AvidXchange Holdings, Inc. (NASDAQ: AVDX), a leading provider of accounts payable and payment automation solutions, has reported its first-ever GAAP net income in the second quarter of 2024, alongside a significant year-over-year revenue growth of over 15%.
The company's successful quarter also included four consecutive quarters of positive free cash flow and a strong non-GAAP gross margin of 72.6%. Despite the macroeconomic headwinds, AvidXchange is confident in its growth prospects, driven by its AI-based customer offerings and strategic software integration partnerships in the real estate and media verticals.
Key Takeaways
- AvidXchange achieved its first GAAP net income and reported a year-over-year revenue increase of over 15%.
- The company maintained a strong non-GAAP gross margin of 72.6% and an adjusted EBITDA margin of 16.6%.
- Strategic partnerships in the real estate and media verticals are expected to drive growth.
- AvidXchange is focusing on automating virtual card payments and leveraging AI to optimize processes.
- Despite pressure on discretionary spending, the company remains optimistic about long-term growth opportunities.
Company Outlook
- AvidXchange expects total revenue for 2024 to range between $436 million to $439 million.
- The company anticipates a non-GAAP adjusted EBITDA profit of $73 million to $75 million.
- They have updated their full-year flow revenue guidance from $45 million to $49 million.
Bearish Highlights
- The company is experiencing pressure on discretionary spending.
- There is a reduction in full-year revenue guidance due to moderation in customer spending and a yield dynamic.
Bullish Highlights
- AvidXchange has seen a positive swing in non-GAAP net income, reporting $10.7 million in Q2 2024.
- The company has a strong cash position of $465 million and low total debt of $76.5 million.
Misses
- There have been no recent acquisition opportunities that were deemed strategic, and valuation has been challenging.
Q&A Highlights
- Executives expect discretionary spending to rebound post-election cycle.
- The company is aiming for long-term opportunities of 20%+ revenue growth and 20%+ EBITDA margin.
- AvidXchange is focusing on higher-quality leads through existing partnerships to shorten sales cycles and improve close rates.
- The company is proactive in offering pricing options and data support to suppliers for optimizing economics.
AvidXchange's earnings call revealed a company on the rise, having reached a milestone with its first GAAP net income and continuing to demonstrate financial resilience. The company's focus on AI-based offerings and payment automation, particularly in the virtual card space, underscores its commitment to innovation and customer value. Despite the current economic climate and some pressure on customer spending, AvidXchange's strategic moves in the real estate and media industries, along with its partnerships, position it favorably for future growth and profitability. With a strong cash position and prudent management, AvidXchange is navigating the challenges and capitalizing on opportunities as it aims to transform the middle market with digital payment solutions.
InvestingPro Insights
AvidXchange Holdings, Inc. (NASDAQ: AVDX) has demonstrated a noteworthy turnaround with its first GAAP net income reported for Q2 2024. The company's revenue has shown robust growth, reflecting a 20.34% increase over the last twelve months as of Q1 2024. This growth momentum is further substantiated by a quarterly revenue growth of 21.63% for Q1 2024, indicating a strong start to the year.
InvestingPro Tips highlight that although AvidXchange has not been profitable over the last twelve months, analysts are optimistic about the company's trajectory, predicting it will be profitable this year. This aligns with the company's own outlook, which forecasts continued revenue expansion and a non-GAAP adjusted EBITDA profit.
The company's market capitalization stands at $2.63 billion, and despite a negative P/E ratio of -70.47, the substantial revenue growth and positive free cash flow suggest a forward-looking potential. AvidXchange's commitment to leveraging AI and expanding its strategic partnerships could be the catalysts needed to achieve profitability, as anticipated by market analysts.
While AvidXchange does not pay dividends, reflecting a focus on reinvesting into its growth and technology, the company's Gross Profit Margin remains high at 69.42% for the last twelve months as of Q1 2024. This is indicative of AvidXchange's ability to maintain profitability at the operational level, even as it invests in scaling its business.
For readers interested in more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/AVDX, which can provide further insights into AvidXchange's financial health and market potential.
Full transcript - AvidXchange Holdings (AVDX) Q2 2024:
Operator: Good morning, everyone, and thank you for joining us for the AvidXchange Holdings, Inc., Second Quarter 2024 Earnings Call. Joining us on the call today, is Mike Praeger, AvidXchange's Co-Founder and Chief Executive Officer. Joel Wilhite, AvidXchange's, Chief Financial Officer, and Subhaash Kumar, AvidXchange's, Head of Investor Relations. Before we begin today's call, management has asked me to relay the forward-looking statements disclaimer that is 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 as a 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 will now turn the call over to Mike Praeger.
Michael Praeger: Thank you, everyone, for joining us today. Joel Wilhite, and I are excited to discuss AvidXchange's second quarter 2024 results. This particular quarter marks a milestone, as we achieved our first ever GAAP net income ahead of our third anniversary as a publicly traded company, while already having delivered four quarters of positive free cash flow. Just as we accelerated our path to adjusted EBITDA breakeven and profitability meaningfully ahead of our expectations. We have now delivered GAAP and non-GAAP net income profitability in short order, highlighting the speed of our execution, the power of our new innovation delivery our growing value proposition for both buyers and suppliers, along with the strength of our AvidXchange culture, has fueled our success and has been a key factor in attracting and retaining the critical talent required to execute our dynamic business. Without a doubt, the choppy macroeconomic backdrop continues to test us all. It has created near term volume headwinds driven by reductions in discretionary spending across the middle market impacting to some degree, all of our various vertical and horizontal channels. However, we remain focused on capitalizing on the current environment by leveraging our financial strength to advance our new AI based customer internal facing product offerings. Executing continuous unit cost improvements and operating leverage as well as enhancing customer growth across our addressable market of middle market buyers and their suppliers. We believe, we are still in the very early innings in the drive to digitally transform was still today for the majority of middle market companies. A highly manual and paper intensive and inefficient back-office procure-to-pay process. With over two decades of institutional knowledge, building features and domain functionality around our AP automation and payment network. No one better than AvidXchange appreciates the opportunity, in the dynamic business processes inherent to middle market companies. Which are complex, unlike the small business market and unique across the various middle market industry verticals, unlike the enterprise segment. Our purpose build value proposition, which has leveraged that institutional knowledge and is increasingly embedded artificial intelligence throughout the product development lifecycle. From our front end intelligent invoice capture functionality, to our back-end payment execution capabilities, in all the workflows in between. Is extending our lead and strengthening our competitive position across our differentiated two-sided buyer and supplier network. As such, we believe, we are well positioned through our investments to advance our future growth and fuel our profit potential by delivering rapid material and quantifiable value in both current cost efficiency and future scalability of our customer's back office transformational initiatives. NAI Earle Furman, is one of the many such customer success stories that highlights the power of our transformational value proposition. As a middle market, commercial real estate brokerage and property management firm based in Greenville, South Carolina, NAI Earle Furman, has been in business for over 30 years, with multiple regional offices in upstate South Carolina and North Carolina's, Piedmont Triad area, as well as partners worldwide. Having grown through acquisitions, the company's back-office processes around accounts payable and payment became very cumbersome and paper-intensive. Specifically before automation, controller Robbie Smith team would promote invoices and create separate books of invoice, supporting document information for each property manager to view, assigned the proper accounting code and approve with a signature. That book would then go back to the AP team who would then manually data and or encode the invoices into their MRI accounting software, before cutting checks for the approved invoices and completing the PO matching process. Since automation, Smith team has seen a step function change in its invoice and payment processes, with MRI vendor pay powered by Avidxchange. As Mr. Smith put it, it is like night and day, our old process took a week or so. Now the whole process is completed in less than two days. This type of productivity, transformation of NAI's invoice to pay underscores the power of our value proposition. Shifting our focus to our financial scorecard, we delivered healthy financial results, while navigating an ongoing macro choppiness. The overriding theme impacting results for this past quarter was our focus on disciplined execution of our business in three areas. First, beginning with our sales and marketing, prioritize go-to market strategies and focusing on our highest yielding channels. Second, is our positive gross margin expansion, driven by our automation, aided by the impact of AI and continued to reduce our invoice and payment unit costs. And finally, third, is our continued overall operating expense rigor, combined with ROI decision-making process, across every functional of business group. Joel, go into more detail later in today's call, but here are some of our second quarter highlights. Revenue growth in the quarter, was over $105 million, up over 15% year-over-year, the growth in the quarter was led by a combination of transactional volume and transactional yield growth. Non-GAAP gross margins meanwhile, continued their upward trajectory, coming in at 72.6% were up 430 basis points and crossing the lower band of our 72% to 75%, Non-GAAP gross margin target, ahead of our 2025 gross margin expectations, that we set over a year ago, during our Investor Day. Our initiatives around automation, artificial intelligence, sourcing and standardization, which are still somewhat in the early stages continue to bear fruit, along with solid operating expense discipline, our adjusted EBITDA margin in the quarter was 16.6%. Transactional yield, meanwhile was which is a metric that we focus on across our leadership team as it demonstrates the power and effectiveness of our AvidXchange business flywheel was up more than 10% to reach $5.33 per transaction. With that overview on today's call, I'm excited to cover three topics that will shed insights into our various initiatives that will drive our future growth and margin expansion. First, our top of funnel activity and other key sales metrics, which provides insights into the sales setup for 2025. Second, discussing two new strategic software integration partnerships, which will further drive both gears one, two and three of our AvidXchange business flywheel. And third, highlight innovations around strategies to automate the execution of electronic payments. Starting with our customer obsession metrics, I wanted to update you on our top of funnel and other underlying indicators driving our go-to-market motion. For the six months ended June 2024, the overall top of funnel was down around 4% compared to the same period last year. However, various key underlying indicators improved, which adds a nice plot twists to the top of funnel narrative and highlights our strong sales execution against a choppy macro backdrop. Before I discuss those, I'd like to call out areas of strength and weakness within the top of funnel. On the positive side, we saw real estate, media, education and non-for-profit verticals, which comprise almost half of our new opportunities, grow anywhere from high single to mid-double digits on comparable basis, HOA construction financial services, meanwhile, were down high double digits. The net decrease in our top of funnel was largely due to a more targeted approach. We called out last quarter around our go-to-market motion, in addition to increasing our investment and focus on our various partner channels, to drive new highly qualified sales opportunities versus historically larger focus on electronic demand gen programs, Which we have seen softening over the last quarter and producing less qualified opportunities. As I referenced earlier, amid these puts and takes in our top of funnel, there have been some promising trends in other sales related indicators that are trending positive year to date with the potential to continue for the remainder of this year. First, sales cycle time on average for the six months of 2024 versus 2023 on a comparable basis, shortened by roughly one-third. Second, close rates for the six months ended June 2024, on a comparable basis remained strong. Both sales cycle time and close rates reflect a higher quality pipeline with interest levels that are actionable, which are the fruits of our more disciplined and targeted go-to-market motion. And finally, our buyer customer, new logo customer acount, a metric we furnish annually for the six months of 2024 outpaced levels comparable for 2023. Leaving us optimistic on the potential for higher net new logo adds or 2024 relative to 2023. Now, I'd like to talk about the four years of our business flywheel. We recently signed some notable new integration partnerships, which advanced gears one, two and three of our AvidXchange business flywheel. Starting with the real estate vertical, we deepen our competitive advantage further with Buildium. This API, integration partnership with Buildium, extends our relationship with real page, one of our biggest ERP partners. As a cloud-based property management software company, Buildium targets various verticals such as condo association management and real estate, including some verticals such as multifamily, student housing, affordable housing, et cetera. With approximately 15,000 customers, roughly 3,500 of which are in our product fit sweet spot. What is just as significant about the Buildium partnership is that we leverage generative AI in building out the integrations. As a result, we are not only able to compress development cycle times by 30% to around two months. We believe that the end user experience will prove to be substantially better given that we're able to train the AI inherent within our existing library of integrations to simulate pain pain points and test various use cases, including edge cases that deliver the best user experience. This referral partnership, which is slated to go live in the third quarter of 2024, initially starts with our AP automation invoice solutions. Additionally, it also represents a significant payments opportunity by potentially adding billions of new payment volume driving the third gear of our AvidXchnage business flywheel, which is the monetization of payment transactions and eliminating paper checks. We believe this partnership highlights, not only the large total addressable market, but also how much runway for growth that still exists in just the real estate vertical alone. The initial vertical segment that we launched our business in 2000. And whereas the industry leader, our penetration rate is still in the single digits. Another ERP partnership of know-it showcases our first invoice solution for the media vertical under gears one and two of the flywheel. This integration highlights how we are extending our strategic advantage and success in media related payments within the media vertical which we launched through the fast pay acquisition into media AP automation. This AP automation solution leverages our existing tech stack and is built on our cloud invoice automation platform. Our target customer profiles are agencies that process several hundred invoices per month and the first integration partners we have identified to go live with is Workamajig. Founded more than three decades ago, Workamajig is a leader in the project management software. That's based designed specifically for marketing teams and creative agencies. Spanning it portfolio of over 3,500 customers Workamajig is a dominant leader in the marketplace targeting those traditional agencies. Through our invoice automation solution, Workamajig customers will be able to digitally transform their AP workflow with our robust end to end capabilities. These range from our AI centric invoice ingestion in the front end to intelligent workflow routing and approval engine to resolve invoice discrepancies as well as leverage our broad payment modalities in our immediate payment network on the back end. This integration partnership went live and became generally available in the second quarter. Our end-to-end invoice and payment solutions, we believe not only differentiate our market position, but also solidify our advantage in selling our payment platform to these targeted media agencies. Turning now to our operations, we continue to make strides on our automation initiatives by leveraging artificial intelligence as a way to further optimize existing automation processes with human agents in the loop. One area in which our success is very tangible and serves as an early win is around payment automation of virtual card payments. To name just one of many lanes of process automation initiatives we've embarked on. This is important as we position ourselves to deliver on our near term gross margin target of 75% and set our sights on our long term margin exceeding 75% as outlined during our 2023 Investor Day. The latest initiative around payment automation is executing virtual card payments through online portals. There are six ways which we execute virtual card payments today, for our suppliers. By a straight-through process, direct API connections, online portals, IVR systems, e-mail and over the phone. Just as with email, were virtual card information is sent automatically to a supplier when a payment is created. There are many supplier our customers such as plumbers, roofers, landscapers, et cetera. That has stood up online payment portals through the relationship with various merchant acquirers or third party website developers to take in these payments. The challenge has been to automate the delivery and application of these virtual card payments that numerous supplier specific online portals at scale, given the explosion of these online portals along with unique user interfaces that are costly and labor-intensive the scale. Currently, we are doing over of these online portal payments, approximately 80% of which executed through humans and the remainder being RPA bots. We believe, we're at a tipping point where we could transform this process through artificial intelligence and deliver virtually all of these online payments without manual intervention. Taking our current levels of overall electronic payment automation of around 85% today to well over 90%. What this should enable is not only lower unit costs as we lower headcount growth and lower overall software license fees, but better leverage around future costs as we grow our business, driving gross margins. But equally impactful, we believe is the control visibility and certainty over virtual card payment execution. This provides as we test this capability through the remainder of this year and look to scale it further in 2025. In closing, we are proud to deliver our first ever GAAP net income profitability, driven by our continued gross margin expansion, along with disciplined execution across the operations of our business. However, we remain more excited about the future. We believe the innovation investments we have made across our product portfolio, coupled with the large and more key integration partnerships. We have executed, position as well to accelerate our growth, build on our margin expansion, momentum and achieve our Rule of 40 objective in 2025. In a Rule of 50 plus targeted by 2028. We recognize the choppy macro backdrop and believe the upcoming election certainly is not helping in the near term. However, those too shall pass as we work towards a significant long-term growth opportunity in front of us across the middle market. Furthermore, while overall top of funnel saw some softness, some of which was a function of our long term strategic trade-offs. Our stronger buyer customer logo cadence year-to-date 2024 compared to the same timeframe last year, leads us encouraged around the sales and revenue trends for 2025. Meanwhile, we remain laser focused on our operational rigor and execution, controlling those elements of our business model that we can directly control as evidenced by our ongoing unit cost reduction and operating leverage. Furthermore, with our new payment platform, payment accelerator 2.0, in our spend management offerings being sequenced for rollout over the next six to 18 months as our new accounting system and ERP partnerships begin to gain traction. We believe we're set up for a nice growth trajectory for 2025 and beyond as we strive for a strong close in 2024. I want to provide a special thanks to all of our AvidX team members for their hard work, dedication and relentless focus on executing our operational and strategic priorities that drive value for our customers, create great scope for their professional growth and unlock significant long-term value for our shareholders. With that, I'd like to turn the call over to my partner, Joel Wilhite.
Joel Wilhite: Thanks Mike, and good morning, everyone. I'm pleased to talk to you today about our second quarter 2024 financial results, which reflect disciplined execution of our growth strategies amid continued macro choppiness. Overall, we delivered another quarter of healthy year-over-year financial performance across the board. I will expand on that in a moment, but let's see how we track relative to implied expectations. Relative to the implied second quarter 2024 business outlook and excluding the float and political revenue contribution. Revenues came in a touch below our expectations with slightly better total transaction volume tempered by slightly lower transaction yield. Gross margin performance remained strong due largely to ongoing progress on unit cost initiatives, coupled with software yield expansion. Coupling that with sustained operating expense leverage, we drove significant adjusted EBITDA outperformance relative to expectations. It's worth pointing out that this continues our streak of delivering adjusted EBITDA profit expansion, excluding float and even political contributions. Most notably, as Mike mentioned, we achieved a significant milestone as we delivered our first ever GAAP net income since going public in 2021. Now, turning to year-over-year results. Total revenue increased by 15.3% to $105.1 million in Q2 of 2024, over the second quarter of 2023. Most of the revenue growth was driven by the combination of the addition of new buyer invoice and payment transactions, coupled with software and pay yield expansion. The remaining revenue growth for this quarter was driven by higher year-over-year float and political revenues. Our strong revenue growth also resulted in total transaction yield, expanding to $5.33 in the quarter, up 10.1% from $4.84 in Q2 2023. Most of the increase was driven by pay and software yield, coupled with transaction mix skewed toward payments with the remainder due to flow and political revenues. Software revenue of $29.9 million, which accounted for 28.5% of our total revenue in the quarter, increased 9.8% in Q2 of '24, over Q2 of 2023. The increase in software revenues of 9.8% was driven by growth in total transactions of 4.8%, which continues to be impacted by macro choppiness with the balance driven by growth in certain subscription based revenues. Payment revenue of $74.2 million, which accounted for 70.6% of our total revenue in the quarter increased 17.3% in Q2 of 2024, over Q2 of '23. Payment revenue reflects the contribution of interest revenues, which were $11.8 million in Q2 of '24 versus $9.2 million in Q2 of 2023. Political media revenue in the current quarter was approximately $800,000 and negligible in the same period a year ago. Excluding the impact of float and political revenues from both comparable periods. Payment revenues grew 14.6% with most of that increase, driven by a combination of an increase in pay yield greater payment mix and payment transaction volume increase of 8.6%. On a GAAP basis, gross profit of $68.7 million increased by 23.6% in Q2 of '24 over the same period last year, resulting in a 65.3% gross margin for the quarter compared to 61% in Q2 2023. Non-GAAP gross margin increased 430 basis points to 72.6% in Q2 of '24 over the same period last year. With the lion's share of the increase driven mostly by unit cost efficiencies and yield expansion. Now, moving on to operating expenses. On a GAAP basis, total operating expenses were $76.8 million a decrease of 5.7% in Q2 of 2024 over Q2 of last year. On a non-GAAP basis, operating expenses, excluding depreciation and amortization and stock-based compensation decreased as well by 0.6% to $58.9 million in the second quarter of '24 from the comparable prior year period, which was helped by the timing of headcount additions and certain third party expenses across R&D and sales and marketing expense categories. On a percentage of revenue basis, operating expenses, excluding depreciation and amortization and stock-based compensation, declined to 56% in the second quarter of 2024, from 65% in the comparable period last year. Overall, absent certain timing factors, the year-over-year percent decline largely highlights, expense discipline and significant operating expense leverage across G&A, sales and marketing, as well as R&D to an extent, even after stripping out the contribution of float and political revenues. I will now talk about each component of the change in operating expenses, on a non-GAAP basis. Non-GAAP sales and marketing costs decreased slightly by $184,000 or 1% to $18.5 million in Q2 of '24 over Q2 of last year. Which absent the aforementioned timing benefits reflects ongoing yet targeted investments in sales and marketing spend to support our continued growth. Non-GAAP research and development costs increased slightly by $291,000 or 1.3% to $22 million in Q2 of '24 over Q2 of last year. The increase, which was also helped by timing factors was due to continued reinvestment in our products and platform, including Spend Management, our pay offering and payment accelerator. Non-GAAP general and administrative costs decreased slightly by $455,000 or 2.4% to $18.4 million in Q2 of 2024 versus Q2 of last year, due to leveraging public company costs across a larger revenue base. These expenses continue their annualized downward progress -- progression as a percentage of revenues as we indicated during our Investor Day. Our GAAP net income was $436,000 for the second quarter of 2024 versus a GAAP net loss of $18.8 million in the second quarter of 2023. With the reduction in losses driven by a combination of strong revenue flow through solid gross profit increase, expense control and timing of certain expenses leading to lower operating losses, coupled with higher interest income and lower interest expense due to reduced borrowing costs and partial debt paydowns. On a non-GAAP basis, our net income in the second quarter of 2024 was $10.7 million versus a net loss of $500,000 in the same year ago period. Approximately $11.2 million positive swing from the year-ago period, driven by the aforementioned factors. On a non-GAAP basis, Q2 2024 adjusted EBITDA was $17.5 million versus $3 million in Q2 of 2023, largely 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 strong corporate cash position of $465 million of cash and marketable securities against an outstanding total debt balance of $76.5 million, including a note payable for $13.9 million. We had $30 million on our credit facility undrawn at quarter end. Corporate cash meanwhile was split roughly two thirds among money market funds, commercial paper and time deposit instruments with the remaining third in deposit accounts, the weighted average maturity on the corporate cash was roughly 22 days, while the effective interest rate on our corporate cash position for the second quarter was roughly 5.2%. Customer cash at quarter end remained unchanged sequentially at approximately $1.2 billion with an interest rate of roughly 5% for the quarter. Turning to our updated 2024 business outlook, we now expect total revenue for the year to be in the range of $436 million to $439 million. Our 2024 revenue outlook reflects approximately $49 million of interest revenues from customer funds, a $4 million increase from our previous 2024 outlook versus roughly $41 million earned in 2023. Also, we anticipate political media revenue contribution of approximately $9 million, given that this is our first presidential cycle under Fast Pay. Recall, we acquired fast pay in 2021. And for context in 2022, during the midterm election cycle, the political arm of fast pay generated roughly $8.5 million in revenues. Similarly, we expect non-GAAP adjusted EBITDA profit ranging between $73 million and $75 million for the year. With that, I'd now like to turn the call back over to the operator to open up the line for Q&A. Operator?
Operator: [Operator Instructions]. The first question today comes from Dave Koning with Baird.
Dave Koning: Hey guys. Thank you. Maybe just to kick off. So the guidance for the back half is about 5% lower, the revenue guidance, about 5% lower then before. And it seems like two components you called out macro headwinds and then then you talked a little bit about yields in payments missing due to other some dynamics there. Maybe talk about those two components and how that's affecting your guidance this year and then, if those should have any impact on next year as well?
Joel Wilhite: Yeah, thanks Dave. Great question. And you're reading it right. I think what we're pointing to, in our guidance for the back half of the year, at a high level is essentially projecting forward what we experienced in the second quarter. So we're guiding what we're seeing. And what we're seeing is a continuation and even maybe a tick worse on the overall total transaction volume, that was a 4.8% grower in Q2, down a little from that 5.8% in Q1. So really kind of continuing that forward and an incremental additional element that I'd point to date this quarter was something that we're seeing in our yield dynamic. So again, overall, continued really strong TPV yield, certainly relative to the industry. And down a basis point, if you think about the progression from Q1 to Q2, but I'd offer up a couple of dynamics that we did begin to see and standout for us in this quarter. And let me just go through them real quick to get it out there. So really three things I'd point to first off, we have seen some larger payments with existing suppliers shift away from the higher monetized rates. Number two, we've seen a mix shift for with new suppliers as we're continually adding suppliers to the Avid Pay network through new buyers or new suppliers that show up in payment files. And we're seeing a shift to other payment modalities with variable take rates, below kind of a full rack rate interchange. And number three, and finally, and I think I mentioned this in the first quarter, a little bit as we are seeing greater monetization of smaller payment sizes driven by the continued sourcing automation in standardization. We're able to monetize incrementally smaller payments to monetize. But on a weighted basis and taken all together, we are seeing a little lighter overall TPV yield, and we've extended both that volume and that TPV yield assumptions forward through the end of the year. While we're navigating this macro environment and we're not expecting that to get meaningfully better or meaningfully worse this year.
Dave Koning: Got it. Thanks guys. And great EBITDA progress to by the way.
Joel Wilhite: Thanks, Dave.
Operator: The next question today comes from Ramsey El-Assal with Barclays (LON:BARC).
Ramsey El-Assal: Hi guys. Thanks for taking my questions. I want to ask you to kind of give us your updated thoughts on revenue visibility in this environment. And I guess it's another way of asking the question about the degree to which you have confidence that your guidance is sort of sufficiently risk-adjusted here maybe accounting for a range of macro outcomes. Is that something that you're confident you can kind of see at this point?
Joel Wilhite: Yeah. Again, I would just reinforce what I said before, what we're guiding is kind of what we're seeing now. I think, we are kind of running the same high discipline, high rigor process. We do when we forecast our business and we have a meaningfully consisted sort of recurring visibility in our overall total transactions. And So great question, Ramsey, one that I spend time thinking about, we feel good about the guidance that we provided.
Ramsey El-Assal: Fantastic, thanks.
Operator: The next question today comes from Sanjay Sakhrani with KBW.
Unidentified Analyst: Hey guys. This is filling in for Sanjay. Thanks for taking my question. I just wanted to drill down around the revenue slowdown. Could you just talk about the sequential change that was seen within the quarters? Was there any noticeable difference between when you started the second quarter to the end of the second quarter? And also any color around like what from discretionary versus nondiscretionary? Thank you.
Joel Wilhite: Yeah, great question. I would just point you back to kind of the volume side, certainly weather year-over-year sequential. We're seeing just continued pressure from a discretionary standpoint. We're still maintaining consistent and really high kind of overall retention of our buyers and our suppliers. But we just see the continued sort of caution in moderation on the part of buyers in their spending and it is still limited. We see limited to discretionary spend type things like advertising, professional services, travel, significant kind of capital projects and improvements and hasn't really widened outside of that discretionary bucket. Maybe just gone a little bit deeper relative to what we've seen in the past few quarters.
Unidentified Analyst: Got it. And then just touching around some of the key initiatives such as payment accelerator in the spend management side, could you talk about the progress around that, how much they're expected to contribute this year and how fast they can spool up in 2025 and beyond?
Michael Praeger: Yeah, this is Mike. And I can generally comment on that. So first of all, payment accelerator, 2.0 is kind of the new version of our historic invoice accelerator offering. Really excited about the progress of that offering, is a we indicated. This year we're kind of taking it slow to prove out all the different kind of functionality of the product that we've improved over the prior version. And we continue to kind of scale it prudently. But certainly 2025 will be the year that we're seeing kind of the real scale take hold in that product as we make it available to all 1.2 million suppliers, of which remember we of that number that we estimate about 60% of that 1.2 million fall the category of small business suppliers, of which we think the product is a perfect fit for. Turning to kind of spend management. Spend Management is a year or so behind kind of that a payment accelerator, we expect to introduce it to our first customers at the end of this year timeframe later in Q4. And again, we expect to initially have an opportunity to make that product available to our existing customers throughout 2025, as we also introduce it into new customers. The focus on payer spend management is really to capture the payment volume and transactions that we don't see today, that fall outside of an invoice. So today, we do a really good job of capturing all transactions that have an underlying invoice related to them because typically we're the system of record for all our customers in terms of call expenses that have an invoice as we feed their general ledger. But what we see is that transactions that don't have an invoice many times fall outside our system and that number could be up to like 50% of a company spend. So spend management really designed to how do we get of all the spend that a customer has related to their expenses in our platform so they can have better reporting visibility to expense, cash flow management, all those type of things as part of our platform, of which they're asking us to do. So there's a little bit of commentary around both a payment accelerator and spend management.
Unidentified Analyst: Great. Thanks for taking my questions.
Operator: The next question today comes from Jamie Friedman with Susquehanna.
James Friedman: Hey, good morning, guys. A lot of hard work here. I just wanted to ask one for Joel, one for Mike. Are you still comfortable with the 20% plus revenue category through 2025, and then I think 20% plus EBITDA margin. Joel. And then, Mike, maybe if you could talk about the Rule of 40 or 50 long term that you'd articulated at the Analyst Day? Thank you.
Joel Wilhite: Yeah, great question, Jamie, I'll start off. I guess the first way I would sort of answer that question is we still feel like we're in the early days of a really big opportunity. And we've got a lot of levers both grow revenue and at the end to be a more efficient business and the evidence is in the gross margin expansion and the profitability, et cetera. I would say that in the short run, we need the macro to turnaround, back to that kind of whether you're talking about 20% of Rule 40, we're operating in a sort of environment of caution and moderation on the part of buyers. And so I would temper our short term expectations, but I'd say those what that long term opportunity is certainly still there.
Michael Praeger: Yeah, maybe just to kind of pick up on what Joel said, Jamie, related to kind of that Rule of 40, Rule of 50. As Joel indicated certainly, we would need and expect that the discretionary spend from customers will rebound at some point in time. We're hopeful that once we get past the election cycle and customers just have more clarity on policies, including kind of the rate environment, that was start seeing some return of their discretionary spend, preventive maintenance projects, things of that nature, as we've seen in other cycles. But the other kind of there's two other things that give us a lot of confidence related to not only kind of returning to kind of that 20% growth number, but also kind of delivering on the Rule of 40. That's the innovation, the products we have driving future growth, being the payment accelerator adoption and then release spend management that I just commented on. But that combined with our new kind of buyer sales channels, in terms of the partnerships that we've added over the last year, certainly AppFolio (NASDAQ:APPF) is a big piece of that with their 40,000 -- 20,000 customers, which we expect roughly half of those who don't fit within our product market fit. M3 and then most recently Buildium. So kind of the new deal kind of sales channels. We're really excited about in terms of driving new buyer sales. And then kind of the last lever is around that conversion to paper checks to electronic, as a we've been kind of commented on that. We believe and that our ability to manage, multiple payment with activities across our platform that combine combinations of speed of payment, price of payment, levels of remittance data along with levels of automation are kind of the key in terms of continue to drive that conversion from paper to electronic. And so those are kind of the building blocks for that 20% kind of growth mantra that we have. And then as it relates to grew 40%, we continue to have kind of those levers, as Joel indicated, certainly AI had a nice impact and will continue as we drive gross margin in our various other automation strategies, continuing to build our gross margin. And then I think, we've been able to demonstrate that we have kind of strong and disciplined execution of the business and especially around the expense discipline that we have and how we run the business to achieve that objective with Rule of 40 and then longer-term Rule of 50.
James Friedman: Got it. Thank you.
Operator: The next question today comes from Andrew Bauch with Wells Fargo (NYSE:WFC).
Andrew Bauch: Hey, good morning. Thanks for taking the question. Just wanted to dig into the dynamics around the suppliers being more discerning around the higher monetize payment offerings. This is something that was called out, but one of your closest peers, I think at least the middle of last year and they basically chalked it up to the macro. But said that, when macro turns those higher monetize payment methods should see greater adoption. And so my question to you is, are you kind of expecting the same thing and what's the risks and we should be thinking about that, each quarter that goes by where they're electing for lower monetize payment methods that those behaviors become more sticky?
Joel Wilhite: Yeah, great question. Let me start and Mike might add a little context. What I would point to maybe is a little bit of a difference than the than the example that you referenced is. We've always been focused on suppliers as customers and there's a value proposition and sort of remember the speed, data automation and then kind of the notion of price depends on that level of speed data and automation. So what I pointed to when we were talking about the yield dynamics is some mix shifts for sure, but not a wholesale kind of retreat from monetize payments, just continuing to seek the speed and the data and the automation, but some different price points. So we're encouraged about our yield today again at 30 bps on on approaching of TPV. We believe we have a industry-leading yield and we'll continue to see that. But we'll also continue to meet suppliers where they are and deliver the value that they're seeking at different prices so. Mike, you want to add anything to that?
Michael Praeger: Yeah, Just kind of reinforce the key element is thinking of the suppliers. It's a core customer and building a value proposition around them. So one of the things that we're seeing is that we don't suppliers leaving our network. We have super high retention rates in the high 90% range related to our supplier customers. But what we do see, especially around you continue to go deeper to convert those paper check suppliers to electronic, is that, at the different price points that we have, it's a value proposition that kind of meets what they're looking for to make that conversion. And so we continue to see high volume of new suppliers being added to the network. However, we think the key is and how we drive this over time to get to our kind of next milestone of 50% of monetize payments and greater over time is that continued delivery of new payment modalities that combine speed, price remittance data along with automation.
Andrew Bauch: Makes sense. Thank you, guys.
Operator: The next question today comes from Darrin Peller with Wolfe Research.
Darrin Peller: I think there's a couple of things we just want to dive into a little bit. One of them is just the transaction growth rates versus the overall volume growth rate. Just on a more technical matter. Any way you can help us guide around what you expect there and transaction size. But more than that, I really want to understand a little bit more around what you're seeing in terms of the dynamic of top of funnel customer adds. Mike, in the last quarter, we talked about different strategy on conferences. So maybe just give us a little more update on what you're seeing in terms of net new additions and your strategy and is market with the markets coming to you with what how proactive you are being in different ways?
Joel Wilhite: Thanks Darrin, got it. I'm going to take the front end of your question and then Mike will take the back part. So just to add a little context, and I think your question is help us understand kind of growth rates in overall total transactions and in overall total payment volume. Remember that our total transactions metric is the sum of all the transactions on the platform. That's all the invoices and all the payments and the subset of the of the transactions that are paying is a smaller, but incrementally faster growing. And I would just say that we still see a pretty direct correlation between the growth in payments and the growth in overall total payment volume. And I wouldn't point to anything meaningfully different in terms of overall average payment sizes across across our verticals. And so finally, I would just say we're continuing to see that caution exercised by buyers. We talk about overall total transaction retention rate as a number that we provide annually last year. In the 103 range normally it's in the 104, 105. In this season we're in, we're around the 100 zip code even plus, minus. And so we're optimistic that as we get through this economic season that returns. But that overall total transaction growth rate is indicative of what we're experiencing.
Michael Praeger: Yeah Darren, maybe you turn to your question on top of funnel like . So I think there's kind of two elements. One is, as I talked about last quarter, a more disciplined approach around our investments in the highest ROI marketing initiatives. This is certainly been putting this practice. We've put in place with how we think about all the trade show conference, user conference type activity around all our partners, making sure we're focused on the highest ROI initiatives. The second thing, which was probably more evident this quarter is around also change of mix in terms of how we think about historically, maybe more investment and electronic demand gen versus supporting our partners and certainly move that mix to our partner channels. Certainly the new partnerships that we've added like AppFolio, M3, Buildium are good examples where we wanted to increase our investment as we're seeing really high qualified leads coming from these channels versus maybe a higher volume, but lower qualified coming from the historical demand gen routes. So we're -- and we think that that strategy is actually playing on time playing off as we see overall results, our new logo growth exactly last year combined with strong close rates, but one of the things we did see, which is really encouraging. Our average sales cycle has been cut by a third. So seeing rates improve and faster close cycles combined with maintaining strong close rates. So I think that demonstrates that, by executing these two strategies that work and seeing higher qualified leads coming through the top of funnel, even though the overall volume may be slightly lower.
Darrin Peller: So you're saying when you're adding at a rate that's faster for new logo growth and that sort of overall new customer adds. In other words, the rate of growth of additions of new customers this year versus last?
Michael Praeger: Exactly kind of new logo growth halfway through the year compared to last year were up over last year.
Darrin Peller: That's good to hear. Thanks, guys.
Operator: The next question today comes from James Faucette with Morgan Stanley (NYSE:MS).
James Faucette: Great. Thank you so much. Wanted to kind of continue to work down the P&L. And given some of the top, while softness is definitely constructive to see flex OpEx down year-over-year in order to what's your projected adjusted EBITDA to protect that? How are you thinking about the right level of OpEx growth for the business over the near to medium term to the extent that revenue growth is a bit more muted?
Joel Wilhite: Yeah, James, good question. And I'd just go back to some of the things that Mike talked about in his prepared remarks and reinforcing it in his commentary. We're really focused on running a disciplined business. We're also very focused on kind of the growth opportunities ahead of us at the same time. So we're just we continue to balance that, what I would say is that, you're likely going to fit into our guidance. There is a little bit of an incremental investment that we're contemplating in our OpEx. And again, that's focused on finishing strong and getting launched payment accelerator, spend management, our overall pay platform, et cetera. So again, I don't know that there's an optimal number to give you, but we're very focused on profitability. You can see that in the gross margin expansion that continues. I'll tell you that even in kind of the the mute, the shift in our guidance in the back half, we're still really focused on the gross margin that's contemplated there. Maybe the rate of a rate of expansion moderates a bit, but we don't expect to go backwards. And so we're continuing to focus on investing in growth and running a disciplined business.
James Faucette: Got it. And then from a business development standpoint is kind of the choppy economic environment continues to persist. Is there other incremental opportunities to further expand the reach and abilities of Avid on through acquisition or looking at adjacencies. How should we be thinking about kind of here, what's the right approach to investment strategically in the current environment for you?
Michael Praeger: Yeah, I think that's a really good question. Certainly the kind of inorganic and providing tuck-in acquisitions has been kind of part of our historical kind of growth as we've added new vertical channels. And many of them have happened through acquisitions. We believe that that's going to be continue to be part of our future strategy, we've had a couple of years of not having any activity on the M&A side, I think that's really a combination of number one, not really seeing anything that we felt was super strategic that could really move the needle for us strategically in terms of that growth. And the second thing is, I think the valuation kind of spectrum of kind of private companies versus public has been a little bit challenging. But I think those elements on that element, we're going to see kind of where we are seeing it kind of change, and we're seeing more activity than we've seen in recent years. In terms of opportunities to continue to do tuck-in acquisitions, move into adjacencies, like you referenced of which is a what we've done historically and haven't really developed playbook on how we execute these effectively. So I expect that we will kind of get back to having routine cadence around some tuck-in acquisitions as we go forward.
James Faucette: Great. Thanks.
Operator: The next question today comes from Craig Maurer with FT Partner.
Craig Maurer: Yeah, hi. Thanks for taking the questions. First, over the long term as perhaps your new origination volume shifts toward partners and away from self-generated leads, where that mix shifts. How should we expect that to impact the yield as I assume you're sharing economics there. And second, I'm a little perplexed by the maintained guide on political revenue at $9 million, which was effectively what you did in 2022 during the midterms. I mean, all fundraising and activity points to a massive upswing in spend from certainly that term number. So I'm curious if you're forecasting share loss or yield compression or something that's keeping that guidance flat? Thanks.
Joel Wilhite: Thanks, Greg. I'm going to take the political question and then I'll have Mike take care of the first part. Great question. And I think let me, kind of reset the table around political. We're sort of reaffirming the $9 million that we've talked about since the beginning of the year. We are seeing consistent patterns with the presidential election. Now granted, we didn't know and fast payback in 2020. But when we look at the first half second half distribution that we're very consistent. I'd also sort of repeat, we don't have a lot of visibility. There is meaningfully back-ended spend. And so if there was an area that surprised us to the good, it could possibly be this political number. And so that said, we're also seeing the same kind of dynamics that we're seeing across the business in our traditional media and political media business as it relates to volume and rate. So the degree of uncertainty, not the same visibility we have in our normal business and hope and we're on the conservative side and we really see it move in the back half, but we're not calling that in our guidance.
Michael Praeger: Yeah, maybe to continue on which also, as I remember kind of a we expect to see the majority volatility happened after Labor Day. So it makes it harder to have visibility to what may happen. Certainly, we're encouraged with some of the forecasted spend levels for not only a presidential cycle, but all the, ballot initiatives in the state run elections on. But Craig, I wanted to kind of come back to you. I think your first question was related to your kind of long-term impact to some of the mix shift of leveraging on having greater leverage within our partner channels. The way we think about we think the net contribution is consistent in terms of our direct sales efforts, certainly the majority of partnerships that we have are more referral partnerships where our direct sales force still leverages those partners of the world and we're sharing some of that revenue. We have a look at it is it's kind of on an investment similar to what we make in marketing related expense to drive our internal leads. So we can have our models show that it's really kind of a net-net kind of equal type of opportunity in terms of overall net impact. And we think it's really kind of the beauty of our demand and funnels as we have lots of different, sources that make an offer so as we're seeing softness, for example, in electronic demand gen and really high kind of activity through our partner channels, we can make these type of adjustments. And I think from a execution perspective, we're happy to be working on high quality leads that are having the impact that they have. And the net result is our net logo growth is up over last year and where our team is working on higher quality leads through that change strategy.
Craig Maurer: Thank you, Mike.
Operator: The next question today comes from Timothy Chiodo with UBS.
Timothy Chiodo: Great. Thanks for taking the question. I wanted to talk a little bit about interchange credit, interchange rates in the industry. So the recently rejected settlement, the original agreement was 7 basis points on a blended and 4 basis points for essentially every category. Clearly that is in the process of being reworked. But I was hoping you could touch on what you think the implications could possibly be for. Number one, commercial interchange rates in general for the industry? And then maybe more specifically any of the more custom interchange rates that Avid has on the commercial side?
Michael Praeger: Yeah, Tim, good question. And I think, it was a quarter or two, feel that number of questions on this topic. So how we think about it. So first of all, I think the biggest impacts are going to be a similar size where you typically have your kind of of standardized interchange rates, one of the things that the dynamic on the business, the business side, and we've been kind of leading the charge here, which are reflected in our industry, leading electronic payment adoption rates. Is creating multiple payment modalities. In fact, even on virtual card today, we go to market with a dozen different virtual card type offerings that combine again, different interchange price points with different levels were moves data, different levels of automation and speed of payments. So when we look at kind of our Avid paid network, proactive in terms of providing kind of the right way our structured and priced product offering or payment modality, to what suppliers are looking for in terms of that value proposition. And the second element is, I think in our case, MasterCard is our primary exclusive provider for execution of virtual card payments, with their different data rates. We've been on the forefront of supporting our supplier customers with all the women's data they need so they can take advantage of different data rates. And so we've already been on the forefront of helping our suppliers, they'll get the best economics they can get by providing them the data, making transactions more secure, less fraud, all those type of things. And we think long term that adds to a sticky customer. And it certainly shows up at our industry-leading retention rates that we have for suppliers. So we kind of view on the commercial side that we've already been kind of proactive in terms of how do we get the right price product for our suppliers to be electronic acceptance on the long term.
Timothy Chiodo: Excellent. Thank you, Mike.
Operator: The next question today comes from Alex Markgraff with KeyBanc Capital Markets.
Alex Markgraff: Hey, guys, thanks for taking my question. Mike, maybe one for you first, just to expand on the top of funnel comments. I mean, I understand sort of some of the comps you provided there. It sounds like some benefits to from a sales cycle standpoint. Maybe a win rate standpoint as well. Just kind of curious like what the net effect of all of this is versus what your expectations were prior to some of this resource reallocation I mean, I'm assuming it's better and I hear you on the net adds expectation for '24. So maybe just from like a and new customer revenue contribution standpoint, how does that compare to what you were expecting prior to this resource allocation?
Michael Praeger: Yeah. So I think, so first of all, the objective of top of funnel is to, hit our sales plan and our new customer add kind of objectives for the year. So I think from that perspective, halfway through the year, we feel that we're on pace to, we're running ahead of last year related to adding new customers. And so we're trending towards that overall sales plan objective. But at the same time, it's not -- we're not spending less on top of funnel or kind of investment has stayed the same. It's just a different allocation. And so I think the beauty of having multiple dynamics of our top of funnel that are driven by many different types of sources. As we see the strength and weakness of different sources, we can adjust our spend accordingly. And so one of the adjustments that we made this last quarter is moving away from typically some of that electronic demand gen that produces lots of leads, but lower quality. And we've seen kind of softness in that particular channel is to move to where we're seeing strength, which is around supporting our growing number of cost, our partners. And the higher quality leads that partners are generating for us. Again, these are existing customers of our typically accounting system and ERP partners. So there's an existing customer relationship and they're raising their hand and they want to automate this business process, in partnership with their ERP accounting system partner. And so those are really high qualified leads and we're seeing it show up in terms of shorter sales cycles while we maintain really strong close rates. So I think overall, I think we'll be more efficient and certainly we pay close attention to all the different lead sources we have, and we'll continue over time to make adjustments where we're seeing strength and weakness across, kind of that overall spectrum.
Alex Markgraff: Thanks. And if I could just squeeze one more in on yield. Just wanted to get a bit more color. The dynamic that you're seeing, is it sort of that occurring really across the our supplier base? Is it more narrow in scope with certain suppliers and certain verticals? Any color there would be helpful.
Michael Praeger: Yeah, you bet. I think it's a fairly broad across the vertical. I wouldn't call out anything specific around.
Alex Markgraff: Okay. Thanks.
Operator: The next question today comes from Rufus Hone with BMO Capital Markets.
Rufus Hone: Hey, good morning, guys. Thanks. Sorry, if this is maybe covered on an earlier question. I joined a little bit late. But wanted to ask about the full year revenue guide. How much of the reduction is this macro getting tougher? And are there any kind of related incremental changes you're seeing in customer behavior? How much of the reduction in the guide was due to that? And then also how much of the reduction was from incremental lead generation headwinds that you're seeing and if you can break it up into those buckets? Thanks.
Joel Wilhite: Yes, let me let me let me tackle those. Rufus, wanted to answer the first question. I think I alluded to it, but I'll just revisit our guidance contemplates in the back half. What we saw in the second quarter, both from an overall total transaction volume. That continues to be impacted by moderation in middle, our customer spending. And also the yield dynamic that we pointed to on this call and that we began experiencing in Q2. And so that think of it as roughly 50-50 balance in terms of what's driving it. It's those two dynamics that are driving the shift in revenue. And then from a from an overall sales top-of-funnel perspective. I think your last question, I would just say that like we're selling for next year in the future. So not so much an impact on what we sell this year in this year's revenue that would impact next year and going forward.
Michael Praeger: Yeah, when we get to the kind of the second half of the year, really, our new buyer sales activity drives the next year in this case 2025 results. So we have a pretty good -- I think visibility to kind of activity our existing customers, but certainly some of the macro discretionary spend has been, you know, some of the headwinds that we've seen.
Rufus Hone: Got it. Thanks.
Operator: The next question today comes from Clarke Jeffries with Piper Sandler.
Clarke Jeffries: Hello. Thank you for taking the question. I wanted to ask about the raise to float revenue. And I suspect that's related to the customer preferences on payment modality. But I wanted to clarify that and ask that to say it another way, you're not expecting a change in the yield, the float yield or the volume as much as a change in the balance of those funds through the year?
Joel Wilhite: Yeah, good question. Here's the way I would frame the change in the flow. And so just to recap the last time we gave guidance for full year flow revenues in the round $45 million. We've increased that to $49 million. And the things that I would point to our previously, we did have factored in rate reductions in the back half of the year. We've reduced the impact of that. I think we have one late year a quarter point, and so there's an incremental lift there. We also have seen somewhat marginally higher customer balances, and we've experienced that throughout the year. We've just made it made an assumption in our projections that we would continue to experience that. Again, nothing underlying different in the in the customer experience and the operational funds flow, but just slightly higher customer balances are contemplated in the back.
Clarke Jeffries: Thank you.
Operator: The next question today comes from Tien-Tsin Huang with JP Morgan.
Tien-Tsin Huang: Good morning to you guys. I know it's been asked a lot, but I just want understand your view here on the patent monetization and suppliers choosing on the acceptance side, the lower cost provisions, is that more cyclical or secular? Do you think that as the cycle shifts that you'll see a shift back or are the suppliers just smarter around cost optimization?
Michael Praeger: Yeah, I think it's a good question. I don't think it's really cyclical. I think it's really around a value proposition. And typically, when they make a decision on a particular payment modality, we started to see really strong retention of that payment modality for life that supplier. And now certainly the big opportunity we have is that roughly 50% of our overall suppliers are still paper check acceptors. So we really we are working to manage pricing value proposition that's appropriate for that. That 50% and again, combining speed of payment, the price to remain stayed on the level of automation. And what we're seeing is certainly to get certain suppliers to move off of paper checks to electronic, sometimes the price is it is an element of it. And so especially we believe that again, with a strong value proposition at the right price point, we get that's prior to being electronic software and beyond our network for a long period. And so I think that's part of our overall strategy that we'll continue to see is as we grow that percentage of 40% of monetize payments to 45% to 50% plus over time, it's going to happen at different price points.
Tien-Tsin Huang: Got it. Thanks, Mike. Appreciate your thoughts on that.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Mike Praeger, for any closing remarks.
Michael Praeger: Thanks everyone, for your interest in AvidXchange. Amid the current macro choppiness. I'm proud of our disciplined execution and healthy financial performance, along with strong profitability results. As I said before, I'm particularly excited about the future given the pipeline of product innovations and the industry leading ERP integration partnerships in progress that should propel all four years of our business flywheel and drive long-term value creation for our investors. With that, I look forward to sharing our progress with you on our next earnings call. Operator, you can close the call.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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