BTRS Holdings Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to BuildTrust's second quarter 2022 earnings conference call. As a reminder, this conference call is being recorded. 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, the duration of the secular tailwinds, our expectations regarding the underlying trends in our business, and our expectations and assumptions regarding 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 that are available on the Investor Relations section of our website, including our quarterly report on Form 10-Q for the quarter ended June 30, 2022. 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, Bill Trust's founder and chief executive officer, and Mark Schiffke, Bill Trust'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'm excited to share with you our results for the second quarter, which once again show incredible momentum across our business. Before I do, I want to say just how proud I am of our amazing and talented Bill Trust team. They've stayed laser-focused on meeting our customers' needs, and growing the business in a very challenging macro environment. The unique BillTrust culture and values don't show up on our financial statements, but are a key part of BillTrust success over the last two decades. I'd like to start with some operational metrics, and then I'll cover some recent business highlights. Our CFO, Mark Schiffke, then will provide details on our performance and updated 2022 guidance. I couldn't be happier about our Q2 performance, and I'm excited to report that we continue to execute against our plan and outperform relative to internal and external expectations. Despite the reported macroeconomic and market challenges, the favorable secular trends around digitization and B2B payments are strong. Software and payment segment growth of 35.4% year over year was incredibly strong and drove highly profitable adjusted gross margins of 74.1% up 241 basis points year over year. Our total payment volume or TPV which is the dollar value of customer payment transactions that we process on our platform, increased 40% year-over-year to $26.2 billion versus $18.8 billion in the year-ago quarter. TPV through the Business Payments Network, or BPN TPV, increased 71% year-over-year in Q2 against a tough prior year comparison. BPN card TPV grew $2.4 billion in Q2, up 38% year-over-year, while BPN ACH growth continued to ramp higher to $1.1 billion, a smaller contributor, but it more than tripled year-over-year. Direct card revenue, or DCR, which is the revenue we generate from processing credit card payments through all of our solutions, was $5.8 million, or 57% year-over-year growth, and a quarterly yield of 6.6 basis points. We are very happy with how our payments business is progressing, with direct card revenue growth once again exceeding card volume growth, and we still expect yield will grow into the teens over the long term, helped by transaction growth on our PayFact and our new surcharging solutions. Now let's cover some observations and recent business highlights. I've said before that in difficult economic environments, we believe CFOs are naturally more aggressive in seeking out ways to increase efficiencies, reduce complexity, and accelerate cash flows. All challenges that are solved by our software and payment solutions. And we see this every day as our customers look to us for new ideas. In June, we were thrilled to host our annual BillTrust Insight event where BillTrust customers and partners could interact and learn how to maximize the value of BillTrust solutions. We discussed actionable ideas across the whole AR spectrum, including best practices of AR automation, trends shaping the future of the CFO office, and the impact of virtual cards on our customers' day to day operations. We also announced a new version of our popular online billing portal that makes it incredibly easy for suppliers to accept credit cards without directly incurring card fees through something called surcharging. Roughly half of our online billing customers don't accept credit cards today, and we believe this is a big opportunity. We have some customers live already and are landing new deals with this innovative approach to card acceptance. We covered a lot at Insight, and I encourage you to visit our website and watch the session replays. They'll show you how we're delivering innovation and why our customers are so happy with what we provide. Also in June, we hosted our first virtual investor session where members of our senior leadership team spent an afternoon doing a deep dive into each of their areas of expertise. In addition, our president, Steve Panato, interviewed John Schoenberger, SVP of Finance at Sunbelt Rentals. They discussed the difficulties placed on AR organizations by the acceleration of AP solutions and how the Biltrust solutions helped streamline their operations. Finally, we provided some updated guidance on our path to profitability, which has been an area of investor interest over the last six months and a topic Mark will address in his prepared remarks. I'd now like to update you on our great sales performance. To provide context, we had our highest sales booking quarter ever in the fourth quarter of 2021. Then in the first quarter of this year, we signed the most new customers ever. And in this last quarter, we broke both those records with the most bookings and the most new customers signed in a quarter. Contributing to this great momentum are wins on our new collections platform acquired as part of the iController acquisition. Now let me share a few customer specific stories. Our relationship with USLBM is a great example of our relentless focus on driving customer success. USLBM is the largest privately owned distributor of specialty building materials in the United States. A high growth company with more than 400 operating locations nationwide. They've acquired several existing Biltrust customer over the years. As a result, we recently partnered to deliver credit, invoicing, payments, and e-invoice connect across their entire enterprise. These existing relationships allowed their leadership to clearly see the benefits of working with Billtrust and how we align with them to drive success. Another customer that has seen clear benefits from Billtrust is Malin, a Raymond company and a leading material handling equipment distributor. A happy and growing business payments network customer, Malin's finance manager, Eddie Harless, told us during a BillTrust Insight session in June about his company's success in now being able to automatically invoice into accounts payable portals through BPN. Eddie told us that the term AP portal fatigue is an understatement, and we know it's a major issue for back office AR teams to manually input invoices into customers' AP portals like Coupa or Ariba. He also told us that the number of Malin customers using portals is growing every single week, but it's no longer something they stress about or even think about. Invoice delivery through BPN helped Eddie and his team overcome the struggle to support their customers' diverse invoice delivery and payment requirements. And thanks to Bill Trust, no one on his team is doing manual invoice entry. We've also made great strides on the partner front, and our recent partnership with Proceed Software, makers of a heavy-duty truck and commercial vehicle dealer management system, is a powerful example of how our solutions can integrate with other systems to maximize supplier electronic payments. Biltrust software is now integrated with Exceed, Proceed's dealer management software, and offers their customers a complete solution for automated electronic invoicing and digital payments, as well as our access to our business payments network, enabling them to avoid the labor and expense of manually keying invoice data and giving them the ability to accept payments through their preferred channels. One of the big growth areas for Biltrust is the Business Payments Network, or BPN. I'd like to take a few minutes to discuss why it's a core part of our strategy. First, BBN is a truly open network and our impressive roster of partners, including Visa, JPMorgan Chase, Coupa, American Express, and over 30 others, coupled with our position as the only open B2B payments network that publishes volume and growth rates, is clear evidence of our leadership position versus our competition. Second, we believe that Digital Lockbox will be a must-have for any AR department, much like online billing sites are. The BBN Digital Lockbox automates the receipts of ACH, credit card, and wire transfer payments, and also provides for delivery of invoices into over 150 different AP portals. We've seen huge interest here from our customers, banks, and the card brands. Ultimately, we believe our competitive advantage with BPN comes from our origins in the accounts receivable space, our understanding of it, and our set of capabilities developed over the last 20-plus years around how to solve for supplier pain points, particularly the acceptance of electronic payment methods. Acceptance, or the supplier side of the transaction, represents a significant barrier to the digitization of B2B payments. And we believe we have all the tools to overcome this barrier and are, in fact, solving for it over and over again as evidenced by our growth and collaboration with world-class partners. We were first to market, we were born from the supplier side, and we made the decision to open up our capabilities to partners from the beginning. All of these factors have been the key ingredients to our success. which we expect to only continue into the future in a market in which B2B opportunity remains incredibly large. We are very excited about the rest of the year and beyond and have a strong supplier and partner pipeline. We also remain very focused on profitable growth, expanding gross margins, and driving cash flow, and are equally committed to managing expenses and protecting our strong balance sheet as we aim to meet or exceed the profitability timing that we recently laid out. Our key theme that I often point back to on earnings and investor calls is that we continue to do the things we said we'd do. Given the current macroeconomic environment, that's been a challenge for many. I'd like to reiterate the strength of our position. We have a solid balance sheet, zero debt, accelerating growth, and we believe we are well positioned to win because we have the best solutions that are designed to consistently deliver great outcomes for our customers. Our automation and digitization solutions seek to address the urgent problems that CFOs and back offices are currently facing. like high labor costs, rising interest rates, supply chain challenges, market volatility, and work-from-anywhere trends. Simply put, we believe we are ideally positioned to deliver what so many businesses need, and we expect these large secular tailwinds will persist for some time. We have been and will continue to be aggressive and take advantage of these opportunities. With that, I'll hand it over to our CFO, Mark Schiffke, to discuss our second quarter results and updated financial outlook.