PAY

Paymentus is a genuinely compounding payments business, not a story stock. Revenue has more than tripled in four years (FY21 $396M → FY25 $1.20B) and FY25 grew 37.3% while the profit line grew faster still: operating income +68.4% to $75.5M, net income +51.5% to $66.9M, diluted EPS +48.6% to $0.52. That gap between revenue and profit growth is the whole thesis — real operating leverage as the platform scales. The balance sheet is pristine: $321M cash (+55.9%), liabilities just 0.19x equity, and only 0.7% share dilution, so growth is self-funded rather than bought with paper or debt. Most striking, operating cash flow jumped 154.8% to $162M against trivial $361K capex, meaning nearly all of that converts to free cash flow — a ~5.4% FCF yield on the $3.01B market cap, unusual for a 37% grower.

The headline P/E of 46.2 looks expensive in isolation but is misleading. Against ~49% EPS growth the PEG is roughly 1.0, and P/S of 2.5 is undemanding for this growth rate. The low 24.8% gross margin is a feature of the model, not a weakness — reported revenue carries interchange/processing pass-through, so the figures that matter are the expanding operating margin (6.3%, up from a near-breakeven base) and the cash conversion, both of which are inflecting the right way. ROE of 11.9% is respectable and should rise as margins scale on a lightly-levered equity base.