BTRS Holdings Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Build Trust's first quarter 2022 earnings conference call. As a reminder, this call is being recorded. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. I'd now like to turn the call over to John T. Williams, head of investor relations, to begin.

Thank you, operator. Before we begin, I'll remind you that today's call may contain forward-looking statements, including our full year 2022 outlook, our expectations regarding the continued growth of our software and payments business, potential for margin expansion, net dollar retention rate, and our medium and long-term targets. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our most recent annual report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission on March 9, 2022, and in subsequent reports that we file with the Securities and Exchange Commission from time to time, and available on the Investor Relations section of our website. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intend to update them except as required by law. In addition, today's call may include non-GAAP measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliation to the nearest GAAP measure can be found in today's earnings release, which is available on our website. Hosting today's call are Flint Lane, BillTrust's founder and chief executive officer, Steve Panato, BillTrust's president, and Mark Schiffke, BillTrust's chief financial officer. I'll now turn the call over to Flint to begin.

Thanks, John, and thank you, everyone, for joining the call today. I'd like to start by first thanking the 700-plus BillTrust employees across the globe who continue to challenge the status quo and drive meaningful outcomes for our customers. We live in trying times, and I couldn't be more proud of our team who strive every day to make magic happen. We've had to reinvent ourselves these last two years as a work-from-anywhere culture and as a public company, and that transition has been amazing thanks to a fantastic team up and down the org chart. Now on to the results. Another great quarter in the books, both financially and operationally. As is customary, I'll begin with some operational metrics and recent business highlights. Then our president, Steve Panato, will discuss some of our growth initiatives. And finally, our CFO, Mark Schiffke, will provide details on our performance and reaffirmed 2022 guidance. Overall, we executed extremely well in our first fiscal quarter and continue to successfully deliver against the key objectives we previously discussed. As a result, we are reaffirming our 2022 outlook, given good visibility, comfort and confidence in our strategy, and strong secular tailwinds that continue to positively impact our business. Our software and payment segment growth continued to accelerate through a turbulent macro environment. On a reported basis, Q1 software and payments revenue grew 16% year over year, which is the gap number. This actually does not adequately reflect the underlying trends in our business because of a one-time event that occurred in Q1 of 2021. I pointed out last year at this time that we had a B2C customer transition off of our platform and a year of deferred revenue was accelerated into that quarter. We think the more appropriate way to assess our year-over-year growth is to exclude the impact of the loss of the customer, including the impact of the one-time accelerated deferred revenue from our 2021 numbers for comparison purposes. Our comments about our Q1 2022 non-GAAP-adjusted revenue and margins reflect this exclusion. With that in mind, the Q1 software and payments growth was 34% when adjusted for the impact of that one-time customer loss. We posted very strong adjusted gross margins of 73.3% in the first quarter, up 290 basis points when adjusted for the impact of that one-time customer loss. Total payment volume, or TPV, which is the dollar value of customer payment transactions that we process on our platform, increased 45% year-over-year to $22 billion versus $15.1 billion in the year-ago quarter. TPV through the Business Payments Network, or BPN TPV, increased 86% year-over-year in Q1 against exceptional prior year growth of 146%. The credit card component of BPN TPV grew to $2.1 billion in Q1, up 50% year-over-year. Consistent with our prior statements, we still expect BPN TPV to grow at least 100% on a full year-over-year basis. Direct card revenue, or DCR, which is the revenue we generate from processing credit card payments through all of our solutions, was $4.9 million, or 68% year-over-year growth and a quarterly yield of 6.3 basis points. We're thrilled with the consistent strong growth and progress here. Direct card revenue growth, again, meaningfully exceeded card volume growth. We still expect that yield will grow into the teens over the long term as transactions move to our PayFact platform and we capture a larger share of transaction revenue. Now let's cover some recent business highlights and callouts. We recently announced an exciting expansion of our relationship with American Express, where suppliers that accept Amex cards will have access to our complete order-to-cash solution, allowing them to automate their accounts receivable process and remove complexity while making it possible to easily track and reconcile virtual card payments to get paid faster. The growth of virtual cards in the accounts payable side is an overall positive in B2B payments, but creates significant complexity for suppliers who need to reconcile large numbers of unsorted, unmatched payments to open invoices. We believe bringing our ordered cash solution to Amex-affiliated merchant suppliers makes their decision to accept virtual cards far easier, as our suite makes it simple to do everything they need, from invoicing to cash application to collections. For Biltrust, this is a fantastic partner win and an opportunity to address the needs of an entirely new group of customers who we expect will be very interested in our digital lockbox and other solutions. We've been pretty clear that we have a big focus on expanding distribution to accelerate growth, and we believe it's working. Our expanded Amex and KeyBank relationships and our Coupa partnership are just a few of the most recent examples of that. In February, we announced the acquisition of Order2Cash, Our European order to cash cycle platform provider for approximately 59 million in cash. This is a key piece of our expansion into Europe and a crucial element of our strategy to grow and cross sell into the region. Integration of our European businesses are well underway and are tracking as expected with some initial integration and scaling costs that we expect will unlock revenue opportunities. Leadership is in place. Marco Eamon, who co-founded order to cash now serves as our managing director and head of European business. We're excited about the opportunity to expand our total addressable market and look forward to scaling up the availability of our solutions more broadly in the region. As we previously said, we do not have business or team members in Russia or Ukraine. The war is tragic and we grieve for the people affected, but so far this war is not having a material impact on our business in Europe. In terms of our most valuable asset, our team, we pivoted to a work-from-anywhere culture about a year ago. I'll admit that I was nervous at first. While there are some downsides, the upsides clearly outweigh them. Less commuting time, more family time, happier employees, and most importantly, the notion of boundaryless recruiting. This lets us focus on finding the best people across the board without regard for geography. This is powerful for a build trust, and it is an exceptional benefit in a tight labor environment. It helps us keep our great teammates and attract new ones. One consequence of this pivot is we now have way too much office capacity. Mark will discuss what we're doing here in terms of subleasing and restructuring, which we believe will help cash flow on our path to profitability. Finally, we're pleased to announce that John Murray recently joined our board of directors. John is a terrific addition to the Biltrust board with a rich background helping companies serving B2B customers transform and scale and a proven track record of generating shareholder value. He most recently served as board chair of Credit IQ ahead of its acquisition by cars.com and was CEO of PayPro, a privately held payroll and benefits company. John was appointed to the board in April and we're looking forward to his contributions in the boardroom. Strategically and operationally, we're doing the things we said we'd do and are off to a great start in 2022. On top of strong secular trends and our growing and under-penetrated TAM, more recent macro trends like increased labor costs, higher interest rates, supply chain difficulties, and the rise of work from anywhere are driving additional demand for automation and digitization solutions that reduce costs and increase efficiency. Accordingly, we believe we are well positioned to meet these ever-increasing demands through a platform of integrated software and payment solutions. I'd like to now turn the call over to Steve Panato, who's making his first appearance on an earnings call and will be available for the Q&A as well. BillTrust was fortunate four years ago to land Steve as our president, and the results since then speak for themselves. He'll be sharing some more detail and insights on the growth side of our business. Steve?