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spk04: Good morning, everyone, and thank you for joining us for the Avid Exchange Holdings, Inc. Third Quarter 2022 Earnings Call. Joining us on the call today is Mike Perger, Avid Exchange's co-founder and chief executive officer, Joel Wilhite, Avid Exchange's chief financial officer, and Subhash Kumar, Avid Exchange's head of investor relations. Before we begin today's call, management has asked me to relay the forward-looking statement disclaimer that was included at the end of today's press release. This disclaimer emphasizes the major uncertainties and risks inherent in the forward-looking statements the company will make this afternoon. Please keep these uncertainties and risks in mind as the company discusses future strategic initiatives, potential market opportunities, operational outlook, and financial guidance during today's call. Also, please note that the company undertakes no duty to update or revise forward-looking statements Today's call will also include a discussion of non-GAAP financial measures as that term is defined in Regulation G. Non-GAAP financial measures should not be considered in isolation from or as substitute for financial information presented in compliance with GAAP. Accordingly, at the end of today's press release, the company has provided a reconciliation of these non-GAAP financial measures to financial results prepared in accordance with GAAP. With that, I want to turn the call over to Mike Prager.
spk11: Thank you, everyone, for joining us here today. Joe Willight and I are excited to discuss Avid Exchange's third quarter 2022 results and the continued momentum we are experiencing across our business driven by our middle market focus and the four growth gears of our Avid Exchange business flywheel that drives our business. As we anniversary our initial public offering, it is noteworthy that today's volatile economic backdrop is somewhat analogous to the one that existed during our founding back in 2000. Since then, and since our IPO, we have not only demonstrated our durability, but also have thrived, laying the foundation for our relentless focus on driving customer innovation, value creation for both customers and shareholders, and strong financial and operating performance. Today I want to talk about three themes that are behind our strong performance for the third quarter and should set us up to continue delivering strong results in the future. These three themes are as follows. Number one, our industry-leading electronic payment penetration remains a key lever in both differentiating Avid Exchange and driving financial results. Two, our hybrid go-to-market sales strategy with a differentiated vertical market approach and integration strategy is driving customer adoption and sales momentum. And three, our focus on customer innovation is increasing our value creation along with extending our vertical market penetration and reach. Let's start by discussing the impact of theme number one and how our industry-leading electronic payment penetration remains a key lever in differentiating Avid Exchange and driving financial results as evidenced by our consistent operating and financial results we have delivered since our IPO. To appreciate the calculus behind our electronic payment penetration, it is worth recounting our driving force. We have taken a holistic approach to our customer base since launching the Avid Pay Network in 2012. Our value proposition extends not just to buyer customers through our AP automation, but equally important to supplier customers through our offering supporting various payment modalities, cash flow manager, invoice accelerator, and avid analytics. Through these bestowed offerings, we have driven industry-leading electronic payment penetration, strong payment volume, higher yield metrics, and robust payments revenue growth. The third quarter of 2022 was no exception. we delivered revenues of over $82 million, which was up 26% over the same period last year. This now marks five consecutive quarters of exceeding our internal financial targets and delivering over 20% comparable organic revenue growth. Led by our robust payments revenue growth of 34%, we drove revenue performance in our non-GAAP gross margins, which approached 65%. Along with expense controls, the baseline levels of which we are proactively calibrating, the result was that we almost halved our adjusted EBITDA losses to roughly $3.7 million in the quarter. A further upshot to our third quarter results, we are raising our full year 2022 revenue outlook while lowering our adjusted EBITDA losses further. This brings us to our second theme driving our results. which is our hybrid go-to-market sales strategy with a differentiated vertical market approach and integration strategy driving customer adoption and sales momentum. The sustained progress on our demand generation is driven by our vertically differentiated and purpose-built solutions, creating our middle market value proposition. The value proposition includes dynamic automation and decisioning of manual and paper intensive workflows with sophisticated business rules supporting a middle market company's accounts payable and payments lifecycle. Through our 220 plus vertically and horizontally aligned integrations with different accounting systems intertwined with our referral, reseller, and white label reseller partnerships, these middle market customers are able to digitally transform their back office, thereby reducing the current and future costs and getting a rapid return on their investment. As these buyer customers adopt their solutions, our Avid Exchange flywheel and value proposition gains further momentum, creating a powerful two-sided network as buyers bring their suppliers, thereby maximizing network density, scalability, transaction liquidity, and electronic payment conversion, and the information discovery to drive operational efficiencies for both buyers and suppliers. As the current economic backdrop remains volatile, where efforts to reduce costs and bolster productivity remain an imperative to offset inflationary headwinds and its knock on economic growth, in my opinion, the benefits of our value proposition should continue to come into sharper view and drive further market adoption. One powerful example supporting our vertical market integration strategy and our value proposition is with buyer-customer VetsPets. a veterinary hospital network as part of our healthcare facilities vertical. According to Blair Myers, Vice President of Finance and Accounting at VetsPets, prior to Avid Exchange, VetsPets back office processes were inefficient, costly, manual, and a bottleneck to growth, including manually cutting paper checks to pay each invoice. After visiting an accounting systems conference and evaluating several AP automation companies, Blair chose Avid Exchange for its full circle platform, which provides both AP and payments automation capabilities, which is highly integrated with their Sage intact accounting system, thereby turning a bottleneck into a profit center. Best of all, Blair recounted, honestly, this was probably one of the easiest new product implementations that I've been part of in my entire career. Another good example is with Sabin Community Clinic, a nonprofit health clinic with multiple locations throughout Los Angeles, which is another success story within our growing not-for-profit vertical, highlighting the power of Avid Exchange's AP and payments automation solution tightly integrated with their MIP fund accounting system. Contending with staff turnover in its accounts payable department, Sabin Community Clinic found it difficult to maintain business continuity and struggled with processing their invoices and payments on time. With our combined Avid Exchange invoice-to-pay solution fully integrated into the clinic's accounts payable process, Sabin Community is now able to process payments on time without worrying about negatively impacting the clinic's operations or their ability to serve their community. As staff accountant Michelle Toh states, With Avid Exchange, I am now able to electronically approve invoices and payments in seconds. Given these very compelling customer testimonials articulating the business problems that we are solving for our customers, I will now provide an update on our value proposition in driving market adoption of Avid Exchange's industry-leading offerings, which are purpose-built for the middle market. In addition, I want to focus my directional commentary on demand trends year over year as it relates to our top of funnel sales activity. This commentary provides a line of sight into potential opportunities tied to new buyer customer logo wins and additional product attachments to existing buyer customers that are expected to convert, fully ramp, and impact 2023 results. Furthermore, our pipeline analytics which overlays the sales funnel, tracks deal sizes, close rates, in addition to onboarding and new customer go-lives, along with our 90-day certification rates for new invoice volume. To date, we are encouraged by the demand activity we are seeing both the buyer and the supplier side of the equation in the face of the current macro backdrop. Our real estate, homeowner association, and nonprofit verticals, along with our horizontal focus, all of which represent a greater weighting in our business mix, continue to exhibit strength quarter over quarter and sequentially. Within the real estate vertical, we're also seeing strong channel demand, partner support for driving new opportunities, as evidenced by Avid Exchange being named Partner of the Year by MRI Software at its Ascend User Conference last week in New Orleans, along with a record year of rent manager growth. another channel partner driving adoption in the multifamily sector of real estate. This is all more impressive considering this year's top of funnel activity was probably influenced by some COVID-related catch-up. Our construction and financial services verticals, meanwhile, have seen some unevenness, which we are also closely monitoring. Overall, nets of puts and takes, we are pleased with the strength of our top of funnel sales momentum and remain cautiously optimistic as we position for a strong 2023. Finally, I want to share insights into our third theme of demonstrating our relentless focus on customer innovation to increase our value creation for both buyer and supplier customers, along with extending our vertical market penetration and reach. The investments we are making in our product roadmap are compounding our strong operating and financial results through three of the four gears of our Avid Exchange flywheel. During the quarter, we advanced our integration strategy with the launch of a new application programming interface integrations, or APIs as we call them, for Blackbaud impacting gears one and gear two of our flywheel. Blackbaud is a vertical accounting solution provider, which we establish a strategic partnership focused on expanding our non-for-profit education and healthcare verticals market footprint. In the third quarter of 2022, we introduced new API integrations with Blackbaud Financial Edge NXT, a cloud-based fund accounting solution built on our next generation Avid Connect integrations platform. These seamless out-of-the-box integrations enable customers automatic syncing of general ledger codes, vendor lists, along with the invoice and payment data between Avid Suite, which includes Avid Invoice and Avid Pay, and Blackbaud's Financial Edge NXT system. With roughly 6,000 Blackbaud customers currently on Financial Edge accounting system, we believe this integration, when the first on Avid Connect, should deepen our technical, sales, marketing, and organizational partnership with Blackbaud, thus enabling us to accelerate our penetration across Blackbaud's customer base. Furthermore, as more of our accounting system partners migrate their on-premise solutions to the cloud, our APIs built on Avid Connect should enable faster customer acquisition, implementation, and payment adoption, along with a better overall seamless buyer customer experience. Under gear number three, which is the modernization of payment transactions, we recently launched our Avid Exchange cross-border payment offerings at NetSuite's annual SuiteWorld user conference in Las Vegas, consistent with our delivery commitment at the start of the year. This capability will be embedded within NetSuite's ERP with the intentional international money transmission and settlement component being powered by WISE, our international payments processing partner. The adoption of cross-border payments is an important product not only in terms of broadening our payment modalities but also in advancing our international pillar of growth strategy but also deepening our relationships by leveraging this capability across all of our horizontal software channel partners. As we have stated in the past, cross-border payments currently comprise a very small component of our existing money flows. But the absence of it did, however, limit our historical participation in a subset of bundled opportunities that included both domestic and international payments. With our advanced three-way purchase order matching functionality introduced in the first quarter of 2022, combined with our new cross-border payment offering, we believe we're well positioned to pick up both new buyer customer opportunities as well as extend our vertical market focus into new verticals such as manufacturing and others. In summary, we're very pleased with our results in the third quarter. Along with navigating our first year as a public company, which we have been driven by the three themes we discussed, combined with our consistently strong execution, our strong balance sheet, and our positive business outlook for 2022, we have much to be proud of. I want to thank all of our Avid Exchange team members for their hard work and dedication in driving this strong financial outperformance amid a very volatile economic backdrop. As we celebrate our accomplishments during our first year as a public company, we're excited about the opportunities ahead and recognize the discipline needed to execute on them. To be sure, we have been tested many times since our founding. As the middle market industry leader, we expect to be tested as we build highly durable growth business. Rest assured, we are focused on excelling and innovating to drive overall middle market adoption. With the investments we've been making across the four gears of our Avid Exchange business flywheel, we believe we are well positioned to advance our value proposition, enhance our industry-leading integrations, continue growing our proprietary two-sided Avid Pay network, and expand our significant competitive mode in being the leader for middle market companies in automating their accounts payable and payment processes while maximizing shareholder value creation. With that, I'd like to turn the call over to my partner, Joel Wilhite.
spk12: Thanks, Mike, and good morning, everyone. I'm excited to talk to you today about our third quarter 2022 financial results, which reflect continued execution of our growth strategies, leading now to three consecutive quarters of positively revised 2022 guidance. Overall, we delivered another quarter of solid financial performance. Our third quarter 2022 revenues came in better than our forecast, driven by higher total transactions, payment volumes, and contribution of interest revenue from funds held for customers given the Fed-induced change in interest rate levels. That, together with better operational efficiencies and expense control, contributed to a lower-than-expected adjusted EBITDA loss in the third quarter of 2022. Total revenue increased by 26.4 percent to $82.4 million in Q3 of 2022 over the third quarter of 2021. Organic revenue growth, which excludes the contribution of our Pay Clearly acquisition, which closed in January 2022, was 25.6%. Organic growth was primarily driven by the addition of new buyer invoice and payment transactions, which increased e-payments to suppliers. As a reminder to those who are new to the Avid Exchange story, both FastPay and Pay Clearly are media advertising books of business that include a portion of revenue that skews to the midterm and presidential election cycles in the U.S. For the nine months ended September 30, 2022, the revenue contribution from just the political segment of the media vertical was $5.4 million. While we are not guiding the 2023 numbers, it's worth noting that 2023 has neither the U.S. midterm nor presidential elections benefits. Back to Q3 2022 financial results. Our strong revenue growth also resulted in total transaction yield expanding to $4.57 in the quarter, up 12.8% from $4.05 in Q3 2021. The increase was driven principally by improvements in mix and payments yield. Software revenues of $25 million, which accounted for 30.4%, of our total revenue in the quarter increased 12.1% in Q3 of 2022 over Q3 of 2021. The increase in software revenues was driven primarily by growth in total transactions of 11.9% in Q3 of 2022. Payment revenue of $56.6 million, which accounted for 68.7% of our total revenue in the quarter, increased 34.3% in Q3 of 2022 over Q3 of 2021. Excluding Pay Clearly, which contributed approximately a half a million dollars in the quarter, organic payment revenue growth was 33.1%. The increase in payment revenues was driven by the growth in total payment volume of 29.4% and 28.7% excluding Pay Clearly. On a GAAP basis, gross profit of $47.6 million increased by 38.7% in Q3 of 2022 over the same period last year, resulting in a 510 basis point improvement in gross margin for the quarter to 57.8%. Non-GAAP gross margin increased 440 basis points to 65% in Q3 of 2022 over the same period last year, driven primarily by a combination of total transaction yield and operational efficiencies. Moving on to our operating expenses. On a GAAP basis, total operating expenses were $74.6 million, an increase of 34.5% in Q3 of 2022 over Q3 of last year, driven by headcount additions to support our growth initiatives, increased expenses in transition to a public company, and a recognition of non-cash stock-based compensation costs. On a non-GAAP basis, operating expenses excluding depreciation and amortization increased 25.9% or $11.8 million to $57.2 million in the third quarter of 2022 from the comparable prior year period, highlighting the operating expense leverage on a comparable basis. I'll now talk about each component of the change in operating expenses on a non-GAAP basis. Non-GAAP sales and marketing costs increased by $3.1 million to $19 million in Q3 of 2022 over Q3 of last year, with the increase driven by the continued investment in our direct and channel strategies to acquire new buyers and supplier customers. Non-GAAP research and development costs increased by $3.8 million to $19.3 million in Q3 of 2022 over Q3 of last year. The increase was due to continued investments in our products and platform. Non-GAAP general administrative costs increased by $4.9 million to $18.9 million in Q3 of 2022 over Q3 of last year driven by a combination of an increase in performance-based bonus accruals due to continued strong operating and financial results, coupled with expenses in transition to a public company status. Our gap net loss was $25.4 million in the quarter versus a gap net loss of $35.5 million in the prior year period, which included the impact of a mark-to-market adjustment for convertible common stock liability prior to conversion upon our IPO, On a non-GAAP basis, our net loss in the third quarter of 2022 was $11.6 million, an improvement of $3.7 million compared to the year-ago quarter on solid organic revenue growth combined with ongoing operational efficiencies and expense leverage. On a non-GAAP basis, adjusted EBITDA was a loss of $3.7 million in Q3 of 2022 compared to a loss of $6 million in Q3 of 2021 due to the aforementioned factors. Turning to our balance sheet for a moment, I want to touch on a few key items. We ended the quarter with a cash position of $508.4 million. The cash is split between cash and equivalents of $411.1 million, which is in a combination of demand deposit accounts and money market funds. The remaining $97.3 million is in a basket of financial instruments, including treasury bills and commercial paper, with a weighted average maturity of roughly 71 days. The weighted average annualized effective interest rate on our corporate cash position for the third quarter was roughly 1.6%. Our outstanding debt balance at quarter end was approximately $128 million out of our credit facility at quarter end, which was $133.5 million. I'll now move on to our updated full year 2022 guidance. In light of our strong third quarter outperformance and Mike's cautiously optimistic commentary about the opportunities and initiatives we continue to see and execute across our business, We now expect total revenue for the year to be above what we previously provided and in the range of $314 million to $315 million. We are also adjusting our non-GAAP adjusted EBITDA expectations lower to a loss between $18 and $19 million. With that, I would now like to turn the call back over to the operator to open up the line for Q&A. Operator?
spk03: We will now begin the question and answer session.
spk04: To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question will come from Dave Coning with Baird. You may now go ahead.
spk14: Yeah. Hey, guys. Congrats on another really good quarter. Hey, thanks, Dave. Yeah. And, you know, maybe for my first question, payments volume yield or I guess revenue yield on volume has continuously gone up, I think, three-quarters in a row sequentially. And maybe you can talk through kind of the different moving parts. I would imagine interest revenue probably helped that a little bit, but even maybe payment type or verticals, kind of talk through kind of, you know, what's driven that continued improvement and then how maybe we should see that going forward.
spk12: Yeah, great question, David. This is Joel. You know, you're asking about kind of our yield on total payment volume, right? So payment revenue over that TPV. We had good growth in the quarter. We were pleased with 29% overall. We've kind of exceeded our expectations from a volume and a total transaction count growth. TPV yield itself, again, it remains kind of industry-leading and healthy. A couple dynamics. We've said in the past a basis point up or down wouldn't be something necessarily to focus on. We do believe that over the long run, this yield is connected to gear three for us and is one of the biggest opportunities that drives growth for us in the future. You know, we don't break out the components and the puts and takes. A couple things, though, certainly our interest revenue, which grew Q2 to Q3, as mentioned in the prepared remarks, that is included in payment revenue. There is a, you know, incremental lift associated with that. You know, same to a lesser extent, given the inclusion of the political component of the revenue. But all in all, we're really pleased with the progression of that yield and expect that, again, that's really where there's long-term opportunity for us as checks come out of the system and we move more and more payments to digital.
spk14: Yeah, great, great. Thank you. And then I guess my second question gets kind of back to the interest revenue. And I think just based on that $800 million or so of that float portfolio and rates being up a lot, We have that line up to $3 million sequentially, and it's probably all margin. So to us, it looks like your guidance, if we just put that through and no core improvement, you're going to hit your guidance even without any core growth. And I fully imagine you have core growth too. So maybe kind of let me know maybe if I'm a little too aggressive maybe on that interest revenue.
spk12: Yeah, a couple questions. So what I would say, and we called out, certainly we benefit from the funds held from customers in a rising rate environment. And, you know, you're right in the kind of plus or minus a billion dollars of cash help from customers. You know, in early quarters this year, we were sub 40, 50 basis points. And on average now, what we saw in the third quarter was, you know, 100 bps and, you know, ramping a little bit as you exit the quarter. So that certainly contributed. And we'd expect that, you know, to continue to sort of pace you know, Fed funds minus 100, 120 basis points on somewhat of a lag. So we do see that, you know, included, but, you know, even removing that impact, we saw good growth, good yield expansion. And then the final part, I guess, of your question, David, is how we think about that relative to the guide. You know, like Mike said, we're, you know, cautiously optimistic. We've not seen you know, meaningful kind of macro impact, but just being cautious as we sort of predict the outcome for the quarter in our guidance.
spk14: Gotcha. Great. Well, thanks. Great job. Thanks, Dave.
spk04: Our next question will come from William Nance with Goldman Sachs. You may now go ahead.
spk06: Hey, guys. Good morning. Appreciate you taking my questions. I wanted to ask on the gross margin improvement. You know, you guys have this plan to improve gross margin by 10 points, I think, by 2024. And so it seems like you guys are basically halfway there and seem to be running a little bit ahead of plan. So I just wanted to kind of pick that apart a little bit and understand, you know, how much of the gross margin improvement is coming from some of the elevated ad spending and higher float revenues this year versus if you kind of strip that back, do you guys feel like you're kind of running ahead of schedule on that plan as you look out over the next year and a half or so? Gotcha.
spk12: Good question, Will. Yeah, we were happy with 65% margin in the quarter, meaningful step up sequentially. And we've talked about that being a part of our path to profitability. We've said before that you know, kind of in the, you know, sort of full year calendar 24, we're committing to that this business will become a profitable business. We believe that happens in the 70% gross margin zip code along with good scale and GNA and then R&D. So we did, you know, just speaking about that 65% in the quarter, the preponderance of that benefit or that sequential increase is really continued operating efficiency that we're seeing and we're seeing that top to bottom, but it certainly shows up in gross margins, also payment yields. It is true that that incremental, that sequential growth in the interest revenue contributed to that gross margin to some degree. We're not breaking out the components. Also, the presence of political was a benefit. Removing both of those, we were pleased with the underlying expansion of gross margin from Q2 to Q3. The last thing I might just add to that question, Will, is as you think about, you know, we're certainly not guiding 23 now and we don't guide to gross margin, but I would kind of balance the expectations of margins going forward for two things. One is, you know, you already mentioned and I answered the political component. There's a bit of a benefit there just given the nature of that spend and margin. And so we've mentioned before that political is largely absent in the 23 year. And the second thing I would say is I think we mentioned last quarter that we've more fully now moved our business into the Azure cloud. And so that transition is behind us. But we are making investments and making certain spend as we exit 22 associated with the security and the platform. robustness of that. And so I would sort of mute expectations for that over the next couple quarters.
spk06: Understood. That all makes sense. And then, Mike, I thought the question or the commentary on top of funnel demand was interesting. One of the things I think you highlighted in the testimonials was turnover among AP staff. I mean, I guess, is that a trend that you're seeing? And as we think about the great resignation playing out in back offices across the country, is that a trend that you're seeing drive more demand for the product?
spk11: Yeah, I think that's a good question. I think the overall trend that we're seeing is the question when people are forced to hire additional AP staff, do they want to invest in the labor component or now is the right time to invest in automation? You know, whether that, you know, need and staff is driven by, you know, the growth of their business or by, you know, kind of the resonation, you know, kind of element, I think is a good question. We recently actually released our Q2 middle market spend, you know, index. And one of the things that we highlighted there as part of our survey is that in the last year, you know, four out of five of our customers across the middle market have grown their business. And so whenever you have a growing business, you also have a need for additional accounts payable staff. And I think in the current economic backdrop, what we're seeing currently is consistent with in the past when you have choppier waters is it really kind of forces our buyer customers to look at, hey, is now the right time to automate this process rather than continue to invest in human labor? So I think that overall theme is certainly playing out. and whether the increase in hiring is that we're seeing is due to kind of growth of their business or part of the turnover of their staff, I think is a good question.
spk06: Got it. Appreciate you taking all the questions. Nice question. Yeah, thanks for helping.
spk03: Our next question will come from Darren Peller with Wolf Research.
spk04: You may now go ahead.
spk10: Hey, guys. Thanks. You know, I want to follow up on the top of funnel again for a minute and just talk about what you think is truly resonating. I know a lot of it was post-COVID being back out of conferences, but still a ton of white space. And so when you think about what's sort of sustainable on the front of, you know, new customer ads, and then just a quick follow-up on volume trends, you talked about, we saw the results and they continue to be very strong. I think you mentioned some differences in terms of verticals and some puts and takes. So, Can you just go into that again? Is it something you're seeing from a macro standpoint that's driving some changes in certain verticals versus others? But look, overall, in context of the strength we're seeing, I guess, is that new business? Is that some verticals outweighing others? A little more color would be great.
spk11: Yeah, that'd be great there. You know, good questions. So certainly, so to kind of start with, you know, the question of, you know, kind of top of funnel activity that we're seeing, you know, certainly the you know, kind of conversion back to in-person conferences has been a positive element for us. You know, historically that's been, you know, a key component in supporting kind of our digital top of funnel, you know, generation along with that of channel partners. And what we're seeing is, I was just at, you know, two of our, you know, partner conferences last week alone, and attendance was up above 50% over last year. So certainly there's an interest in finance leaders, CFOs, getting back to how did they catch up or really lean into some of the automation initiatives that maybe they haven't invested in during COVID. The second thing we're seeing is really some nice activity across some of our channel partners. Again, during COVID, many of our channel partners were more focused on just maintaining customer relationships rather than selling new products. and now they're getting back to how they grow their customer base. So that's really being a positive element in terms of top of funnel activity. As it relates to the performance across our eight verticals, first of all, the beauty of our business today is that we're super diversified across eight different verticals, plus we have the horizontal slice that's driven by some of our channel partners. And, you know, what I would say is, you know, we've had, actually in the quarter, had four verticals that really probably outperformed our internal expectations, being real estate, HOA or home or association and condo association management market, nonprofits, and then the horizontal market. And I made, you know, reference to, you know, two verticals that we're seeing some unevenness with being construction and financial services. However, I'd be careful there not to kind of equate it to maybe entirely driven by macro. Construction, for example, we have some internal strategies on how we're going to market related to the conversion of still a fairly large base of on-prem Tibberscan customers and how we're moving them to our new titanium cloud-based offering for construction. And so, you know, some of that uniqueness is, you know, based on some of our internal go-to-market strategies and how we're converting that base and, you know, not making the Avid Pay network available to some of those on-premise customers as a, you know, a catalyst for, you know, getting them to adopt. And then on financial services, you know, we're also seeing, you know, some of the indigenous across some of our channel partners that we rely on in terms of, you know, just not being as Avid Exchange, maybe not as, directly involved in the sales process as we are in some of our other verticals. So those are some of, you know, the commentary that I would say. All in all, you know, the puts and takes, we're very pleased across, you know, all the verticals in terms of how on balance they're performing. Okay.
spk02: That's really helpful, Mike. So I guess I'm curious.
spk10: Any update there?
spk12: Yeah, maybe I'll just hit that in the two parts. Again, the levers being the first part and the path to profitability being the second part. So from a lever standpoint, we've talked about our path to profitability as being, you know, obviously the gross margin improvement is a really core part of that in addition to scale and operating expenses. And we've talked about that gross margin progression. Being essentially made up of roughly two-thirds expansion of yield and roughly a third of just steady consistent operating sort of unit cost improvement. And that can sort of be zigzag across the quarters depending on various circumstances, but that's basically the way we see those gross margins expanding. And then from the second part of your question, again, You know, we're not giving guidance now, but certainly we'll do so for 23 in the March timeframe. So we're sticking with and we still see that profitability point for us in the full year 24. And again, I just remind you that we're focused on, you know, really being super disciplined. We've talked about efficient growth being the focus of the team across the company and making sure that we're continuing to invest in growth. And so we do have You know, we're expecting to continue to invest around the flywheel products for buyers and suppliers and our platform while seeing that steady progression of gross profit. So we do see profitability around the corner, Darren, and we'll update you guys when we give guidance in March.
spk11: Great. And, Dave, Darren, just maybe just kind of a reminder to, you know, Joel did a good job of articulating about two-thirds of that expansion yield. in terms of driving gross margins from expansion yield. And one of the biggest levers there, remember, is this large base of paper check suppliers that we have. And that continued conversion from paper check to electronic does really good things for us in terms of taking costs out of the spectrum as well as increasing revenues related to those transactions. And the faster we add new buyer customers, it adds a bigger backlog to that paper check supplier base.
spk16: Understood. Thanks again, guys.
spk03: Our next question will come from Josh Beck with KeyBank. You may now go ahead.
spk16: Thanks, guys, for taking the question.
spk07: I want to drill down a little bit around the political revenues. So certainly I think we have a really good sense of how that trended in the first half and what it looks like in Q3. I guess my question is moving forward, would the calendar Q4 generally be the strongest? Obviously, that's when a lot of the actual election activity is. So that's kind of part one. And then part two is just thinking about next year. Is that something that really drops off or there's It's more of a maintenance spend. Just, you know, any further color on just how to think about that political piece would be great.
spk12: Yeah, great question, Josh. Let me just kind of provide a couple of data points and perspectives, and then Mike maybe just talk generally about that business. But, you know, we just lapped our first year kind of owning FastPay, you know, kind of pleased to have just to increase the diversity of our Verticals across the middle market and so pleased with that business of course a subset of that Overall media business is political and I think what we've you know, you know year-to-date I think again Just you know, we'll sort of sunset talking about fast pace separately as we laugh the organic, you know, we laugh the anniversary But you know year-to-date we've generated about thirteen and a half million dollars of total media revenue associated with that acquisition and about 8 million of that's non-political. And so we've talked about the inclusion of roughly 2.5, 2.6 million of political in the third quarter. We've said before that even though the election is November, there is kind of a meaningful build of that revenue through the year. It is pretty tough to predict. And so from a guidance standpoint, we're being cautious. It's tough to predict what that Q4 could be. It could move depending on the way the election cycle plays out, runoffs and otherwise. That's about as specific as I'd get from a guidance standpoint. To answer your question a little bit about how should we think about 23, we've talked about that not being a presidential or midterm cycle, and maybe just to give it some color, that 2.6 that we mentioned we generated in political revenue in Q3, the comparable number in the prior year was around 700,000, and so kind of meaningfully different, and that should give you a little bit of a little bit of color about how to think about 23. Mike, anything you'd add?
spk11: Yeah, I would say that overall the media vertical for us is fairly diversified. Still the majority of the customers and the spend is from kind of corporate media. And on the political side, we're actually almost split 50-50 down the fairway between those customers that support the Republicans versus the Democrats. And the thing that's been interesting actually for me to seeing is a lot of the spend is actually driven by the issues, not, you know, even more so than the candidate, you know, political spending. And so the issues is one of the biggest drivers related to that category for us.
spk07: Really helpful. And then, you know, I think a question that you've addressed and, you know, we're getting a lot is certainly with respect to the macro and, you know, the vertical commentary and, you know, certainly your ability to help fight inflation is super helpful. But I'm also kind of curious, like, you know, what signals or maybe macro indicators are you watching? Obviously, there's lots of B2C oriented payment companies, it's pretty obvious. And B2B, it's a little bit trickier, I think, for investors to track. So maybe, you know, from the prior recession, or just, you know, macro indicators you found helpful would be great.
spk11: Yeah, certainly what we've been talking about in terms of on the buyer side, it's top of funnel activity and the continued adoption of the overall market that's still managing paper invoices and paper checks and that conversion. So it kind of starts there. And then the second thing that we're, being in the payments business, which is a little bit different than what we've seen in kind of the last economic downturns where we didn't have as big of a payments business as we do today. We're paying close attention to, say, average payment sizes and overall kind of payment volumes. And to date, those remain pretty healthy for us across the B2B spectrum. One of the biggest areas that we're also paying close attention to is on the supplier side is whether a more challenging macro environment actually ends up being a bigger catalyst for us in those suppliers moving from paper check to electronic. Today, with a paper check transaction, on average, it's taking the supplier seven to 10 days to get fully paid and settled when the US Postal Service isn't making that any faster. And moving to electronics certainly provides them a significant advance in terms of their cash flow. And so, although we don't have, you know, we've not forecasted really into any of our models, you know, we are cautiously watching whether that's a positive impact for us, you know, in the current environment.
spk02: Super helpful. Thanks, guys.
spk03: Our next question will come from Brad Sills with Bank of America.
spk04: You may now go ahead.
spk15: Oh, great. Thanks, guys, for taking my question. I wanted to ask about TPV. Lots of puts and takes with the macro backdrop right now. You've got, on one hand, inflation, which could be a tailwind, and then, on the other hand, we're heading into a recession and seeing some choppiness across different verticals and industries. You talked about some changes by vertical. If you could just kind of help us understand more kind of the puts and takes as to what you're seeing with regard to spend volume on a per customer basis, you know, how that's trending and any color on different verticals.
spk12: Yeah, thanks, Brad. I'll take a shot, and Mike may add some context as well. Again, you know, just stepping back, we were pleased with the results in the quarter. You know, we, you know, top and bottom line beat, but also beats on sort of the core fundamental health of the business, total transactions, TPV. On the macro, like we've said, we haven't seen a meaningful impact on a adverse macro environment. We're cautious and optimistic as we move through that. And we've also seen lots of puts and takes across the verticals. But I would say that the mix of those puts and takes is no different this quarter than we've seen in past quarters. and sort of steady as she goes. So I don't know, Mike, if you want to add anything to that.
spk11: Yeah, maybe in my last commentary, I kind of focused on some of the verticals. And maybe one other aspect of it is in our horizontal business, that was another area that we saw some outperformance based on our internal expectations in the quarter. And really driven by some of our bigger channel partners like the NetSuite, Acumatica's of the world, and others. And I think we're seeing lots of overall demand on the horizontal side. The NetSuite user conference that was recently in Las Vegas was a very well-attended conference. And we did announce our cross-border offering at that conference specifically for NetSuite that's highly integrated into the NetSuite payment process. And our expectation is that that will continue to drive some nice performance in terms of new buyer customer adoption on the horizontal side of the market as well. In addition to the commentary I made previously on the various puts and takes on the vertical markets that we're in.
spk15: Wonderful. Thank you. And then one more, if I may, please, just on the cross-border offering. Are there any verticals where you see a near-term opportunity Have you taken a look at your transaction volumes to parse through where you see the opportunity for that? Are there certain verticals where there's just a heavier volume of international payments? Where do you see the initial success and any color on just pricing for cross-border and what that might bring into the model in terms of monetization? Thank you.
spk11: Yeah, so good question. I'm as probably anxious as you are, Brad, in terms of where the impact is going to be. You know, as we've kind of talked about historically, we don't have, you know, a big demand for cross-border within the existing verticals that we're in today due to the fact that they're very geographically centered type verticals. However, where we're seeing kind of the initial interest, you know, i.e. just in the last, you know, 30 days or so, is in the horizontal market. And specifically, probably in opportunities that we would have historically opted out of because we weren't a good fit for those type of customers. And so playing in those type of opportunities in a horizontal market within, say, NetSuite and some of our other horizontal accounting systems that we're deeply integrated with is going to be kind of that opportunity. We also think it's going to, over time, lend itself to us developing new vertical markets that incorporate you know, cross-border type opportunities as part of that. And we have specifically perhaps the intersection of combining what we've, you know, previously released in the last couple of quarters related to our next generation purchase order and procurement related tools combined with cross-border provides us, you know, for a nice solution, for example, potentially in the manufacturing vertical and some of those other verticals where there may be purchase order procurement centric combined with having an international supplier base. So those are some of the things that we're taking a look at, and it's going to be interesting to see where some of those kind of natural customer ads come from. But we expect certainly it's probably going to be driven by the horizontal market first, and then followed up by perhaps pursuing new vertical markets based on our customer trends that we're seeing.
spk16: Thanks, Mike. Thanks, Joel. Thank you. Thanks, Brad.
spk03: Our next question will come from Andrew Bow with SMBC Niko Securities.
spk04: You may now go ahead.
spk05: Hey, good morning, guys, and thanks for taking the question. Just wanted to visit the comments you made, Mike, on the Blackbaud relationship. You know, they said, I think you said 6,000 customers currently on the accounting system and an opportunity to really penetrate that base. Can you give us a sense on what's addressable there from, you know, a buyer customer perspective, you know, it could be a pretty big opportunity in the context of the 8,000 buyer customers you had at the end of 2021.
spk11: Yeah. I mean, first of all, I agree with you. And, you know, this is another good example of kind of our playbook in terms of that vertical market focus and going very deep within the verticals. And one of the biggest, you know, components is, of being in a vertical market is being deeply integrated to the core accounting systems that support that vertical. So Blackbaud is a great example of that and having the next generation, what we call kind of built inside integration with a partner like Blackbaud gives us a nice avenue to pursue that 6,000 customers. I think our team is, obviously we're still in the early days of you know ramping and going to market within that partnership and But I think it's very similar to some of the other verticals that we've seen with partners with you know similar, you know You know customer sizes at the end of the day. We're still subject to the adoption rates that we're seeing across the overall industry and and You know continue to build on the value proposition, but having a deeply integrated and you know, AP automation payment experience with Blackbaud certainly provides, you know, a great customer experience. And so we do believe that will be a lever in terms of increasing that adoption rate within the nonprofit vertical, you know, for those customers that are using Blackbaud. So I would say more to come and we'll certainly kind of keep you updated. But I know, you know, the team and myself are, you know, really excited about what that opportunity presents, you know, long-term for us.
spk05: Got it. Thanks for the call there. And then it wouldn't be a proper earnings call if we didn't discuss Invoice Accelerator. Any update there? I know that you talked about Accelerator 2.0 last quarter, so anything you can provide on that front on where that's going would be great.
spk11: Yeah. I'm glad you're as passionate about Invoice Accelerator as I am. So what I would say is that one of the things that we have launched over the last quarter is the development of Invoice Accelerator 2.0. And so I think our main focus is on development of that product and being in the market later next year with it. And so what I would say is probably the focus is going to be more on the – getting Invoice Accelerator 2.0 in the market and then the launch of it in the market versus maximizing the opportunity on our 1.0 platform in the near term. However, we do see consistent growing demand for the offering, certainly the macro backdrop we think is a natural catalyst for more suppliers that want to take advantage of it. Just reminding people with our current 1.0 offering, We've really only made it available to a very small subset of suppliers while we get the learnings for both the qualification of invoices that are eligible to be advanced as well as all the business rules related to managing the offering and the recapture of the payment. In the 2.0 offering, it'll be made available to all our suppliers and we believe that you know, roughly, you know, 50 to 60% of our overall supplier pool of, you know, 825,000 plus suppliers, you know, fall into the kind of the small business category, which is really the category that Invoice Accelerator 2.0 is designed to serve. And so I'd say we remain, you know, really excited about that offering and, you know, anxious to be in the market with it next year.
spk05: And just to follow up, that 50% to 60%, that's relative to, I think you said in the past, 40% addressable within the 1.0 offering?
spk11: Much less than that. We've made the 1.0 offering available to less than 10% of those suppliers.
spk05: Okay. Got it. Thanks, Mike. Yep.
spk04: Our next question will come from Ramsey, LSL, Barclays. You may now go ahead, Hank.
spk01: Hi, thanks for suing me in here. I just had one question for you. I was wondering if you could give us an update on the M&A pipeline and also just comment on the degree to which you've got all these great new products out there now, cross-border, invoice accelerator, STP. Is there a way now that you have those products out in market to kind of accelerate their adoption via M&A? It seems like there might be some interesting kind of tuck-ins that would help the progress on traction at
spk11: Yeah, Randy, good question. So what I would say is that our playbook related to M&A continues to be very focused on how we accelerate vertical market expansion versus product expansion. I think we feel very confident and good about our product portfolio and the innovation progress that we're making. And sometimes on the product side related to acquisition, that actually can slow you down versus accelerate as you try to integrate products and things like that. We believe as the industry leader in the middle market and having our products purpose-built for the middle market, there's actually not a lot of opportunity for product-related type of expansion through M&A. We believe that our playbook has stayed consistent on using it for vertical market expansion, and we love the profile of smaller software companies that are making headways in a particular vertical that we're not in, that understand the nuances and the domain knowledge of that vertical market, and also have some of the integration experience with the leading accounting systems that may serve that vertical. And they have not yet pursued adding a payment capability. And so that's the playbook for us that we remain focused on. However, I would say that the current kind of environment, we've not seen some of the valuation corrections filter through to the private markets. It's taken probably longer than we've expected for that to occur. And so we remain fairly optimistic about kind of the future of M&A. as we go forward and maintain a really healthy balance sheet and really a war chest to position ourselves in a really good way for when those opportunities arise. Interesting. Thank you so much. Appreciate it.
spk02: Yep.
spk03: Our next question will come from James Fawcett with Morgan Stanley. You may now go ahead.
spk08: Hey, good morning. Thanks, everybody. Just a couple of quick questions from me. I mean, obviously, everybody seems very excited and rightfully so around, you know, the improving profitability and moving into, you know, that profitability and what that roadmap looks like. But how are you thinking about kind of balancing that that rate of profitability improvement with growth and, and, you know, the levers that you may need to pull or push one way or another there?
spk11: Yeah, you know, I think, you know, that equation related to, you know, kind of, you know, growth, investment versus, you know, profitability. And I think the way we look at it is we kind of define it as efficient growth. We don't believe that our, you know, kind of accelerated, you know, path to profitability is, you know, impacting growth. We still believe that's a really important, you know, kind of component for us to take advantage of kind of the market adoption. And I think the biggest reflection on our growth there is just the rate of overall market adoption. And as that rate, you know, increases in the future, we expect, you know, our growth rates to continue to increase as well. And probably the biggest thing that we can do is continue to build the value proposition, you know, consistent with how we have been, you know, building it. And so that'd be, you know, kind of my, you know, commentary related to you know, that growth and certainly, you know, focused on, you know, internally, maybe more of a kind of a rule 40 type concept in terms of, you know, how we're balancing those two equations.
spk08: That's great. Encouraging me here. And then I guess tied to that, can you just give a quick update on what you're seeing competitively in the market? how much you may be running into other players, or is everybody staying pretty well in their consistent line or lanes, excuse me, and what do you think the key determinants are for wins right now for Avid Exchange?
spk11: Yeah, so on the competitive side, so first of all, I'll take the kind of swim lanes first. We have not seen any changes related to the swim lanes. Within our core middle market, we don't see bill.com as an example within the middle market, certainly within the verticals and the horizontal focus that we have. In the same sense, we don't see people like Coupa and others. you know, in our core deals either. Maybe around, you know, kind of the core edges, you know, literally, you know, less than, you know, 20 deals a year, we may see, you know, those type of competitors. So our number one competitor continues to be the status quo paper-based process. You know, 95%, you know, plus of all our new customer ads, our customers that are doing this for the first time, moving from paper invoices and paper checks to electronic, And so that continues to be our number one loss reason, you know, continues to be that the customer is not ready yet. They're asking us to come back in six months, come back in nine months to talk to them about it. As it relates to other competitive companies, third-party companies, I would say one of the interesting dynamics is we probably have less competition today than we had, you know, a couple years ago. And, you know, M&A has been, you know, you know, part of that, you know, so for example, we used to see mineral tree historically in past years and maybe 10% of our opportunities. And they've really disappeared from our core market and really haven't run into them at all, you know, in 2022. So that would be kind of one example. And then, you know, the barriers to entry just continue to increase. The, you know, the challenges begin, you know, with getting licensed as a, you know, regulated money transmitter, you know, the bar continues to increase, not only in terms of the cost to get licensed, the timing, but also some of the, you know, tangible net worth requirements that some of the states have just makes it prohibited for, you know, startup companies to pursue that path. And so we've really seen probably, you know, a fairly stable, you know, kind of competitive landscape. And, you know, the number one competitor that we you know, remain laser focused on, you know, competing with every day as a status quo process and how do we continue to build a value proposition to entice, you know, these controllers and CFOs to move to an electronic process sooner than later.
spk16: That's great to hear. Thanks a lot.
spk11: Yep.
spk03: Our next question will come from Brent Graceland with Piper Sandler.
spk04: You may now go ahead.
spk13: Thank you. Good morning, Mike. Building on kind of the topic of, let's say, coopetition, obviously we've seen kind of the ERP vendors offer their own kind of modules over the last decade. You obviously have a best-of-breed module specifically to NetSuite, which just came out with an API automation suite. at the NetSuite world. You obviously are adding more functionality and embedding functionality in NetSuite. Could you kind of remind us about that relationship? Is it a strong relationship? Is it kind of normal competition? Just walk us through changes, if there has been any, with that relationship and then a new product they came out with. Thanks.
spk11: Yeah, what you're hitting on is within NetSuite in particular, and this is a good example where I think how we kind of partner closely with our leading and biggest channel partners. And so one of the things that NetSuite has done recently is they've kind of pared back the number of participants in their kind of core partner deep integration ecosystem. Now it's only a handful of players of which we're the leading We're the largest AP automation partner that they have. We have the biggest install base of NetSuite customers. And what we're kind of seeing as part of not only NetSuite but others is, yes, the B competitive ERP systems do have a baseline level of functionality in their kind of AP module. But at the same time, that only addresses a small subset. And particularly with their NetSuite's new offering, it's really designed what I would say is more kind of the small business side of the NetSuite customer base where they don't have business rules related to their approvals. It's kind of a one-step approval process, very simplistic type of AP management. And then for those companies that have more sophisticated business rules, which is where we're catered to, we have a very deep relationship with the NetSuite sales team. They bring us into those opportunities as really an embedded partner to solve those customer problems. So I would say one of the benefits actually that the NetSuite announcement has made, it's actually helping to increase the overall education and knowledge base around the benefits of AP and payment automation. So we're seeing an uptick of NetSuite customers now that are evaluating solutions, a solution for this business problem for the first time, and then they're saying, okay, now that I'm more educated about it, what is the best solution for me? And so we're clearly positioned for those customers that have a more complex business process around, you know, multiple general ledgers, more complicated coding, more dynamic approval workflows is our, you know, bread and butter versus more of a simplistic small business customer, which would be probably appropriate for the, you know, the NetSuite offering.
spk13: Perfect. Very helpful color there. I was getting some questions on that, and it's very clear the differences. Joel, my follow-up here for you is just around just the transactional unit volumes. You know, growth there did moderate from, I think, 13% to just below 12% growth this quarter here. Obviously, completely understandable given the macro. Do you think that could stabilize in this 11% range this quarter based on the trend you see so far? Is there risk that starts to moderate a little bit closer to 10%? I know it's a specific question, but love to get any color around transactional unit trends that you're seeing here in Q4 relative to just a slight downtick you saw in Q3?
spk12: Yeah, you bet. Great question and happy to address it. Again, I'll start kind of broad and then get right to your question. I mean, broadly, again, really kind of proud of the performance we turned in for the quarter. Good TPV growth, better than our expectations. Good transaction growth. better than our expectations. And we feel like, you know, we're sort of pleased with where we are from a progression standpoint. And again, remembering the growth algorithm, expansion of our underlying buyer customers, adding new logos, new buyers, and then expanding that transaction yield as we go. We think those things, we do see those things working together that give us confidence in light of especially the opportunity that we see ahead of us for that kind of 20% organic growth on average over time. I think just with respect to the quarter, you're right. I mean, I think about 100 basis points different than last quarter, so 12 and 13 range. I do think it's reasonable to We sort of think it's reasonable that we're in the zip code that it would sort of kind of stay in. I think we mentioned last quarter, and I'd repeat this quarter, that we did, you know, it's an interesting base comparison given 21 being a bit of the COVID recovery. And so there's some, you know, noise overall in quarter to quarter, but nothing other than that. So we feel good about, you know, the growth and the health of the network and the volume.
spk03: Okay, great. That's all I have. Thank you so much. Our next question will come from Timothy Chiodo with Credit Suisse.
spk04: You may now go ahead.
spk06: Great. Thanks a lot. I'll try and keep these on the quicker side since we're a little bit over here. But on the supplier network, the last update was a 2021 number, I believe, at about 825,000. We're deep into 2022. I was hoping you could maybe just give us a sense of where that number stands today, given it's an important part of your network effect and competitive advantage. And then as a brief follow-up, I know you mentioned that the construction vertical and financial services are the ones that you're just kind of monitoring, but everything is going well still. I'm sure we'll get this question from investors. If you could just recap what the portion of either volumes or revenue or gross profit is of those two verticals specifically, I'm sure that would be much appreciated.
spk12: Thanks, Tim. I'll jump in real quick and then Mike can add some context. So, you know, we kind of established a routine when we went public last year of kind of updating our buyer and supplier accounts on an annual basis. And we'll certainly do so again this year and address that, obviously, and talk about it in the year-end call. But kind of happy with the overall growth across the business. Mike, anything you'd add?
spk11: Yeah, what I would say is that, you know, that supplier component, you know, is really the secret sauce of Avid Exchange. And the reason, you know, that provides us the competitive advantage in the marketplace is our ability to monetize the supplier side. And so, as Joel said, we're pleased with that growth. And, you know, we're certainly looking forward to updating those numbers in March. You know, as it relates to... I think your second area question related to kind of across our eight verticals is they're kind of waiting across some of those verticals. I would say that overall it's extremely diversified across our eight verticals plus the horizontal part of the market and the horizontal is actually one piece that's exceeding our expectations as well. Within those, probably again, our most mature and some of our largest verticals are the real estate HOA components of it, just because those were our first verticals that we entered into. So we have really nice customer base and growing nicely within those verticals, as well as just overall deep market presence. Construction and financial services are two of our newer verticals that we got into. through acquisitions, being construction with Core Associates and financial services with the Banktel acquisition. So maybe that's a little bit of flavor there, but I'd say overall, we don't have any outsides waiting on any one particular vertical or the other, and we have a nice diversification. And then the horizontal is actually adding another component of that diversification and the growth that we're seeing there.
spk06: excellent mike and joel i think that context really helps especially around the reminder on the recency i'm sure people will appreciate that and no sweat on the 825 number we will wait for march but agree that is part of the secret sauce thanks for taking the question thank you our next question will come from pian seeing huang with jp morgan you may now go ahead
spk09: Thanks. You've covered a lot of ground already, I know. So just a clarification, has the operating expense outlook changed in any way since last quarter? I know the gross margin performance is better, including the float that you discussed, but just wanted to clarify on the OPEX.
spk12: Thanks. Yeah, good question, Jinjin. And one thing that I haven't had a chance to mention is, again, from an operating expense standpoint, nothing significant apart from what I would say here. One, overall general operating discipline that we're applying in the business, balancing growth and our path to profitability. Specifically, the sequential step-up in operating expenses in the third quarter over the second quarter, the lion's share of that sequential growth is associated with our Bonus accruals that we alluded to when we gave guidance last quarter, that would be a little bit higher in the back half of this year as we are sort of exceeding our kind of internal incentive targets. And apart from that, we're seeing ahead of us and around the corner of really getting that operating expense leverage together with the gross margin expansion that takes us to the profitable business that we see ahead of us.
spk02: All right, good to know. Thank you.
spk03: This concludes our question and answer session.
spk04: I'd like to turn the conference back over to Mr. Prager for any closing remarks.
spk11: Great. Well, first of all, I want to thank everyone for their time today. As you can see, we're really passionate about helping our middle market customers every day and excited about our year-to-date results. We look forward to talking to you in the new year. And with that, operator, you can close the call.
spk03: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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