$9.05
$63.21
bear $9.05
base $36.46
bull $63.21
margin of safety $19.00
market price* $31.54
What the business is. Paymentus sells cloud-based bill-payment software to utilities, insurers, lenders, governments, telecoms, property managers and other organisations that send out bills. It also powers bill pay for banks and credit unions. It charges a small fee on each payment rather than a licence fee, so it earns money when consumers pay their bills by card, bank transfer (ACH), app, phone or voice assistant. About 53 million consumers and businesses used the platform in December 2025. Transactions grew from 458 million in 2023 to 597 million in 2024 and 724 million in 2025. Most bills are for essential services, customer contracts usually run three to five years at first, and the platform connects directly into each biller's core billing and accounting systems. That makes it costly for a biller to switch. Its Instant Payment Network lets partners such as consumer apps, retailers and banks (including a warrant-linked partnership with J.P. Morgan) present bills from tens of thousands of billers. Substantially all revenue comes from the United States. Reported revenue ($1.20 billion in 2025) includes card-network interchange fees that pass straight through, so revenue overstates the economics. Contribution profit, which strips those fees out, grew 29.5% in 2024 and 23.8% in 2025. How we measured earnings. We start from operating cash flow, strip out swings in receivables and payables, and subtract stock compensation. We also subtract the amortisation of warrants and upfront incentives used to win clients, because those are a real cost of acquiring business. Then we subtract the capital spending needed to keep the platform running. Nearly all of that spending is software development capitalised onto the balance sheet: about $37 million a year, which has held roughly flat since 2023 while revenue almost doubled. On this basis owner earnings were about $25 million (20 cents a share) in 2023, $55 million (43 cents) in 2024 and $87 million (67 cents) in 2025. The 2021-2022 years were a smaller, loss-making investment phase and are not representative. Operating cash flow jumped from $64 million in 2024 to $162 million in 2025. Most of that jump was a reversal of 2024's build-up in receivables, a timing effect we removed rather than counting as earnings. The company has no debt. It held $378 million of cash at 30 June 2026, and we treat about $50 million of that as needed to run settlement flows. Because we add the rest of the cash to the value directly, we took the after-tax interest it earns (about $7.5 million in 2025) out of the earnings stream so it is not counted twice. Starting point. We anchor on the 2025 level of roughly 61 cents a share of business cash earnings after interest income is removed, rather than a multi-year median. Every year since 2022 has been higher than the last. Both quarters of 2026 ran well ahead of the same quarters of 2025, so it is a level the business has already reached, not a forecast. Owner earnings per share rose 56% in 2025. The first half of 2026 ran about a third ahead of the first half of 2025, with revenue up 29.5% and operating income up 87%. Our base case assumes 28% growth in 2026, below both of those rates. Whenever we credit growth, we also charge the full software spending that produces it, not just the maintenance portion. What growth we credited, and why. The growth we credit comes from one engine: signing and implementing new billers and banks, whose customers then move more payments onto the platform. The engine has lifted revenue every year in the filings since 2019, at about 31% a year compounded, through both the 2020 pandemic and the 2022 inflation squeeze. It has been funded from the company's own cash, and each win is small relative to the whole. That makes it a proven, repeatable process. There is plenty of room left, because 724 million transactions is a small slice of US bill payments, but the rate slows as the base grows. We did not credit further profit-margin expansion, new international markets (Canada and India are small), or new products. Base case. Earnings grow 28% in 2026, then 20%, 18%, 16%, 14%, 12%, 10%, 8%, 7% and 6% through 2035, reaching about $350 million before development spending. Development spending rises about 5% a year, to about $60 million. After 2035 we assume no further growth. Earnings simply persist at that level, carried by the switching costs of being wired into billers' core systems and by the non-discretionary nature of the bills. The business is worth about $4.38 billion, or $33.92 a share. It owes nothing, and surplus cash adds about $2.54 a share, for about $36.46 a share. Bear case. Growth stalls quickly. 2026 still grows about 20% because the strong first half is already reported, but growth then slows to 6%, 3% and 2% before going flat. In 2028 the business loses a major distribution partnership, cutting earnings by 10%. The company's own filings warn that losing one of its largest partnerships could take associated billers with it. The filings also describe pricing that lags rising interchange costs and lower margins on large enterprise billers. After 2035, earnings shrink 3% a year for fifteen years as competitors win renewals, and we credit nothing beyond that. The business is worth about $840 million, or $6.51 a share. There is no debt, and surplus cash adds $2.54, for about $9.05 a share. Bull case. The biller engine keeps running near its recent pace: 33% in 2026, in line with the first half, then 26% tapering to 8% by 2035. Development spending rises 8% a year. After 2035, growth continues at 3% a year for another decade as recently won billers keep shifting volume onto electronic payment, then holds flat. The business is worth about $7.83 billion, or $60.67 a share. With surplus cash and no debt, that is about $63.21 a share. What would make this wrong. The valuation depends heavily on the biller-acquisition engine continuing for years. Most of the base-case value lies beyond 2030. Transaction growth has already slowed from 30% to 21%. The company says the slowdown reflects a shift toward large enterprise billers with larger payments per transaction, but if the slowdown reflects weaker demand, the base case is too high. Stock compensation has also been rising fast: $18.6 million in 2025 and $12.2 million in the first half of 2026 alone. It is charged in full here, but further increases would lower per-share value. Upside would come if the operating leverage visible in 2026 persists, since we deliberately did not count wider margins. Accounting judgements. One is the split of software spending between maintenance and growth, made with a capital-intensity formula. In the valuation cases we charged the full software spend whenever growth is credited. Voting control sits with holders of high-vote Class B shares, including the founder and private-equity investor Accel-KKR.