Q2 2020 Repay Holdings Corp Earnings Call

Greetings and welcome to todays earnings conference call think hosted by repaying with us today or drop more co founder and Chief Executive Officer, Jim Murphy, Chief Financial Officer. During this call, we would making forward looking statements about our beliefs and estimates regarding future events or results.

These forward looking statements are subject to risks and uncertainties, including those set forth in the FCC fall winter related to today's results.

Our most recent form 10-K filed but that's DC.

Actual results may differ materially from any forward looking statements that we may make today.

Looking statements speak only as of today.

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 non certain non-GAAP financial measures an explanation of these non-GAAP financial measures as well as reconciliation of these non-GAAP measures to the nearest GAAP financial measures can be found in our earnings release available on the company's IR.

I would now let's turn the call over to Mr. <unk>. Please go ahead.

Thank you operator, and good afternoon, everyone. We hope everyone is continue to stay safe and healthy during this difficult challenging period.

As you can see from our release the value proposition to our business, that's becoming even more evident.

This new onslaught of because the Nike endemic.

Well the second quarter, we reported 63% growth in both card payment volume in gross profit.

On an organic basis, we sell gross profit growth of 21% compared to the second quarter of 2019.

For todays call I wanted to first give an update on our business into second quarter as well, it's how trends have been more recently.

I also wanted to spend a few minutes reviewing some recent announcements when you have made and how they further our near and long term growth strategies Lastly, Jim will review our results in more detail and talk about the remainder of the year.

Now to review our trends for the second quarter, how we think about repay in today's environment.

During the quarter and into July really experienced increased demand for our offerings in several of our businesses across existing and new clients as our customers have accelerated implementation of electronic payment capabilities.

I won't repeat business continues to exhibit resiliency as it has throughout the crisis.

As more customers and lenders adopt and implement remote electronic payments.

Our instant funding product, which is our product that allows lenders to since launch directly to bar, which make accounts eligible debit and prepaid cards has continued to see an increase in demand as lenders and borrowers shift from physical disbursements to electronic.

Well be to be buy ins dipped in April that business rebounded nicely in early may and is now back to pre Tobin levels.

As mentioned previously our try source business was more impacted and others do some retail exposure. So it's taking longer to rebound over twice the worst volumes begin to meaningfully recover in late may now be recovered levels.

Next I want to mention a few recent business announcements and how those tied into our strategies for near and long term growth.

The majority of our growth is derived from further penetration or existing client base.

Expect our growth in 22, when he will continue to be driven by expanded usage increased adoption with our existing clients, which we have initiate leading volume retention.

A significant portion of our organic growth comes from these existing customers. We expect that continued to be the case in the near and long term.

In addition to existing customer growth, we expect that can teach you experienced new client wins in existing and new verticals driven by direct salesforce.

We'll be aided by soccer integrations, which we organically at its 60 partners during the quarter.

This brings our total to 82 integrations at the end of June.

During the quarter, we added six new credit unions do you see acceleration of ourselves efforts as well is gaining solid traction with our symitar and correlation integrations.

It's helped us achieve record new clothes sales for gross profit in the quarter following a record setting first quarter.

A few of our recently announced integration partnerships turnkey lender Novatech Okada bought.

All service a variety of verticals that we already addressed further expanding our penetration.

Got about focuses on receivables management and that collection, which is a smaller business for us. So we're hopeful this new partnership can help us increase correct.

Turnkey lender and Novatech had a strong presence in Canada as well as the U.S., which makes this relationship even more valuable exciting.

As Tim will describe further.

We're still focused on finding operational efficiencies and continue to execute our previously announced cost actions.

Now moving to M&A, which has always been it will continue to be a driver of growth for the company.

A few weeks ago, you announced the acquisition of C plus and accounts payable automation provider to a variety of industries the concentrations in automotive property management Central services.

The company's technology platform efficiently execute this client outbound 80 payments by a virtual card DCH or check.

He paid class, where CPP boasts an impressive list of ERP integrations automotive vertical going do track and dealer built as well as the property management and field services industries.

TPP currently maintains over 26000 rolled supplier relationships.

This acquisition is beneficial to our growth strategy for many reasons, including.

If I had access to the 10 trillion plus 80 automation space, which is experiencing rapid growth in a strengthening thesis.

He paid last as well as replace existing B to B business has experienced people trends as a result of because the Nike and then it.

He pays less existing automotive property management and fuel services ERP integrations.

Present, an estimated virtual card payment volume opportunity a 540 billion.

Also intend deploy our technology integration oriented competencies to quickly on lot more of the estimated 10 trillion plus market SMB a p. automation.

With the acquisition of CPP, we now have 90 soccer integrations.

BPP, it's a complimentary to our business as the majority of our a BBB business, it's focused on software automation.

The payment solutions around a our side of transactions.

Yeah acquisition of CPP will enable us to provide a p. automation and payment solutions to be paid existing client base.

We believe this way, especially be the case would I be to be out and automotive customers.

In a our coupled with 80 makes me pay a one stop shop, which we expect to accelerate go forward sales calls all of our business lines.

Finally, we're thrilled to have their in horrocks see big Lucky CEO and Seth Benartzi take lots of CTO join repay serving as leaders within the B to B business.

Our M&A pipeline remains active as we continue to look for targets in current verticals, along with attractive new verticals that are large growing an underserved.

Another key driver I'd like to mention that due to our recent Mercedes wins and other internal sales initiatives within auto business. We're now more actively addressing the prime money market, including captives.

This along with our CPP I could position as a standard I tend to approximately three trillion.

To wrap up I wanted to take the opportunity to say that I continue to be inspired by the incredible work of our team during this period their health and wellbeing.

As well as that of other stakeholders continues to remain top of mind.

Their dedication as well as the diversity of our business I mean unique solutions. We offer has continued to position us well during these times.

I'll now turn the call over to attempt to discuss Q2 results in detail.

Go over our outlook for the year.

Jim.

Thank you John.

Now, let's move onto our Q2 financial results before of your updated financial guidance for the remainder of 2020.

Despite the tough macroeconomic environment in the second quarter Gergely covert pandemic repay delivered strong results across all of our key metrics.

Second quarter card payment volume was 3.6 billion.

An increase of 63% over the prior year second quarter.

Total revenue was 36.5 billion, an increase of 68% over the prior year second quarter.

Note that our second quarter volume and revenue are typically down from Q1 due to the seasonality in Q1 related to tax refunds.

There's also no we're not tracking virtual card payment volume in our metrics.

Hi source GPS antennas contributed approximately 11.2 million revenue during the second quarter.

Moving onto expenses in the quarter.

Other cost of services were 8.7 million compared to 4.6 million in the second quarter of 2019.

The increase was primarily due to the additions have tried source heap, yes. The mechanics, however, when excluding those additions the amount was essentially flat in Q2.

Gross profit was 27.8 billion, an increase of 63% over the prior year second quarter.

I don't know Ganic basis gross profit increased 21% in the second quarter 2020, compared with second quarter of 2019.

As a reminder, gross profit as a key metric for us as this is how we price new customer deals and how we structure our sales team incentives.

Yes, you name it was 19 million compared to 8.59, the second quarter 2019 increase was primarily due to increased hiring share based compensation and added operating costs from our acquisitions.

Second quarter pro forma net loss was 8.4 million compared to net income of 4.29, the second quarter 2019.

The decrease was mainly the result of fair value adjustments related to our tax receivable asset, which resulted from the follow on offering an exchange of course, there units as well as the higher as she and I described previously.

Second quarter adjusted net income was 9.9 million or 14 cents per share.

Please note. This concludes the tax effect adjustment.

Lastly, second quarter adjusted EBITDA was 16.2 million, an increase of 55% over the prior year second quarter.

Second quarter adjusted EBITDA as a percentage of total revenue was 44% compared to 49% in the prior year second quarter.

This increase in adjusted EBITDA as a result to both organic growth as well as contributions from try source essence attacks.

As a reminder, Tri Starr Cps and Montana, EBITDA margins are slightly below our loan repayment business.

As John mentioned on July 20, Threerd, we announced the acquisition of CK cost for up to 16 million of which eight nine was paid at closing doing meaning 8 million maybe comparable in the third quarter 2021, depending upon the achievement of certain growth targets.

Closing of the acquisition was finding finance with cash on hand will not materially impact that language.

On June 2nd we closed our follow on offering where we issued 9.2 million shares of repairs class a common stock at $20 per share.

It's easily offering were used for general corporate purposes, including the purchase to see pay plus into acquired equivalent number of outstanding units, representing limited liability company and trust the clock parent holdings for cash, which resulted in 4 million net new shares.

On July 27 are we Werent redemption period expired.

As a result of all want related transactions. The company received approximately 87 million cash and issued approximately 8 million shares.

Our cash liquidity positions remain very strong.

As of July 31st we had 186 million of cash on the balance sheet 30 million of Undrawn revolver capacity and 46 million of Undrawn delayed draw term loan capacity for a total liquidity amount of 262 million.

Pro forma net leverage is now approximately 1.2 times, which is well below our current net leverage covenant level of 5.5 times.

I July 31st we had approximately 79.3 million shares outstanding aren't as converted basis.

This reflects the new shares in the warrants described previously but does not include Unvested shares our fully diluted shares, including Unvested shares equal to approximately 82 million shares.

Finally, moving onto our outlook for the remainder of the year.

My first quarter call, we laid out three illustrative scenarios that make assumptions on macroeconomic and market specific drivers that may impact our business over the remainder of the year.

Assumptions and scenario, one or played out but due to the recent virus spread this summer not all have.

However, since our first quarter call. We believe we have additional clarity on how merchants consumers and businesses are reacting to this environment, giving us enough confidence to provide an updated guidance range for the year.

This range assumes no further unforeseen covert related impacts, which could create substantial economic during the second half a year that being said.

We now expect card payment volumes to be between 14.5 billion 15 billion total revenue to be between 145 million at 155 million.

Gross profit to be between a 110 million in 115 million and adjusted EBITDA to be between 62 and 66 million.

In terms of cost actions, we continue to focus on three key areas hiring prioritization operating expense management and vendor cost management.

To date, we have experienced approximately 2 million in savings from these actions and will remain prudent and closely managing costs in the coming months.

Now I'll turn the call back over to the operator take your questions operator.

Thank you at this time, we'd be conducted a question answer session. If you look that's question. Please press star one on your telephone keypad, a confirmation till indicate your line is and the question Q.

You mean for starts you if you looked your move your question from the Q.

Part for participants, usually speaker equipment, and maybe necessary to pick up the had said before pressure sarkies one monkeys, we pull for questions.

Our first question comes on line of Sanjay Sakhrani KBW. Please state your question.

Thanks, Good afternoon, So I guess I heard you guys say that you're not assuming any unforeseen related coping related impacts and maybe you could just talk a little bit more about some of the assumptions, you're making around share gains and and some of the spooling up new relationships and I was just wondering if there was any.

He details on on sort of July and August trends as well.

Yes, hey, thanks to the question this is Tim.

[music].

So you know we.

In our original scenario analysis, we scenario one was a Q3 recovery.

You know where in Q3 now and we've seen this is Todd virus surged over the summer. So we're just trying to be practical with those comments around some of the uncertainty.

Although we do have confidence enough to put out these ranges and we we have seen strong volume trends continue through July and into early August, particularly within loan repayments that continued very strong.

But again were mindful of how somebody events around us right now some of the new customer wins.

We experienced in Q1 in Q2 are being rolled out.

And some of those potentially could be implemented faster than we anticipate which I've actually could provide potential upside to that.

But again we.

I wanted to just be mindful of events around us.

Anything on the July and August trends I mean are you seeing any kind of further strength.

Yeah, Yeah July.

It's been strong in early August has also been strong again, driven by a loan repayments as we mentioned b to B, which really dipped in April has come back strong and is now actually above pre covert levels, but we continue to see try starts coming back. It's it's nearing pre code pre covert levels, but it's just taking.

Longer to return because of some of the retail exposure to has but wed look within loan repayments, specifically and b to B. It's been we've seen really strong trends in July in early August [noise].

Got it and then John <unk>, maybe just give us an update on the M&A environment clearly.

You know there's been a pretty significant resurgence in valuations are cross fintech and and Tecogen also maybe just curious to get your perspectives on that and and I think I heard you talk about getting into prime auto lending maybe could you talk about you know how that opportunities unfolded. Thanks.

Sure.

Thank you for your time.

So we we see a from my perspective, we have always had her own organic M&A pipeline. A we continue to build that we actually brought on an additional team member in July to help us there.

As we continue to build out our initiatives. There we are able to see many different things in the market. Obviously, we try our best to be selective.

Never.

You never want to do a deal that doesn't meet some of the things we look for some of the criteria we look for.

We are seeing some things we see some things that could be actionable, we were choosing to do that we think can.

We try our best to be selective there as I said, so valuations you know depending on the asset spending on the vertical could could be a little bit different and so we would expect that they would not be at historic lows like we did we do see some opportunity, especially like when we think long term when we think the value that.

We can take can create with those particular assets, especially around technology.

And in our sales initiatives that we could find argue integrator partners as well or on the captive auto finance market.

Yes, we wanted to mention that because it's an area. We've touched on obviously, we were we have many of those in our pipeline as far as a the ability to pursue a don't translate that into they're going to automatically happen things like that those are longer sales cycles. It's a market that if you looked at our loan repayment murder.

Cool.

Those were not really included in those addressable markets. So we thought it was appropriate also to mentioned those we do think as we look out in the next few years those opportunities will will potentially come to market at some of those come out of contract.

And we think our yes, some great technology and offerings to just as we did with Mercedes we'd be able to to bring additional value to the marketplace, there and hopefully a come out with some wins as we go through that process.

Thank you good luck with that.

Thanks.

Our next question comes a lot of Joseph Bob.

I think with Canaccord he stupid question.

Hi, guys. Good results. Thanks for taking my question has lot of trying to drill down a little bit more on on the auto loan book and you know what you're seeing there and how that puts and takes in those portfolios in terms of.

Maybe I'm kind of thought as you talk about growth and expansion with those clients, perhaps offset by maybe a little bit more and delinquent.

Payments going on a given.

No the pandemic I met all the follow up.

Hey, John Thank you. So we did see delinquencies increased an auto in late March into April in early May I, we think with a lot of our customers those have leveled off.

You know there actually a lot of instances, where we've been deploying some of our payment tools to help with collections to reduce delinquencies.

So you know that.

We should we continue to see strength, there and then put our auto more generally.

You know originations were down around that time as well that we think those came back really strong.

In May and now into early August given that there's or demand for used cars and there's because more people out in the roads are going back to work and not using public transportation as much also maybe moving out of the city into the suburbs requires maybe a second vehicle. So we think we think there's lot of demand drivers there who see enough.

We are seeing that with our customers. We're hearing that from that we're seeing it in the the volumes as well.

And we also think Theres just a continued shift.

Card payments within auto, which again is one of our biggest <unk> organic growth driver. So.

We think that there was a bit of a dip there related to delinquencies and originations, but that's come back nicely.

Okay. That's helpful.

And he was just kind of touched on strategic relationships are minutes, there's a lot of them that you've announced recently and.

Clearly that they found attractive I was wondering if you keep tunnel.

Quantify how they may contribute to the PML moving forward or basically how to frame the.

The strategic relationship opportunity is it as it evolves thanks much.

Yeah. So you know we see these software partnerships as key part of our distribution strategy. We do have a direct salesforce, which we like we don't necessarily rely it at all on isos or agents, but we do we do have these software relationships as referral partners.

And they can be anywhere from having 50 to 100 merchants and large lenders on their platform to.

500, plus or even larger.

And so we just think that this allows us to address all different parts of these end markets from small merchants to enterprise large merchants.

And it's a way for us to access them more efficiently.

So we think it's just it's become a very very core part of our organic growth strategy. We have we're up to 90 now with a C pay plus acquisition, we have internal resources focused on finding new partnerships, but also further penetrating existing partnerships. We now have relationships with software providers in Canada, which will facilitate distribution there.

And again.

The ones, we're adding each quarter or just across all verticals, which again as part of the the growth strategy. So so that's that's kinda something where continues to remain focused on and and providing resources toward and.

We think that's really going to set us up nicely growing 2021.

Great. Thanks, a lot stuff.

Yes, as a also it.

What we've said is our goal is to try to add one to three per quarter and.

And as you can see we had a little bit more than that the second quarter.

Prior to our acquisition of see pay plus so we're excited about that is a key driver for us. It. It does hopeless as we try to accelerate growth and becomes key grip critical part of our relationships as we drive growth what our direct sales force.

Right. Thanks Huh.

Our next question comes a lot of Peter Heckmann with D.A. Davidson. Please state your question.

Hey, good afternoon, everyone. I was wondering on the acquisitions I said about 11.2 million dollar contribution.

The impact there was that primarily in try source and and I guess could you estimate what might it have been has had an up into the pandemic or theyve added another three four or 500000.

Yeah, So that was primarily try source and.

That's probably a good estimate I would say would probably be end up somewhere between 11, a half from 12.

Had we not had that disruption, but in most of it is coming from try source.

Got it got it and then just in terms of the cadence of thinking about third quarter or fourth quarter or maybe the timing of any additional government stimulus anything there should be thinking about there.

Oh, Yeah, I mean, I think you know, there's obviously a lot of attention being paid to additional stimulus now yeah. We do think that previous package helped us no toward the end of April and then providing strength into may.

I think there will be some form of.

The extension of the enhanced unemployment.

Which you know, we think will benefit our oh.

Customers customers for the consumer.

And we think that's the.

There's there's currently I.

I think we they think there'll be an extension of the moratorium on evictions and then the forbearance on student loans, it's kind of unclear how the payroll tax.

Holiday will impact us, but yeah, we think that that did help in Q2, and so we think certainly that could help come into Q3, depending on what form that takes and then as I mentioned earlier.

No we had a really really strong sales month on Q1 Q2, when we say new clothes sales. We mean recurring monthly gross profit there was are being implemented and rolled out today. So as I said earlier, we think that really benefits at end of Q3 into Q4, and then sets us up well for 2021, because we'll get a full 12 months of recurring monthly.

Gross profit on all those new implementations. So those if that's kinda you some of the moving pieces. The next to a couple of quarters.

Okay. Okay. That's helpful I'll get back into queue. Thanks.

Our next question comes on line ups and to keep Seattle with credit Suisse pretty stupid question.

Great. Thanks, good afternoon everybody.

John Tim Jake the topic I wanted to touch on is your medium term growth outlook in we'd be typically talked about this as mid teens organic growth.

And I know that in the slides an earlier in your comments you mentioned it continues to be heavily weighted towards growth with your existing clients and further penetrating that base. It does appear to us, though that there could be an opportunity to sort of bolster that medium term number or at least at a larger component of new merchant additions. So when I think.

About that I think of March and April being record must for new wins, I think about the Mercedes Benz signing new credit unions that you mentioned this quarter and also the opportunity you have within Scimitars for additional credit Union customers.

Just wanted to get you could maybe quantify a little bit how you break it out down that mid teens in terms of the components. It clearly existing is the largest but the opportunity that maybe new additions could be a bigger part of that growth algorithm longer term.

Yeah. So historically, we've we've seen that about 75% of that existing customer excuse me organic growth comes from existing customers.

We are you know we are accelerating our lives sales efforts to your point.

With all with the new verticals, we've added with lot. We've added a lot of software partners recently, and then Mercedes being a big win so I do think that there could be more coming from new so maybe that 75% drops a bit.

But we still think the biggest growth driver as channel expanding usage and adoption of cards is verticals are just so underpenetrated from a card perspective, and we think the last few months or better real catalyst to accelerate that.

And they're still though the markets themselves are so large and that we think that that's still going to be a majority of the organic growth opportunity, but I do think that with our additional software partners. We've added a lot to our sales organization, both direct sales reps and sales support folks to facilitate that so I do think.

That that will become a bigger part of organic.

Coming from new to your point, we might it might take a few quarters to really see that the numbers, but I do think that's probably right.

Okay, Great Yeah, Tim I want to supplement that you're I want to supplement that with a b to b side, obviously, if we.

We continue to enhance our offering there as I mentioned on the call a with RC pay plus offering as we integrate that in and combine that with our a our solutions we think a.

Like a set us up well for the latter for this year and into next year.

For new sales growth as well.

Great point. Thank you John My quick follow up is on Mercedes, which we referenced earlier notice that the branding and the logo is it's up on the Mercedes Benz financial services website, clearly displaying the option to pay via repay and but just wondering if you could give us any update not asking you to quantify that.

Specific customer it anyway, but just in general how it's going in the early days of of ramping what the Mercedes new new customer.

It's going very well like you said, there basically marketing our solution and being very open with that on their site, which we're not we're happy about.

We think that speaks to the strength of the offering we we know that theres been really strong adoption of card across all the different channels and when I say channels I mean like I've yard mobile in Texas, which are we don't think ness. They really had many fullscale way previously meeting Mercedes and so.

This is a more a prime customer touched on in the call and.

Require really high quality technology, they like to be able to do things sufficiently.

Quickly and oftentimes in their mobile device and so I think that's really been actually pretty high opening from Mercedes and not having access to those tools previously and we're starting to see that the number so it's going very well so far.

Great. Thanks for taking my questions.

Absolutely.

Our next question comes along a quick Mark what the Tems research. Please state your question.

Yeah, Good evening, John in Tim Thanks.

Wanted to ask two questions first.

Tim if you could [laughter] not can ask for guidance, but if you can think out 21, you know we're looking at from guidance the cadence of.

A payment volume growth.

Slowing down materially as you have some really big comps to grow over.

But.

You know are we looking at something returning back to the well north of 20% range in 2021 or are we looking or are we thinking high teens is a natural growth rate. There are curious to get your opinion and secondly.

If you could characterize that the different.

Pricing or yield.

That you're looking at a when comparing the used car market versus the captives. Thanks.

Yes, so in terms of volume growth and cadence there I mean as I mentioned.

Most impacted part of our business has been try source, which does have a lot of volume.

The volume is as lower margin and so as you can see our our gross profit margins are actually up.

Pretty significantly in Q2 versus Q1, but the volume has come down and so we're just being trying to be thoughtful about how we think that ramps back up in Q3 in Q4 I'm assuming it does fully ramped up by end of the year. It's the levels, we anticipated that will set us up nicely from a volume perspective going into 2021.

Also mentioned that we you know we are now tracking virtual card payment volume in our numbers. Yeah. We had some of that we've been tactics, but now we have a bigger opportunity there would see paid clause.

So you'll see virtual card payment volume.

You know come into the numbers now in Toby because he paid plus is growing so quickly that will become a more material part of 2021. So you know with those two factors in mind I could see they're being somewhat of an acceleration in the growth.

The second half of this year into early next year, but again, we're just kind of with our current guidance for 2020 being.

Mindful and practical of the events around us and so but there those are a couple of points I'd like to make just try source impacting us more and then.

He pay pluses virtual card volume coming into 2021 as well.

And you know in terms of auto take rates.

Certainly the larger volume opportunity might come with.

Oh, great but of course, there's or volume to go get and if we can find ways to add services like these channels and just.

Get more and more of that volume, we think the actual gross profit dollars, resulting from that will be.

We'll be meaningful and potentially larger than if they are at a higher take with a lower volume customer. So we still like that can you still like the way that works out from a gross profit dollars perspective, and we've always been consistent in saying that gross profit as our primary metric and we can work with our vendors.

On reducing costs of processing to try to bring more of that revenue take two gross profit even with those larger customers have lower revenue take rates.

Alright, thanks, so much.

Yep.

Our next question comes on line of Andrew Jeffrey with Suntrust. Please proceed with your question.

Hi, Good afternoon, gentlemen, actually trust Securities now.

So.

A couple of questions and I appreciate the time.

First of all.

John I Wonder if you could address you know one of the things that I think has distinguished.

Repay in a in the debit card loan repayment sanction specialization in D. I actually integrations.

They're in analog.

Oh, I assume that a lot of the ERP integration, Sir our standard.

No standard ERP providers, but I'm thinking about you know she pay plots and integration and Dealertrack. For example in auto is there any opportunity to build a I really differentiated offerings.

Analogous to what you've achieved and.

On or tenant.

Yes, Hi, Andrew good evening.

Maybe is a little bit different than the loan repayment piece of this we do think there is cross sell opportunity.

Ah with our existing customers and the ability to create some unique integration opportunities there.

But b to B is a little bit different.

As we say owner, a p. automation or I don't I P. S business, that's the a our side and we do rely on various integrations there, but also integrations, we we partner with some channel partners there to.

Help us drive growth in those situations that we'll continue to be the case, well, we think that there's an opportunity. There is to continue to enhance that offering with the p. automation coupled with the a our piece of that with those same channel partners to drive growth there and there is we think there is some opportunity on the.

Because the dealer management system side loan management system side to add some maybe 80 automation features of that although many times loan management systems are not always the the accounting ERP systems. So those could be a little bit different from that perspective, but we have seen even from the press release, we've seen.

A couple of positive signs from existing customers.

Talking about inquiring about our abilities to do that remember these are financial institution nonbanks on the lending side generally speaking.

And many are still finding ways of automation just like we talked about what's happening in the spring all businesses had to deal with electronic payments abilities. So we are again, we need to continue to enhance our offering.

Integrate our new acquisition together as we lay out can you lay out our strategy. There, we very intentional and that's why we want to do that we see the opportunity there there will be rocks in the the proof will be in our ability to execute oh, we like the opportunity there.

Okay.

Thanks for that and then I wonder from Bob.

From a a borrower perspective behavior standpoint.

You do you see some of the growth you're seeing any installed base is a result.

You can see <unk> consumers paying a repaying.

So the debit card for the first time them and I Wonder if Ah, yes, there's a ramp.

It is an accelerated shift I guess away from from check based rubinson that some of the growth you're seeing an installed base.

Sure. This is John so here's one thing we definitely for sure saw because it was brand new volume is our you heard us talk about our instant funding, where our worst funding loans directly.

All right with our new decent debit Mastercard send a direct to consumers doesn't count.

Oh, we knew that was not happening the horse because as a new product for us and new product for the lender, what we think and what we've seen historically is if you funded loan that way you. Most usually you repaid along that way.

So we think Thats a positive feature sign as we as we talk about.

Organic growth for existing customers if that continues to accelerate or continues to try to drive adoption in funding, we think that concrete create additional opportunities and payments as well. We do obviously think based on some of the things. We saw again remember we just see the payments, sometimes we don't see <unk> all of it.

Payments for example, we would never we wouldn't see their cash or their check.

In the loan repayment side.

Well, we did see Mackenzie volume right and Oh, we do think that some trends have definitely shifted and when do you think that's very positive for us on the long term side. It could pull forward. Some some things that we would think we thought would probably take a little while longer to do over time surgeon.

So core we see a positive strength there.

Okay, Yeah, the pandemics accelerated a lot of.

Trends are already in motion I appreciate that thanks.

Our next question comes a lot of Bob Napoli with William Blair. Please proceed with your question.

Hi, Thank you good afternoon, John and Tim.

You guys are well so just maybe a follow up on a the b to b strategies.

And Ah you know, bringing those three businesses the acquired together and.

He that you'd have to team you need to have both the technology you need do you need to bring on something else to try to bring that together and then or where do you stand as far as additional ERP integration for the PD business can you do that organically or do you have to acquired.

So they box Tim I'm. So we we think that no one of the things we liked about see big cost was that was the management team there and the foundries that business have been in baby payments for very long time, several decades, so that really adds to our management strain crank out to help us execute there.

We know that some of the merchant today P.S. have been asking for any piece solution.

So there's probably a direct cross sell their Lexus text has already started happening I'm just acres. The choosing these accounting ERP is really just want one payment solution they want to make it more efficient an automated anywhere they can.

So that's something that we're seeing and then as John said Weve couple of inbounds. Following the announcement of see pay cost from.

Lenders.

That have been looking to automate their IP, so we're already seeing it happening.

We think that.

Darren and South are really going help there we think they have a lot of.

Great industry contacts to continue to hire additional strong b to B talent, that's very much in near term initiative.

And so the pieces are coming together and we are already starting to see movement in terms of cross sell so I'm just really good positive momentum there.

Yeah, Bob we will continue to have to invest in talent and technology and we can organically do that.

We have the ability to do all those things, especially with this last piece, we put here, but when they also say.

If we find some some opportunities that we think we can accelerate.

The future we wouldn't look to to act on that if it were something that would fit well with us or open up a couple of verticals that we thought it would be some significant oh I would say kind of sub verticals inside of B to b, but that's all kinda subject to finding some things that we think would fit well with us anything that we think would help us provide an excel.

Great opportunities there, we would look at that.

Thank you and the the team from a.

The assay pay plus came from Fleetcor. They have a pretty good virtual card business you talked about virtual card. What is your are you partnering on the virtual card.

And today, or and which still drones virtual card technology and.

Capabilities.

Yeah, so to today.

Remember, we have a little bit of some virtual card and health care offering. So we have the ability to bring our own sponsor banks and those relationships. We can still outsource some of the platform processing.

But we would look to obviously enhance that bill a media those features and functionalities ourselves or at least to extent, we can control the entire customer relationship.

Some of those you inherit some existing relationships out there and we would look overtime to build critical mass of behind our own offering.

Okay. Thank you and then just last question do you track.

You know the I mean, how do you view your sales that first year to date this year versus last year every day I mean, obviously lot of things haven't been implemented but if you look at revenue.

No. It annual hey are our or how do you. How are you looking at the new business that you signed and how does that compare to a year ago.

So we look at we look at gross profit monthly gross profit quota is by sales.

And that's recurring monthly gross profit.

And so we look at that and you know we've expanded our direct sales force both organically and through acquisitions.

And we are you know.

Hitting or often months we're exceeding.

The gross profit quarter gross so where we're.

Well beyond where we were.

Year to date last year.

Just given that the broader opportunity across multiple verticals increased number of sales folks and also you know the increased number of software integrations. So there's a lot of different avenues for us to talk to win business now and we're seeing that and so I'd say we're ahead, but that's how we track at monitored in terms of monthly gross crop.

<unk> quotas.

Thank you appreciate it.

Once again, if you look that's the question. Please press star one on the telephone keypad. Once again, if you will assess question. Please press star one on your telephone keypad.

Our next question comes a lot of Mike problem, but not much trends, we see what's your question.

Hey, good afternoon, guys. He to think anything to call out on the attacks.

With all the mortgage activity that's out there you know I think the main impetus for that was sort of mortgage payments the integrations with five serve in black Knight.

And then also Canada any update on Ah things North of the board.

Yes, so the mortgage business has been active and a lot of refinancing activity.

And I'm going to panics does really well and that type environment. There typically probably not processing that monthly principal payments, but they're processing kind of the unique complex transactions like if there's a refinancing and they.

Switched lenders or switch servicers and that's what they do they've actually just experienced a couple of a nice customer wins to be able to do that for them and they're working on some integrations within mortgage as well so I businesses doing nicely and then.

We now have all the pieces in place in Canada, including a few software integrations and we've been building out our sales team there and so we're starting to see some real traction there too.

And that's again, that's another growth driver going into 2021.

Got it might make it little bit longer sales cycle in the mortgage servicing side, but.

As much as you know that.

Mark it hasn't had to adjust to.

To this the whole pandemic itself as well, but we've seen positive we've had lots of additional conversations or pipeline looks looks strong. There. So we're excited about you know what the future looks like in that area, but some of the offerings. We can do it sounds like a key integrations, there just a little bit longer sales cycle.

That world, though.

Okay. Okay. Thanks, guys.

So no further questions, but then the Q Oh, let's turn the call back over to Miss Morse for any closing remarks.

Yeah. So thank you so much everyone for your time today really appreciate you joining us we hope you continued to be safe and healthy we look forward to giving you an update on huh.

Third quarter call in November and have a wonderful pleasant evening. Thank you for your time.

This concludes todays teleconference. You may now disconnect your lines at this time. Thank you for your participation remember wonderful day.

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