated cash flows.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, we do not believe that a hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other applicable currencies would have a material effect on operating results. 71
Biggest changeAs of December 31, 2024, we do not believe that a hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other applicable currencies would have a material effect on operating results. 70
As of December 31, 2023, we do not believe that a hypothetical 10% relative change in interest rates would have had a material impact on the value of our cash equivalents, investment portfolio or expenses. Foreign Currency Exchange Risk Certain of our operations are conducted in foreign currencies.
As of December 31, 2024, we do not believe that a hypothetical 10% relative change in interest rates would have had a material impact on the value of our cash equivalents, investment portfolio or expenses. Foreign Currency Exchange Risk Certain of our operations are conducted in foreign currencies.

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