Q1 2022 Bottomline Technologies Inc Earnings Call
[music].
Greetings welcome to the bottom line first quarter of fiscal 2022 earnings conference call.
At this time all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Nope This conference is being recorded.
Now turn the conference over to your host Amy Brown Rake you may begin.
Good afternoon, everyone welcome to bottom lines first quarter physical 20 twenty-two earnings conference call.
I'm, Amy Brown, right and joining me this afternoon or Rob Emily Bottomline C E O and Bruce voted CFO.
Statements made on today's call will include forward looking statements about bottom lines feature expectations plans and prospects. These statements are subject to risks uncertainties and assumptions, including those related to the impacts of COVID-19 on our business and global economic conditions.
Are forward looking guidance is based on our assumptions after the macroeconomic environment today.
Many of these assumptions relate to matters beyond our control please.
Please refer to the cautionary language in today's earnings release and bottom lines. Most recent periodic reports filed with the SEC for discussion of the risks and uncertainties that could cause the company's actual results to be materially different from those contemplated in these forward looking statements. We do not assume any obligation to update four and looking statements.
During this call bottom line financial results are presented on a non-GAAP basis.
These non-GAAP results include among others gross margins operating income EBITA net income and earnings per share.
A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in the Investor Relations section of our website.
A summary of the guidance provided during the call is available from the company upon request.
Let me now turn it over to Rob for his remarks.
Thank you Amy.
Good afternoon, and welcome to the bottom line physical twenty-two earnings call.
As always we appreciate your interest in Baltimore.
I'm here with Bruce Boettner, CFO will provide a detailed review of our financial results in our guidance.
Bruce will also outline the new manner in which will be disclosing and reporting on our key product sets.
This will help investors understand the financial profile and contributions of each.
And importantly allow investors to track the growth and success of these major products.
As always will answer questions after Bruce remarks.
We're pleased to report on a strong Q what.
Subscription revenue growth was on target of 15% highlighted by a breakout quarter and pay mailbox.
We made significant advancements in our products.
Expanding tam and extending our competitive advantage.
We announced that will be welcoming three new board members.
My current will be rejoining the board, who also adding fill hello, Larry client as new members.
We look forward to adding their experience and perspective.
We've also formed a strategy committee of the board, which will make recommendations with respect to our market position and strategy.
Opportunities to accelerate our subscription revenue growth.
And other ways to create additional shareholder value.
I'll provide some color and several of our most significant product advancements in a moment.
But first of all outline of key financial results for the first quarter.
Subscription revenue was 103.5 million.
Reflecting year over year growth of 15%.
Our investments thesis is straightforward R.
Or products.
Market position and execution are well positioned to produce sustained subscription revenue growth and our targets, 15% to 20% range.
Subscription bookings in the quarter when $19.8 million.
Total revenue.
Was $123.6 million representing year over year growth of 10%.
And adjusted EBITDA was 23.1 million.
In line with our plan and guidance.
Are targeted product investment.
Market opportunity competitive position and strong execution or all of the evidence and the results were reporting for the quarter.
There are also the foundation of our confidence in our ability to drive sustained subscription revenue growth in the coming year.
And years beyond.
There's a lot of really great progress to be made across the company in new product innovation.
I would like to highlight a few for investors because they play a central part in our competitive position in the market.
Expansion of Tam.
And long term growth opportunity.
We've spoken at a significant opportunity in front of us to build on a leading position in payments automation and expand into the full payments in cash life cycles as payables receivables and Treasury management.
I am pleased to update you on the progress we're making on our new integrated receivables platform just one of the building blocks of our PCL strategy.
Over the next few months, we'll be launching our next generation receivables offering some feature there's a platform include intelligent reconciliation of payments remittances and invoices.
You didn't navigate exception management.
And the ability to predict behavior over time to increase payment visibility and forecasts receipts.
Our PCL strategy will play out steadily over the coming quarters in years.
And the receivables releases of significant and important step and the expansion of our capabilities in this market.
Yeah.
Turning to our banking solutions <unk>.
Developing the market leading platform is a complex and difficult task, particularly in a highly competitive market.
We've done just that with digital banking with our DB Iq platform.
Our leadership was confirm this past quarter as well once again named best in class by a T and the digital commercial banking payments and cash management category with number one and product features clients service clients strengths and vendor stability.
We continue to offer new capabilities to banks to allow them to more effectively compete and grow the business banking franchise.
An example is our new merger IQ platform, which is focused on banks consolidations and positions bottom line is a key partner of monitoring the customer basis of to merge banks.
The platform provides insights and predictions related to platform usage.
<unk> transaction volumes engagement and early warnings of attrition.
All critical behaviors banks want to monitor an acquired customer base.
With the combination of a well established market leading position.
A strong pipeline of new product innovations.
And a positive outlook.
We're confident in our digital banking products that will be a significant contributor to our growth in queue to the.
The second half of the fiscal year.
In the years ahead.
Finally, I'd like to comment on a quarter and some of the advancements we've made with <unk>.
We had a rail breakout quarter and <unk>.
Growth in the quarter was 31% but.
But it's not just the acceleration to 31% growth.
It's really about execution momentum and major product extensions.
A comprehensive payable product strategy is resonating with customers and the market.
We provide a single offering for all payment types optimizing customer outcomes across automation security and rebates.
We have an excellent foundation for continued growth.
Just on our position in the market the size of our network and the strength of our go to market.
But later today, we announced significant new capabilities for <unk> via the acquisition of bar payment systems.
The combination with bar brings a straight through processing a virtual cards.
New robust vendor enrollment capabilities.
Added value at a customer's virtual card programs and the potential for new additional channel partners and additional revenue opportunities for our existing channel partners.
Our continued product extensions aligned to our customer promise and strategic plan for growth.
We couldn't be more excited about the results for the quarter and.
And the road ahead for <unk>.
As you can see we build a portfolio market leading products tar.
Targeted it intelligently digitizing the way businesses pay and get paid.
Our products do this and demanded that a simple smart and secure.
Across our payment platforms, we've continued to innovate around these strengths.
Focusing on products that exceed customer's expectations for automation intelligence rounding across multiple payment types fraud prevention predictive analytics interoperability and innovation.
In closing we're excited about fiscal 22 and the runway. We see ahead based on our products position in the market and the size of those market.
Our products that differentiates bottomline from other players in the space.
Empowers continued demand and growth.
We're pleased with the Q1 results and the strategic advancements in the quarter.
We're confident in our fly 22 plan.
We're also confident will continue to execute against that plan and.
And in doing so drive shareholder value.
I will now turn the call over to Bruce and then of course, we'll both be available for questions.
Thanks, Rob and good afternoon, everyone.
As Rob mentioned today I'll start with a review of our first quarter of 2022 performance.
And then I'll share some changes were making to our financial reporting to provide a clearer and deeper view into the key elements of our business.
Finally, I'll cover guidance for Q2 and the fiscal year.
Q unrepresented, another very positive step for our accelerating financial performance.
Subscription revenue was one O 3.5 million and grew 15% year over year.
Both of those hitting the high end of our guidance.
Description revenue was 84% of total revenue four points higher than the same period, a year ago and recurring revenue was 94% one point higher than last Q1.
Both of those metrics are at all time highs as we continued to drive recurring revenue through our key growth platforms.
We expect continued acceleration of our subscription revenue growth as the fiscal year progresses, I'll talk more about the drivers of that in a few minutes.
Total revenue exceeded our guidance at $123.6 million, representing 10% year over year growth, which is within our target range for fiscal 22.
Bookings in Q1 119.8 million.
Although we would have liked to have seen more that bookings level is 19% of our subscription revenue.
So it is sufficient to support our target, 15% to 20% subscription revenue growth target over the longer term, especially when taken together with the other non bookings revenue growth drivers in our business.
And we do expect more robust bookings across the balance of the year our pipeline a strong.
Moving down the income statement in the first quarter core gross margin was 59% as it was in Q4 of 21.
At 60% subscription gross margins were on target for the quarter and consistent with Q4 21.
Our subscription revenue business models are continuing to scale and we expect gross margin expansion as we progress through the year.
Moving to Opex sales and marketing was 22.7% of revenue in Q1 340 basis points higher than in Q1 of 2021.
As we've conveyed we are investing in the teams and programs that are driving accelerating revenue.
Product development was 16% of revenue in Q1 80 basis points higher than Q1 of 2021.
Fueling the innovation agenda that Rob just discussed.
The growth in both innovation and go to market expense was predominantly driven by increased investments in our key payment platforms, Paymode X and P T X where.
Where we are seeing particularly accelerated growth.
Operating expense growth also reflects increased compensation costs, including employee salary increases that we had postponed in 2021 due to COVID-19 uncertainty.
The market for technical and commercial talent is as hot as soon as ever been and we're committed to remaining competitive and attracting the very best teams to bottom line.
Our people and our products are the two best investments, we can make near the key to driving our future growth.
Adjusted EBITDA in Q1 was $23.1 million, which hit the low end of our guidance.
That represents 19% of revenue the mathematical result of total revenue above guidance and EBITDA dollars at the lower end of guidance.
We remain confident that we will achieve our $106 million EBITDA target for the year.
Core operating income was 14 million within our target range core EPS was 22 cents for the quarter.
With a little below guidance because in addition to hitting the low end of our operating income target, we have more tax impact than anticipated.
Turning now to the balance sheet and cash flows.
In Q1, we executed aggressively on our $50 million share buyback program.
Repurchasing approximately 517000 shares for $21.5 million, representing an average price per share a $41.59.
We have continued at this pace and Q2 and as of the end of last week, we had repurchased approximately 942000 shares and spent 39 $7 million. So an average price of 42 11.
We continue to believe our shares are undervalued and will buyback shares for so long if that's the case.
We ended Q1 with $125 million in cash and cash equivalents and $130 million drawn on a revolving line of credit of $300 million.
For the quarter operating cash flow was $10 million capital expenditures were 12 million and free cash flow was negative $1.5 million.
As a reminder, R Q1 free cash flow is always the low point of the year due largely to seasonal working capital fluctuations.
So the big financial picture for the company is a strong start to the year in terms of growth profitability and capital allocation.
We feel very good about where we are on our trajectory into the rest of the year.
Now, let's take a deeper look at the business.
Over the past few quarters, we've heard a lot from investors about our product level of reporting.
And today, we are instituting significant changes in response to that.
Those changes are designed to provide greater clarity and depth about the key elements of our business and in particular for visibility into our key growth and profit drivers.
As you will see in the supplemental information and our 10-Q, we've revised certain of our segment and disaggregation of revenue disclosures.
To help understand the impact of these changes we've recast the four quarters of fiscal 2021 as well as the full year of fiscal 2020, and our supplemental slides.
So let's take another look at our queue one performance through this adjusted Lions.
Legal spend management, which as you all know is a very focused products that grew 7% year over year in Q1.
Once again and as expected the growth and Ellison picked up from the previous quarter and eight new customers chose our legal spend management products.
You'll also see and are updated reporting that legal fund management is our most profitable product line with 24% operating profit in Q1.
Remember that on a company wide basis, the difference between operating profit and EBITDA was 7.2% in Q1.
So although we don't report EBITDA at the granular segment level that company level differential should allow you to make a reasonable approximation.
Banking solutions subscription revenue was 8% higher than Q1 of 21 and total revenue growth was 5%.
Both of those were impacted by the remainder of the lap of the legacy, Texas termination fee and Q1 hundred 21, but we discussed last quarter.
Digital banking solutions now includes financial messaging, a product that is almost exclusively sold to banks.
In Q1 financial messaging generated $21 million in total revenue grew 10% year over year and produced 17% operating profit.
So this is a sizeable growing and profitable product line.
Perhaps the most exciting is the dynamic performance of the payment platform segment.
Which includes Paymode X and P T X.
We continued to see very strong and in fact accelerated performance there.
Subscription and total revenue grew 33% in Q1 versus Q1 of 21 and 29% on an organic basis, which excludes the addition of Treasury Express.
Both Paymode acts and Pts contributed to this strong growth.
As they continue to capitalize on the large market opportunity in the us and UK markets respectively.
I noted on our last call that we expected, our Paymode X and Pts products together to grow between 20 and 30% this year.
And thus far they are exceeding those expectations.
During the quarter, we added twenty-four clients to our Paymode X customer base.
You'll also see in our updated reporting that these platforms generated 17% operating profit in Q1 and have been consistently profitable across the last five quarters, while also driving accelerated growth.
Our last two segments remain unchanged.
We hope that these changes to our communication about our business will provide a clear view of the growth and profitability of its components and be more in line with the way that most investors tend to think about them.
We are determined to be responsive to the request we've been hearing from many of you and to adjust the way we talk about our business to be more helpful to you to understand the growth profitability and value profiles of its key elements.
Going forward. This should provide a good means to more accurately track our progress.
I would like to move now to our outlook for Q2 fiscal 2022.
We expect subscription revenue of 106 to 108 million, reflecting 14% to 16% year over year growth.
Total revenue of 125 to 127 million, 9% to 10% year over year growth.
Adjusted EBITDA of 24 to 26 million.
Core operating income of 15 to 17 million.
In core EPS of 24 to 26 cents.
With the accelerating growth, we're seeing and good visibility into the balance of the year.
Today, we are reaffirming our full year fiscal 22 guidance.
We continue to expect subscription revenue of at least $445 million, reflecting 15% to 16% year over year growth.
Driven by the continued strength of our key payment platforms, Paymode X and Pts.
We expect total revenue of 520 million, 10% year over year growth.
Adjusted EBITDA of $106 million, 20% of revenue.
Core operating income between 68 and 71 million.
In core EPS of $1.11 to $1.15.
In closing, we're very pleased with our start to the fiscal year.
Our plan is for continued strong performance as the year progresses.
The opportunity we see ahead of us in this dynamic and growing market is incredibly exciting and our leadership position across product lines gives me confidence that we have a promising path ahead of us.
Now will open the call for questions.
Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tonal indicate your lines and the question Q.
Yes, My first car too if you'd like to move your questions on the Q.
Participant using speaker equipment and may be necessary to pick up your handset before pressing the starkey.
Our first question comes from the line of Andrew Smith, What city. Please proceed with your question.
[noise], Hey, Robyn a bruce thanks for taking my questions here.
I want to start off with the question on the recent announcement with the addition of the board members and the formation of the strategy Committee.
Obviously, there's been a topic of conversation amongst investor to last couple of weeks, just hoping to get your take what what types of discussions are you, having I guess at the board level from a strategic perspective.
Obviously, there's input are ways to approve the business give you mentioned accelerated growth things like that but our other strategic options also being discussed like spit out schedule sale things like that.
And any color in terms of the Aperitive there would be helpful. Thanks a lot.
Well see Newport members just joined yesterday, So we haven't had committee meeting.
Yet at this point, but we certainly have a very good sense and that a lot of discussion on why I won't call, having said that that's not something aboard level of discussion is something we could share particulars either now or in the future.
What I would say, though is everything's on the table. We're looking at how can we accelerate growth all looking at other ways to create shareholder value, whether that's a spin off or any of the other things you mentioned everything's on really on the table, what's going to be the best solution for the business and to shareholders.
I guess can I appreciate that Rob and then.
Dig into the performance a little bit.
A quarter to kind of have to think about growth going forward that I really liked this new this new statement disclosure and declaring the commentary is a is a bigger appropriate. So thank you for that uhm just unplugged platform.
Insistently in that 30 per cent plus.
Can't for the last couple of quarters now some of that is is.
Recovery and comparisons and things like that but.
But.
I know, you mentioned 20, or 30% expectation, but what's the right way to think about like a peanut platforms over the intermediate term and I guess the question is.
<unk> your product set.
Evolution, which looks really interesting.
And then also kind of demand environment do you think we're on a structurally higher growth path here going forward versus just something that's more comparison related thanks.
Yeah. Thanks, Andrew.
We've we've been pretty clear in guiding to that kind of 20% to 30% range.
For for the payment platforms, Paymode X and Pts remember that the 33 and 31 do include a little bit of benefit from Treasury Express. So the the the actual performance of the two primary payment platforms is probably more like in the high twenties, 29% as we said.
This quarter, and probably sort of a similar level a little bit less than that last quarter that having been said look there are a number of drivers further growth of our payment platforms. Obviously, we're out there booking new business all of the time.
You know most of the investors know that vendor enrollment is a really important driver and continued product innovation is an important driver.
Just really started to <unk>.
Drive revenue through virtual card channels as you know historically, we're more focused on ACTH basic and premium Sch and the addition of fora that we announced this morning and straight through processing is another way to provide a really efficient pay.
Payment modality for our for our customers. So it's really a combination of all of those things booking booking new payers enrolling new vendors, providing expanded more efficient functionality and honestly Paymode X P. T X or just firing on all cylinders right now will probably stick with that 20% to 30% range. If we can outperform that that's great.
But we're not we're not looking to change that right now.
Perfect. Thanks for that Bruce and then sneak or one more in on a banking solution. So I think.
Rob you Might've mentioned expect banking solutions to be nice contributor to growth in the second quarter in the back half of the year.
So is it fair to say now that we get past his trophy, but we should see Linda.
Nation of correct, there and then I guess, just just any comments about justification banking pipeline is obviously heard from others.
About the sales cycle in the.
When taking up so would love to get your perspective, there as well thanks a lot.
Sure well the first thing the math as you pointed out the map of the significant determination fee year ago really sort of hindered us in terms of a growth rate this quarter, but we cleared that now so in the second quarter, we'd expect to see them more normalized growth rate for our banking solutions and step up.
Certainly from where we were in Q1, a significant step up the market, where you have the leading business banking platform and that benefits us in a couple of different ways, we're going to win the majority of no opportunities for platform deals where strategic partner to major banks will rely on us to grow the business.
Banking franchise, so that's new platform capabilities that we can bring out merchandise Q as a good example of that.
On the context.
Bank consolidation and there are a number of the men play a market that were.
Involved in working with.
Measuring what's happening with the customer base is never more critical because you are trying to save of this acquired base, we've seen that client and activity or we've seen attrition are we've seen any other indications that we're going to lose some of our customer base, we're bringing across so this is actually a brand new target a tool and it's just an example.
The kinds of new capabilities, we can bring to our banks to help them win compete and grow their business Bank enfranchised.
The short answer to your question is yes, with the termination Fame won't say stronger growth next quarter and that'll help our overall subscription growth right as well.
Great to hear about the Cup final capabilities. There. Thanks, guys I appreciate the comments.
Thank you et cetera.
Our next question comes from the line of match Schwartz with Raymond James. Please proceed with your question.
Hey, this isn't that also John Davis, Thanks for taking a section just wanted to ask about the consequences pull your outlook and then let's meet the modest take week or two can guide this <unk>.
What gives you confidence.
Celebration going forward. Thanks.
Hey, Matt I'm, sorry that was very garbled for us could you just repeat that one more time, maybe a little more slowly so we make sure we get it.
Sure and that clarinet.
Yeah, that's a little better thanks, Okay cool. So I just wanted to ask about the call came from the full your outlook given maybe modestly week or two to guide and then what gives you the confidence in the in flight celebration going forward.
Sure. Yeah, obviously, we have rolling forward forecasts of all four quarters in our plan for fiscal twenty-two all along contemplated accelerated growth across the course of a quarters.
Between the lap for digital banking that continued and in fact was more significant in the first quarter. The continued acceleration of both Paymode acts and legal spend management out of Covid.
And our visibility into the pipeline of our digital banking deployments, we've kind of known all along that this was going to be the shape of things.
We've we've stuck with our guidance for now the 15 plus percent.
Subscription revenue growth and.
If paymode action Peachy X continue to fire as well as they are.
We would hope maybe we could do a little better over the course of the year, but for now I think we're going to stick with where we are.
Alright, great. Thanks, so much yet.
Thanks, Matt.
Our next question comes in the line of George sat down with Craig Hallum. Please proceed with your question.
Hi, guys. This is James down for George Thanks for taking my questions. So you mentioned in the announcement this morning, a little bit on the call today that Bora brings in some new banking channel partners and since J P. Morgan is one of those partners I'd be curious to know sort of how the relationships you are bringing in through the acquisition will be straw.
[noise] Shourd relatives, your existing payload partners and I guess, how many paymode partners could you potentially have following the acquisition.
Well to be clear of those partnerships.
There was a bar partner. So there are the potential for new channel partners, but they aren't Paymode X channel partners today, what the real benefit of it.
Acquisition acknowledging I should mention we have that pulling it upgraded and running already know that we had that fully integrated and running the day, we announced for.
The day, we caused the transaction so the bill benefit is that ability to drive more virtual card transactions and to do so in a much simplified way for our particular larger vendors that are taking significant volumes of virtual car transaction. So it's an important technology to be adding it gives us.
We've had an existing relationship on other products with J P. Morgan, but it gives us another way.
Way that we are now working with them, but to be clear there. They are not today of Paymode X channel partner.
Got it.
And then there are checks we've seen that you're adding some SMB focus sales reps for Paymode could you maybe talk about your strategy in the lower end of the market or the thought process. There since historically historically has been up market and I guess, maybe that's sort of ties into the acquisition of this morning, I guess well the virtual card capabilities sort of help you.
And that strategy, given that's sort of a payout method and low yeah. So there's three different things in their virtual card is going to help at enterprise level for sure and it's going to help them medium business and small business as well so that.
That capability helps us across all markets, we would target.
<unk>.
Moving down market is really a function of product capabilities that we fanatic.
So the Paymode X example, it'd be bittersweet payments as in so the <unk> can address more of a mid market and small business requirements in terms of the direct salesforce, though that team is not one thing. It just slightly off that team is targeting enterprise mid market enterprise customers as as our car.
That market. So I wouldn't want that are direct sales team as a vehicle to.
Go down market really it's product capability that helps us extended to.
Broader market then we're addressing today and the sales team is again focused on mid market monoprice.
Got it thanks for taking my questions.
Thank you. Our next question comes from the line of Gary pressed Athena with Barrington Research. Please proceed with your question.
Yeah. Good afternoon, everyone [noise] couple of questions here in terms of the the sales and marketing expense, obviously, it's elevated as a percentage of sales this quarter going forward does that start stepping down as a percentage of sales or do you intend to keep it fairly high like you did in Q1.
We don't anticipate a significant step down in sales and marketing as a percent of revenue.
Our objective is to accelerate our revenue growth and drive incremental gross margin, including gross margin scale. So that we have additional.
Operating expense to invest while still maintaining our 20% EBITDA target.
Okay and then in terms of the strategic review I know you said you haven't had a meeting with the new board members and all that but what what is your thoughts on the timetable that when we would hear something.
You can share that.
[noise] well that would depend of course, what actions, we end up taken and how what those timeframe for those actions might be so I wouldn't want to speculate today and commit that we'd have some.
Answer some new news.
I will tell you work open to any and all ideas that are going to drive shareholder value, we think bottom lines well undervalued given the products. We have the market position, we have in the revenue growth history and trajectory we have so.
Looking forward to working with the committee from a management perspective on one of the ways that we address that ma'am can increase shareholder value of bottom line.
Okay, and then lastly, Bruce you mentioned, the something I didn't quite get it with the EBITDA adjustments as it pertains to the segment profitability could you maybe help us as to where how those things put out to each different segments, particularly payments banking and legal.
Yeah that was yeah. Thanks, Gary that was exactly what I intended to convey in my comment is that we don't report EBITDA at this segment level and we're not looking to change that today, what I. What I was trying to convey is that if you look in the aggregate the difference between our operating margin in our EBITDA is about 7% so.
And if you wanted to look across our segment operating profits and add 7% to each of those it's not a bad approximation there's no particular.
Skew and the differential that to be concerned with okay. Thank you.
Our next question comes from the line of Chris Kennedy was William Blair. Please proceed with your question.
Hey, guys. It really appreciate the the new disclosures, Rob you mentioned the breakout quarter for Paymode X can you provide a little bit more perspective, and what the growth has been over the last several quarters of payload.
Well, let's make a couple of comments and Bruce can comment on specific growth quarter by quarter. If it cares too, but one is 31% is an acceleration for us. So certainly just on subscription growth along but frankly, the least of it I think the pieces are really or a breakdown quarter of the momentum we huh.
Today momentum we have in book gains momentum, we have in the depth and cautious with which we are working with channel partners momentum, we haven't vendor enrollment and.
Momentum, we have in terms of product capabilities, which includes.
Straight through processing that we've added now with with four so really it's it's extending the capabilities of the platform executing on vendor enrollment in bookings that makes us breakout quarter really looking forward into the coming.
And the remainder of the fiscal year. So that's really the keys and calling it what I think is very fair to call breakout quarter.
And Chris I'll, just add if you if you go back into the Covid quarters, I think we were pretty clear in conveying that the transactional nature of the revenue streams from Paymode X led to material declines in the growth rate. If you go free previous to Covid performance in the high teens and twenties for Paymode X was kind of what we have come to expect.
We wanted to try to accelerate that further and as Covid is kind of in the rearview mirror now.
That's why we're able to show the kinds of growth.
Growth numbers that we're putting forward, putting forth last quarter and this quarter and it's really across the forward to later shift key roles product rolls leadership for the product itself all of those areas, where we're really executing the positions us well for the next couple of quarters and frankly several years.
Ben vendor enrollment I'll just add in particular, we get very very regular reporting on our vendor enrollment efforts in that team is doing an amazing job.
Okay very helpful. And then one follow up can.
Can you talk a little bit more about the virtual card opportunity what what percentage of it is the mix today and then how does that impact revenue. Thanks, a lot guys.
Sort of references to mix today is very very small in terms of revenue bottom line, we've focused on frankly pioneered hgh plus and driving.
Acha's one of the payment types of what we're doing now is adding the virtual card capability, which really rounds out a full integrated payables strategy and ads for our existing channel partners, who have a significant level of card it adds even more vendor enrollment capability and ease of those.
Transactions for the vendors that one acts up car so.
It's not a revenue major revenue contributor today, but it really rounds out the capabilities and positions us very well for strong revenue growth in the future.
Thank you.
Our next question comes from the line of Matthew Roswell with RBC. Please proceed with your question.
Yes, good evening and.
I want to reiterate I liked the I'd like a new segment reporting so a question on the expenses.
Polluted and I apologize in advance for that if we if we think about the step up inexpensive year over year could you talk about sort of what percentage of that you would consider kind of return to normalcy, meaning you broke wage increases back I'm, assuming that the sales related travel is starting to pick up.
What.
What percentage is kind of investments.
And then on that sort of incremental investment piece the percentage that's associated with irons equal against things like.
R&D.
Hopefully.
Yeah that makes sense, Matt no problem.
Very little of it let me start with what it isn't very little of it as a return of travel expense like most companies, we aren't anywhere near back into kind of.
The.
The pre COVID-19 level of activity there.
And it also isn't a lot of expense that is not people related.
70% of our cost structure is our teams and so when we're making these investments in very large part those investments are towards people.
The catch up as you as you pretty well put it on.
The levels of compensation. The fact that we didn't do merit increases for awhile or or a material part of the step up an expense for sure.
But quite a lot of the investment is going toward teams that are immediately driving revenue. They are digital marketing teams.
The reinforcement of the vendor enrollment team for.
Four Paymode X customer success.
And then there is also significant investment going into product development. So.
Growth for US is a fact is a product of.
Investing in new offerings to bring to market and investing in to go to market leverage that we need and then go to market muscle we need to make that happen. So it's really across the board on all of those things yeah.
Yes, it's separated.
Agree with everything first have a long way to look at it would be theirs incremental new investment that we're making in the air as he talked about and then just salary increases which have been across the board in compensation and expenses are across the board because we as we've said we.
And held goes back during Covid.
The market is competitive as it's been we have a super team and we want to make sure we're.
Really very competitively positioned in terms of compensation.
Okay, and if I could quickly get the the repurchase information again, uhm I just wasn't able to write it down fast enough and then on the year to date.
The second part I think you should adhere to gauge or the quarter today.
Yeah, Matt let me just pull those numbers back out for a second I don't I don't have that in front of me will we can take the next question. We can take it off while I will take the next question I'll come right back to Ya.
Thanks, Thank you.
[noise]. Thank you ladies.
Ladies and gentlemen, we have reached the end of the question and answer session Oh hold off on that hold on one second we're going to give a closing remark anyways. So thank you first of all give us.
<unk> stock buyback.
Yeah. So as of the end of the first quarter, we had repurchased 517000 shares for $21.5 million and that represents an average buyback share price of $41 and 59.
I mentioned, then that we had continued the repurchase over the course of Q2 to date and that as of the end of last week as of activity repurchases through last Friday, we repurchased 942000 shares and spent 39 $7 million. So an overall average price of 42.
11.
So thank you I'd say in closing, we're really pleased with the quarter, particularly the momentum we saw Pamela X as we indicated.
We're confident in our plan, we're executing against that plan.
And we look forward to reporting a strong Q2 to investors. So thank you for your interest in bottom line in your time this evening.
Thank you.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.