New IPO: Paymentus $PAY SaaS Billing and payments Network Solution, $20 price, M Cap $2.4B

$PAY Paymentus provides SaaS Billing software and solutions to enterprises. The company is seeking ~ $200M at $2.4B in it is IPO this week, pricing shares at $20

Paymentus and Amazon Team up to Provide an Easier Way for Customers to  Manage their Bills with Alexa | Business Wire
Paymentus IPO

$PAY Founded in 2004 by Dushyant Sharma, Paymentus has 1300+ customers, providing payment acceptance solutions to businesses.

Profile photo of Dushyant Sharma
Dushyant Sharma, Founder Paymentus

$PAY has raised over $35M over the years from investors including Accel-KKR, which is investing another $50M at the IPO.

Offering Summary

$PAY solution solves the manual and complicated process of accepting and managing payments from customers for mid-sized and large enterprises.

Instead of creating a bill, getting checks or transfers and then reconciling payments, customers use $PAY to send electronic bills and get paid immediately.

Paymentus currently processes about 1% of US payment volume at $38B, and the global market is over $5T.

$PAY makes money by charging a convenience fee per transaction by the consumer and transaction fees paid by billers.

Metrics

Gross DBNER is 97% and Net DBNER is 117% indicating strong customer retention.

They have 1300+ customers and 212M Bill transactions processed monthly. There is no customer concentration.

Financials

$PAY recorded $324M in revenue for LTM Q1 2021 (March) and is growing at 33% YoY. They have 31% Gross Margins and are adjusted gross margin profitable.

$PAY recorded $28M adjusted EBITDA in 2020, +10% YoY.

$PAY has over 500 employees and is headquartered in Charlotte, North Carolina.

$PAY revenue for 2020 was $92M (+32.5% YoY) and gross margins were 30.6%.

Valuation

$PAY is seeking $2.4B market cap, which translates to a 7.15X Price to Sales, and 115 EV / EBITDA valuation.

Comparable valuations for competitors $FISV (Fiserv) at 5X P/S, but growing at 11% YoY, which indicates this is a reasonable valution.

Recommendation

There is no compelling reason for me to invest on the IPO day, since the growth is not very compelling (30%) and the valuation is not attractive either.

In the #FinTech space, this is a fairly unique company, but not an unique investment opportunity overall.