Repay Holdings Corp Q2 FY2022 Earnings Call

Welcome to today's Earnings Conference Call being hosted by Repay. With us today are John Morris, Co-Founder and Chief Executive Officer; and Tim Murphy, Chief Financial Officer. During this call, we will be making forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in the SEC filings related to today's results, and as well as in our most recent Form 10-K filed with the SEC. Actual results may differ materially from any forward-looking statements that we make today. The forward-looking statements speak only as of today, and we do not assume any obligation or intent to update them, except as required by law. In an effort to provide additional information to investors, today's discussion will also include references to certain non-GAAP financial measures. Reconciliations and other explanations of those non-GAAP financial measures can be found in today's press release and in earnings supplement, each of which are available on the company's IR site. I would now like to turn the call over to Mr. Morris. Please go ahead, sir. You may begin your presentation at this time.

Thank you, operator, and good afternoon, everyone. There are three subjects I will be covering on today's call. First, I'll briefly review our Q2 results and business updates; second, provide insights on our current trends and what we're expecting for the rest of the year; and lastly, discuss our medium-term vision for the business. First, on the second quarter, we reported card payment volume growth of 34%, total revenue growth of 39% and gross profit growth of 42%. Organic gross profit growth in the quarter was 10%. We view these as solid results in light of the increasingly uncertain macro environment. We continue to see strength in our B2B payments business during the quarter. This strength is driven by secular tailwinds, including the digitization of business payments, as well as the need to find efficiencies now that many U.S. businesses are implementing hiring freezes. This has been aided by our focus on our B2B go-to-market strategy, which is partially through our direct sales team, which continues to expand as well as through our 85 software integration partners. Also importantly, our supplier network has grown to 135,000 vendors. We continue to be at the forefront of B2B innovation, including our offering for both AR and AP. In fact, we were recently honored at Premier Inc.'s 2022 Breakthroughs Conference with the Supplier Horizon Award within the Purchased Services Category. We experienced a strong business development quarter in the consumer payments side of our business. We continue to succeed in the credit union space, reaching 225 credit union clients. One of our new partners in this space is Q2. Many of you know Q2 Holdings, which is a leading provider of digital transformation solutions for banking and lending. This integration means that Repay will be able to offer its payment technology within Q2's digital banking solution as well as leverage Q2's integrations with various core systems, further expanding our reach within the personal loan and credit union verticals. Credit unions have been able to differentiate by maintaining lower rates, gaining share in this new operating environment. So they have continued to be a focus of ours from a business development standpoint. We also experienced another record quarter with our Instant Funding product. Our second quarter 2022 instant funding volume was approximately 50% ahead of Q2 2021. We believe this will be another way to influence our more digital card-based repayment transactions, as the repayment method on file is a debit card. In fact, one of our largest lending clients just told us, they love instant funding and their goal is to replace all checks in the branches with Instant Funding. And while we continue to be excited about addressing the large and underserved consumer lending opportunity, personal lenders are giving a mixed near-term outlook in terms of consumer loan demand and credit performance. In Q1, most market participants indicated that demand was accelerating towards or above pre-COVID levels. The momentum seems to have slowed over the past few months, depending on which part of the borrower credit spectrum that lenders ultimately serve. Given these factors, we expect the recovery to pre-COVID levels in the personal loan market will take longer than we originally anticipated. While our auto lending clients have held up well and auto lending demand is strong, the market remains supply constrained and used car prices are still elevated, leading to affordability concerns. That said, our clients have long-duration auto loan portfolios. So we have robust non-discretionary and highly recurring payment streams to process. We continue to see an exciting opportunity in this very large vertical that is now fully embracing digital payment solutions. Lastly, REPAY Clearing & Settlement, or RCS, continues to perform nicely with a significant pipeline for future growth. We officially and successfully completed the back-end conversion of BillingTree to RCS. We're starting to realize these synergies and generally have more control now that our systems are unified. In addition, we recently brought on Mike Cottrell to lead our efforts for the RCS business. With the increase in demand for more innovation and flexible third-party processing solutions, and his extensive background of working with PayFacs, gateways and payment platforms, Mike is well equipped to help us accelerate the growth of our Clearing and Settlement solutions as we expand into additional payment modalities and networks. Now to move on to my second topic, the second half of this year. Tim will go into more detail shortly, but we have updated our expectations for the remainder of the year based mainly on trends we are seeing. First, for our consumer payments business. As I just mentioned, with varying degrees of expected client loan growth for the personal lending business, we felt that it was prudent to update our outlook for the year. To be clear, though, we continue to believe that the majority of our personal lending clients will achieve pre-COVID levels of loan growth in the coming quarters due to increased demand for consumer credit, which is derived from elevated consumer spending, dwindling savings and no further stimulus plans. In addition, the majority of our clients do not have funding constraints and are diversified across credit types, all of which are important during these dynamic economic times. As for our B2B business, it remains strong. Our customer base on the B2B side is mostly medium to enterprise businesses, who are looking to find efficiencies and other ways to generate revenue in the inflationary environment, and our solutions provide just that. We also continue to have confidence that our AP Media vertical will ramp significantly in the second half of the year. Just to further explain our media business, our clients are seeing payments to suppliers for political ads. So when you see political ads on TV, it could be our client that is the agency working on behalf of that candidate. For the first six months of this year, we processed significantly more than our original forecast, and we are on pace with the amount we processed during the first half of 2020. The agencies with whom we are currently working represent an impressive lineup of the most well-funded candidates, PACs and party committees. Now I'd like to turn to our medium-term vision. We know that next year is on investors' minds. And while our planning for 2023 is very preliminary at the moment, we feel confident in mid-teens organic growth, even during a recessionary period, which further exhibits our confidence in durable growth at Repay. This expectation is due to our large, diverse, underpenetrated end markets and our vast distribution network of 230 integrated software partners that we have spent over a decade building. This is also supported by secular tailwinds. As we've always said, the secular trends towards frictionless digital payments will not go away in any macro environment and will continue to be a tailwind that will drive our business for years to come. This is evidenced by a new survey of American adults commissioned by OnePoll, which finds that digital payment options remain key for consumers paying off personal and auto loans. This continues to support our core value proposition that we provide integrated financial technology solutions, which allow our clients to be paid anywhere, anyhow, anytime. Also, as I'm sure many of you heard, Visa reported that second quarter debit spending was significantly above pre-pandemic levels. Net debit has also benefited from accelerated cash digitization. These are all trends from which we gain benefits. As always, our focus is on sustainable, durable growth with strong unit economics. To do this, we look to further increase our card penetration across all verticals with top clients. We continue to expect the majority of our growth to be derived from our existing client base, which is generally comprised of scaled and highly integrated clients. We continue to also focus on optimizing our processing infrastructure in order to reduce costs as we grow volume. The BillingTree to RCS conversion is a great example of this. We're also developing the best software and payment solutions for all verticals. One of our many moats continues to be targeted new product solutions that easily differentiate us from competitors and help us win new clients. We're able to do this efficiently by replicating our current tech platform and optimizing product development for near-term revenue. Lastly, we are laser-focused on thoughtful capital allocation. During the quarter, we implemented our share repurchase program and have been buying back shares in a disciplined way. We believe that this repurchase program will not inhibit our growth strategies based on anticipated free cash flow for years ahead. Lastly, we're always on the lookout for strategic M&A opportunities to enhance our overall scale, market competitiveness and organic growth runway. With that, I'll now turn the call over to Tim to review our second quarter results in more detail.

Thank you, John. Now let's move on to our Q2 financial results before I review our financial guidance for 2022. As John mentioned, in the second quarter, Repay delivered solid results across all of our key metrics. Card payment volume was $6.2 billion, an increase of 34% over the prior year’s second quarter. Total revenue was $67.4 million, an increase of 39% over the prior year’s second quarter. This represents a take rate of approximately 109 basis points, which as discussed previously, is back to levels shown prior to Q1 2022. BillingTree, Kontrol, and Payix contributed approximately $14.2 million of incremental revenue during the quarter. Moving onto expenses in the quarter. Other costs of services were $16.7 million compared to $12.7 million in the second quarter of 2021. Incremental other costs of services from BillingTree, Kontrol, and Payix were $2.6 million for Q2. Gross profit was $50.7 million, an increase of 42% over the prior year’s second quarter. On an organic basis, we saw gross profit growth of 10% compared to the second quarter of 2021. Note that we exited the quarter at 11% in June and see stronger trends into July. SG&A was $39.1 million compared to $29.5 million in the second quarter of 2021. Second quarter adjusted net income was $16.1 million or $0.17 per share. Lastly, second quarter adjusted EBITDA was $27.6 million, an increase of 35% over the prior year’s second quarter. Second quarter adjusted EBITDA as a percentage of total revenue was 41%. We are prudently managing hiring and other non-personnel expenses due to the current environment. So we expect adjusted EBITDA margins to be higher in the second half of 2022, while remaining focused on putting in place the proper infrastructure for accelerated organic growth throughout 2022 and beyond. Combined pro forma net leverage is approximately 3.5x. We expect this to be below 3x by the end of 2022, a very comfortable level, which will allow us to continue to fund organic and inorganic opportunities. Please recall that of the $460 million of total gross debt, $440 million of this is convertible with a 0% coupon and a 40% conversion premium. This convertible debt does not mature until February 2026. As of June 30, we had $60 million of cash on the balance sheet and access to $165 million of undrawn revolver capacity for a total liquidity amount of $225 million. So we feel very good about our balance sheet heading into a potential downturn. Please note that we made a relatively large earn-out payment during Q2. If we had not made that payment, we would have ended the quarter with over $70 million of cash. As of June 30, we had approximately 100 million shares outstanding on a fully diluted basis. Finally, moving onto our thoughts for the remainder of the year. Based on our first half results as well as current trends, we're updating our guidance for 2022, which now includes volume to be between $25 billion and $26.3 billion, total revenue to be between $268 million and $286 million, gross profit to be between $204 million and $216 million, and adjusted EBITDA to be between $118 million and $126 million. As John touched on previously, we continue to expect growth to ramp in the second half of 2022, driven mostly by our exposure to the AP Media vertical, which is expected to be positively impacted by the political cycle. This revised 2022 outlook assumes organic gross profit growth of approximately 14%. Again, we expect this growth to ramp in Q3 and can be higher in Q4. While the current macro environment is highly uncertain, we feel confident that we understand the primary drivers underlying the verticals we serve, and we'll continue to keep a pulse on the moving pieces surrounding these industries to effectively manage our business.

At this time, we will be conducting a question-and-answer session. Our first question comes from the line of Ramsey El-Assal with Barclays. You may proceed with your questions.

Hi, thanks for taking my question this evening. I wanted to ask for a little bit more detail or color as you can provide on what you're seeing in the personal loan vertical. Is it originations that your clients are signaling they're pulling back on? Or have customers also stopped kind of paying as much as they were? What has led you to be a little bit more conservative there in terms of the forward look?

Yes. We are seeing strong demand, but some lenders are tightening their credit criteria due to an increase in delinquencies and a decrease in credit performance in certain cases. We believe it's positive that there is demand, but underwriting standards are tightening to varying degrees. This has prompted us to reassess our outlook and adjust our projections accordingly.

Got it. That makes a ton of sense. And then just a quick follow-up for me. On the mid-teens organic growth next year, can you help just update us on the algorithm there? How much do you expect the B2B business to grow? How fast do you expect it to grow relative to loan repayments for the rest of the business? Any granularity that you could provide on just the algorithm would be helpful at this point?

Yes. And so we expect to exit this year at about 20% organic growth, but that includes the political media volume. If you exclude the political media volume, the exit rate will be above 15%. So we're going into next year with strong organic growth. We still expect B2B to be growing north of 25%. We expect some normalization of the consumer lending business and consumer payments in general back into kind of the low double-digits. And then we expect our RCS business to be growing as well, probably high single-digits to low double-digits, all of that building up to the mid-teens outlook for next year.

Hey, good afternoon. Thank you for taking my question. I missed your comment on auto loans, noting long duration. Were you also seeing some pockets of increased delinquencies in certain credit tiers or are you not observing that yet?

Our comment on duration is that we have a very long existing book of business, around six or seven years. Because of this, we enjoy highly recurring payment streams for an extended period. We have noticed a slight increase in delinquencies and a decline in credit performance. However, due to the long duration and recurring nature of our book of business, the impact on us is not as significant as it would be for a personal loan, which has a shorter duration and feels the effects more quickly.

Okay. You're just not as reliant on new originations in the auto loan side.

That's right.

Okay. And then did you mention your mortgage business? I know it's not a huge percentage of revenue, but if you could give us an update on some of the trends you're seeing there?

Yes, we didn't mention this on the call, but from our perspective on the origination side, we will likely focus more on servicing as it constitutes the majority of our processing capabilities at this time. We are aiming to expand the origination side from an LMA viewpoint. However, our servicing processing is growing due to some insourcing benefits, although we did not provide specific long-term projections. That said, our current customer base is continuing to grow and utilize more of our services.

Okay. All right. Appreciate it. Thanks.

Hey guys. I appreciate you taking the question tonight. John, I appreciate your enthusiasm for Instant Funding and the 50% growth. Can you talk about kind of what the trajectory is in Instant Funding? I know it gives you good leverage to debit repayments, especially in that personal loans product. Is that continuing to grow a lot faster than originations? I assume it is. And can that help you blunt some of the downturn or the less robust recovery in the personal loans market that you're talking about?

Yes, that's a great example. Even when the overall market fluctuates, we've noticed that more clients are utilizing our tools, especially for digitization. This segment is growing significantly for us, likely outpacing their origination growth as we observe a shift towards digital transactions that were previously completed through cash, checks, or ACH. Our largest clients are particularly moving towards this digital experience to meet consumer demand. Historically, we've seen that the method of funding often becomes the primary repayment method, which is promising for us. For instance, if a debit card is used to fund a direct bank account, it's likely to be the main repayment method as well, which we are seeing strong demand for. This trend of using debit as a repayment method has been consistent and continues to grow across various customers as that shift occurs.

Okay. It would be interesting to see how that affects your business in a more normalized demand environment. And then I guess just from a high-level perspective, given what's happening in the macro and the shifting mix of your business that we've seen over the last couple of years. Do you think it's time to increasingly emphasize from an incremental investment standpoint B2B? You've got a lot of exciting stuff going on there. I know the consumer business is core. But I just wonder, as far as investment priorities, product development, go-to-market, etc., whether Repay in a year or two doesn't look more heavily like a B2B company? I just philosophically, just from an incremental investment dollar perspective, how would you encourage us to think about that?

Yes, we believe there is a significant opportunity for our shareholders to generate long-term value in this area. The market potential is substantial, and we are directing more capital towards product and technology development as we implement these with our various integrated partners. We are increasing our capital allocation in this sector. Our core capital allocation has involved acquiring businesses that align with our strengths, which is evident in our technology's superiority compared to competitors in the market. We expect to continue growing and allocating more resources there. The reason this segment hasn't outpaced others in our business is that those other areas are also experiencing rapid growth, especially given the current macroeconomic environment, and our B2B segment continues to expand quickly. We foresee it becoming a more significant part of our business in the coming years.

Okay. So to be clear, you're allocating more internal capital as well as M&A?

That's correct.

And specifically, within B2B, we're allocating more capital to the AP side. And we're seeing a lot of growth there. Some of our recent announcements on ERP partners are now leading to very nice distribution paths and bringing us deals, and that's where we're spending a lot of resources.

Great. Thanks a lot for taking the question. I think we touched on this a little bit earlier, but I think it's important to circle back on it. It kind of relates to Ramsey's question. You had mentioned, Tim, I think everyone appreciates this. You mentioned the Q4 gross profit exit rate excluding the media contributions and sort of the mid-teens aligned with the initial look at next year. But you made the comment that even in a recessionary scenario, you think the growth could maintain that mid-teens growth. Maybe you could just add some additional context around what would be the offsets that would help the growth maintain that mid-teens even in a recessionary scenario?

Yes. So I mean we talked a lot about durable growth. And what we're really talking about is a potential downturn. We think that there's probably greater adoption of our payment tools to facilitate repayments on these loans. And so if there is a situation where there's weakening credit performance, we think our customers would actually want to utilize our tools more and have greater penetration to help with that performance. And so I think that's a major offset. And I think there's probably a sweet spot where employment stays strong and maybe it's sort of a mild recession where there's still good demand and then there's greater adoption for our products and that could lead to us having really nice sustainable growth.

Yes, we are making significant progress on our product features and functionalities, which, along with our integrated partnerships, should support growth over the long term. Additionally, we have a robust sales pipeline and a strong implementation pipeline from our sales this year that will contribute to next year's growth.

And also, I'd say, Sanjay, in our B2B sector, we've diversified. We believe that since we are catering more to medium and enterprise customers on the B2B side, this segment is likely to perform better during a potential downturn. We do not have exposure to small and medium businesses, and we think that if a downturn occurs, it may affect them before it impacts medium to enterprise customers.

Excellent points. Really appreciate that context, both John and Tim. A minor one as a follow-up around the B2B business, so on a much brighter note, to your point, B2B doing great. You also showed the supplier network continues to expand, which is another nice positive. Within that supplier network, is there any change at all to call out? Or is it steady as she goes in terms of the mix of suppliers that are willing to accept virtual card versus those that might be beginning to opt for the enhanced ACH offering?

Not really a change. I think similar penetration rates. A lot of it is about the verticals we serve. And so we'll start to see more and more suppliers, for example, in auto dealerships or hospitals or property management, field services, and that's where you start to see the network effect of having those suppliers. And when we talk to new customers in those sub-verticals, having that supplier network that we can already address with them is very helpful. And so that's where we start to see more and more wins because when we look at their supplier database for a new prospect, and we already have them in ours, that allows for much greater penetration and therefore, a greater rebate to the customer, which is helpful in that discussion.

Absolutely. All right. Thank you for that, Tim. Appreciate it.

Our next question comes from the line of James Faucette with Morgan Stanley. You may proceed with your question.

Hey guys. This is Jeff Goldstein on for James. Just looking at the implied margin in your new guidance, it's actually 50 basis points above that of the prior outlook. So maybe you could talk a little bit more about managing expenses. I think I heard you mention in your prepared remarks and how that may offset some of the reduced operating leverage you'd probably be getting from lower revenue.

Yes. You're right, the margin is a little bit higher, and we are managing both personnel and non-personnel expenses. We're trying to continue to focus only on hiring truly revenue-generating and revenue-supporting roles. That would be in sales, product, and tech, and then being very disciplined about that. And then on the non-personnel side, just scrubbing our expenses, making sure we're finding everything we can to put us in a position to have reduced OpEx going into the back half of the year and particularly into next year where, if it were a downturn, we'd be set up for success from an OpEx perspective.

Okay. Got it. And then just a follow-up around pricing. I know in the past, you've mentioned that 15% of your business is priced on convenience fees. So how should we think about the like-for-like trend of those fees given the inflationary environment? Is that going up given the environment as contracts are renegotiated? How should we think about that? And maybe also just the outlook for take rate more generally into the second half of the year and into 2023? Thanks.

Yes. I think the best answer is it would be similar and maintain a similar trajectory unless there were some large win that could move that percentage around some. But for the most part, it's two-sided. You've got the business side of the world who, by doing a convenience fee, it allows them to drive acceptance of that payment type with less impact on their financials. And on the consumer side, it gives them that option to make a payment through that particular channel. So we would say it would remain similar to where it is today.

Hey John, hey Tim. Thanks for taking my questions here. I want to go back to the discussion on personal loans. And apologies if I missed this, but perhaps you could just mention the expectation for personal loan growth that was embedded in the previous outlook versus the current outlook? And then just, John, I think you had some comments around this. But just the confidence that we have it pegged correctly now in terms of just what we can expect for the remainder of this year? Thanks a lot.

Yes, we initially anticipated that the personal loan market would return to normal more quickly. We expected it to achieve mid-teens growth by the end of this year, but now it seems more likely to reach high single digits to low double digits. We still believe that in a normalized environment, it could return to that growth level. This aligns with our previous expectations, and this is our current situation.

Okay. And then confidence that we're at the right level with a high single-digit to low double, or is that just more macro dependent and TBD, just curious on that assumption?

Based on what we know today, and we feel good about it, but it is somewhat macro dependent because, again, things are moving quickly.

Yes. It makes sense. I saw the acquired revenue came down a little bit. Can you just talk a little bit about that, whether that's related to personal loan volume or something else that would be helpful?

Yes, we calculate incremental revenue for the quarter, and in Q1, there was no BillingTree or Payix revenue compared to the previous Q1. However, there was some BillingTree revenue in Q2 last year. This explains the decline in the incremental amount, but the total revenue remains similar.

Got it. That makes sense. I appreciate the clarification. If I could ask one more question about the B2B payments business, there seems to be significant growth there. Looking at the sub-verticals, I am curious about any changes in customer behavior from a broader perspective. I would expect that adoption might increase during periods of macroeconomic volatility as companies seek to digitize. However, economic activity can also affect B2B payments volume. I am interested to know if you are observing any changes in customer behavior among your merchants. Thanks.

Generally speaking, no major changes in customer behavior. We still think it's wide open, and most of the conversations are competing against other forms of payment. We have recently experienced some competitive takeaways, which we think is encouraging, which shows the strength of our solutions. But again, most of the situations are where we're competing against other forms of payment.

I would say that in the healthcare part of our B2B sector, it has returned to what we consider normalized levels. We continue to see strong demand for our solutions in the healthcare verticals.

Hey, this is Noah Katz on for Bob Napoli. Thanks for taking the question. You guys told us that you have $60 million in cash on hand. Just curious like what the appetite is for M&A and what the M&A pipeline looks like today, given that you guys have said that you have significant liquidity and you're currently managing your leverage? Just any color there would be great. Thank you.

Sure. As you know, we have our own corporate development team. In the last quarter, we were waiting for the private market to align with public valuations, and we have observed some normalization in that regard. We believe there may be a bit more adjustment ahead. We have a robust pipeline of opportunities we are monitoring, but as I mentioned earlier, we will be cautious with our capital allocation. Additionally, we find our own valuation to be very appealing, which is why we initiated the share repurchase program. There are certain strategic opportunities in the market that we are considering, and if they align with our criteria, we will thoroughly assess them to determine how we can enhance overall shareholder value, while also considering the optimal use of our growth capital.

Thanks for giving some color there. If I could play off the B2B question a little bit, too. Because just in general, like with the B2B question, you guys have said it represents about 20% of the total revenue mix. I guess just if you could give us some more color on the long-term strategy for the business and how you're going to grow it? That would be great. Thank you.

Sure. We will continue to enhance our integrated software ERP systems, with several in our pipeline for new partnerships and additions. We're also focused on our AP/AR one-stop-shop solution and expanding our sub-verticals. We've experienced success in sectors like automotive, healthcare, travel, and entertainment, and plan to strengthen those relationships. There are additional B2B sub-verticals where we're seeing opportunities, and we will further develop our direct sales force and business development teams, which are yielding positive results for us. If we find significant inorganic growth opportunities at suitable valuations, we would consider investing to expand our team and technology. We believe there is a large addressable total addressable market for many years ahead, especially in the medium to enterprise customer segment, where opportunities remain as many haven't adopted what we view as our comprehensive payment solution. While there may be variations available, none truly provide a complete one-stop-shop experience. We will continue to focus on growth in this area, concentrating on our product technology and sales efforts.

We want to ensure that it becomes a larger component of our offerings. We are making additional investments, and John covered the key aspects well. Our goal is to expand our supplier network, and we have brought on specialists to assist with this effort. We have a unique process for developing our network, which we believe will enhance the adoption and use of virtual cards. Focusing on the key sub-verticals that John outlined is also an important aspect of our strategy.

Thanks. Tim, you mentioned like during a recession, you do see more engagement with their product. I mean, is that what you've seen sort of historically in downturns?

Yes, Sanjay. We've been doing this since 2006, and during the past recession, which had a very different job environment and consumer financial conditions, we were still growing rapidly and meeting the demand for credit. As long as there is a demand for credit, it generally finds a way to be satisfied, which leads to some form of payment. We've also observed, and are currently seeing in some discussions, the capacity to implement real-time payment across various channels. Historically, we've definitely seen this, and we believe it will continue as we enter a possibly credit-stressed economic environment. Ultimately, everyone wants to be repaid, and by making that process as easy as possible, repayment happens more frequently.

100%. I guess when we think about the B2B business, how do you think that behaves during a downturn? Is that fairly insulated? Or would it also see stress?

We are focused on serving medium to enterprise-level clients. It's hard to rule out any possibilities, but what we observe is that there is a digital shift occurring. Our total pay solution helps automate processes and create overall efficiencies. We anticipate an increase in our conversations as businesses seek ways to save money. Our rebates act as credits for outsourcing solutions, which is one of the best value propositions I have encountered. When you outsource something and receive a credit in return, it enhances the efficiency of reconciliation within your ERP systems. We believe the strength of this value proposition will continue to drive interest on its own merits. Looking at our overall customer base, we don’t anticipate heavy stress from the macro environment, especially in the medium term, as corporate balance sheets remain strong.

Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Mr. John Morris for closing remarks.

Yes. Thank you, everyone, for your time today. Really appreciate your questions. I just want to continue to say, we'll continue to focus on our business on sustainable durable growth, as we've talked about, with strong unit economics. Our business is performing well and it is strong. So thank you for your time, and I look forward to speaking with you in-person.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.