Q4 2021 Paymentus Holdings Inc Earnings Call
Speaker 1: and elsewhere in our filings with the FCC. We encourage you to review these detailed safe harbor and risk factor disclosures.
Filings with the SEC.
We encourage you to review these detailed safe Harbor.
And risk factor disclosures.
Speaker 1: In addition, during today's call we will discuss certain non-GAAP financial measures, specifically contribution profits, adjusted gross profits, adjusted EBITDA, and adjusted EBITDA margins for non-GAAP financial measures.
In addition, during today's call, we will discuss certain non-GAAP financial measures specifically contribution profit adjusted gross profit adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures.
Speaker 1: These non-GAAP financial measures, which we believe are useful in measuring paymances' performance and liquidity, should be considered in addition to, not a substitute for, or an isolation from GAAP results.
These non-GAAP financial measures, which we believe are useful in measuring the same emphasis performance and liquidity should be considered in addition to and not a substitute for or in isolation from GAAP results.
Speaker 1: We encourage you to review additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures in our earnings press release issued today, and supplemental slides, each available on the investor relations page of our website.
We encourage you to review additional disclosures regarding these non-GAAP measures.
Including reconciliations with comparable GAAP measures in our earnings press release issued today and supplemental slides each available on the Investor Relations page of our website.
Speaker 1: With that, I'd like to turn the call over to Dushant Sharma, our founder and CEO . Thank you, Paul.
I'd like to turn the call over to Duchamp's Sharma, our founder and CEO .
Thank you Paul.
Look consequently, one was a great year.
Speaker 2: We accomplished many things that we believe position us well for a strong 2022 and beyond.
We accomplished many things that we believe position us well for a strong 2022 and beyond.
Speaker 2: But before I talk about 2022, let me discuss our Q4 performance first. We pulled out our first Q4 performance first.
Well before I talk about 122, let.
Let me discuss our Q4 performance first.
We closed out our first year as a public company on a high note.
Our contribution profit grew 36% in Q4 two.
Speaker 2: Our contribution profit grew 36% in Q4 to $45.3 million.
To $45 3 million.
Our transaction volume growth.
Speaker 2: Our transaction volume grew 54% to over 83 million transactions in the quarter.
54% to over 83 million transactions in the quarter.
Speaker 2: And in 2021, we also increased our number of clients to over 1,700, including billers and financial institutions.
And in 2021 also.
We also increased our number of clients to over 700 <unk>.
<unk> dealers and financial institutions.
And from a user standpoint.
Speaker 2: We saw 21 million consumers and businesses use our platform in the month of December 2021.
We saw a 21 million consumers and businesses use of our platform in the month of December 2021 .
Speaker 2: Our payment volume for the full year jumped 68% to over $63 billion.
Our payment volume for the full year jumped 68% to over $63 billion.
To provide additional context, it took us 15 years to get to $30 billion in payment volume annual payment volume.
Speaker 2: To provide an additional context, it took us 15 years to get to $30 billion in annual payment volume.
Speaker 2: And we have added more than that in just the last two years.
And we have added more than that and just the last two years.
It is pretty remarkable.
Speaker 2: And as you can see from these numbers, our core strategy of building a network and gaining market share is paying off handsomely.
And as you can see from these numbers our core strategy of building a network and gaining market share is paying off handsomely.
Speaker 2: As reflected in our 2022 guidance, we expect continued demand for our platform and the ecosystem.
As reflected in our <unk> guidance, we expect continued demand for our platform and the ecosystem.
Speaker 2: which we believe provides significant momentum for 2022 and beyond.
Which we believe provides significant momentum for 2022 and beyond.
Speaker 2: Let me now discuss our expectations for 2022.
Let me now discuss our expectations for conflict.
Based on our current visibility.
Speaker 2: We believe 2022 will be another year of a strong growth and profitability.
We believe going to contribute 22 will be another year of strong growth and profitability.
Speaker 2: We are expecting full year contribution profit growth to be between 29 and 30 percent and adjusted EBITDA margin to be between 14 and 16 percent.
We are expecting full year contribution profit growth will be between 29, 30% and adjusted EBITDA margin to be between 14 and 16%.
Speaker 2: and we feel great about our prospects for 2022, primarily because of the work we have done, already done.
And we feel great about our prospects for continuing to do primarily because because of the work we have done already done.
Speaker 2: during 2021, which we believe has set a great foundation for our 2022 performance.
During 2021.
We believe has set a great foundation for our country to performance.
Let me walk you through a few of these items first we established a significant partnership with Jpmorgan Chase to jointly sell of our solution to the below market.
Speaker 2: We established a significant partnership with JPMorgan Chase to jointly sell our solution to the Biller Mark.
Speaker 2: Both teams continue to be excited about the partnership and the momentum we are seeing.
Both teams continue to be excited about the partnership and the momentum we are seeing.
Speaker 2: Second, we closed two acquisitions, which has strengthened our presence in the financial services market that allows us to begin monetizing payments through the bank channel.
Second we closed two acquisitions, which has strengthened our presence in the financial services market that allows us to begin monetizing payments through the bank channel.
Speaker 2: and I'm sure you're wondering about integration, it's going very well.
And I'm sure you're wondering about the integration.
It's going very well.
Third we launched our instant payment network, our IPM with several of the largest companies in the world and when combined with nearly 300 financial institutions on our platform.
Speaker 2: Third, we launched our Instant Payment Network or IPN with several of the largest companies in the world and when combined with nearly 300 financial institutions on our platform.
Speaker 2: We believe it is a tough combination to beat, and as you know, IPN is unique to Paymentos.
We believe it is tough combination to beat and as you know <unk> is unique to <unk>.
Speaker 2: Fourth, we sign and implement it in number of key clients that we expect to see.
Fourth we signed and implemented a number of key clients.
That we expect to serve for years to come.
Speaker 2: We also finished migrations of a large insurance company, a large real estate e-commerce website, and a top 15 US mortgage servicing company. All went live in 2021.
We also finished migrations of a large insurance company.
A large real estate E Commerce website.
And a top 15 U S mortgage servicing company.
All went live and consequently, one.
Each displacing legacy systems.
These are among the over 50 clients dealers and financial institutions that we on boarded in the quarter.
Speaker 2: These are among the over 50 clients, billers and financial institutions, that be onboarded in the quarter.
Fifth we have signed additional partnerships, including a new telecom partnership in the fourth quarter that we expect to help Golar biller base and corresponding revenues.
Speaker 2: Fifth, we have signed additional partnerships, including a new telecom partnership in the fourth quarter that we expect to help grow our biller base and corresponding revenues.
In October 2021 .
We launched an IP and powered app called those centers.
Speaker 2: We launched an IP and power app called Bill Center that modernizes bill payments for banks and trade unions.
That modernizes bill payments for banks and credit unions.
Speaker 2: It has been very well received in the market with several clients signed in the four.
It has been very well received in the market with several clients signed in the fourth quarter.
Speaker 2: Bill Center provides consumers with a 360-degree view across all bills.
The center provides consumers with a 360 degree view across all bills.
Speaker 2: It offers more payment choices with debit, credit and digital wallet options. And it delivers immediate notification of payment from the biller.
It offers more payment choices, the debit credit and digital wallet options and.
And it delivers immediate notification of payment from the village.
To the banks and financial institutions.
With IP and both center consumers have more choice and flexibility about how they pay and when debate.
Speaker 2: With IPN and Build Center, consumers have more choice and flexibility about how they pay and when they pay.
Speaker 2: Finally, our addressable market opportunity is big.
Finally, our addressable market opportunity is big.
Speaker 2: And despite our scale, we believe we're just getting started.
And despite of our scale. We believe we are just getting started.
As a testament to our momentum and leadership position in a recent comprehensive review of many biller direct vendors.
Speaker 2: as a testament to our momentum and leadership position in a recent comprehensive review of many Biller Direct vendors.
Speaker 2: by IT Nova Rica Group, a leading financial services advisory and research firm. Paymentus was named as the industry's best-in-class vendor.
Or by <unk> group, a leading financial services Advisory and research firm payment. This was named as the industry's best in class vendors.
Speaker 2: I can over e-caree this conclusion after numerous capability deep dives, feature functionality comparisons, client reference calls, product demos.
I think nobody can reach this conclusion after numerous capability deep dives feature functionality comparisons client reference calls product demos.
Speaker 2: and due to our innovative Biller Direct platform and our excellence in Biller service and support.
And due to our innovative biller direct platform and of our excellence in pillar service and support.
Speaker 2: As a reminder, our platform and the IP ecosystem exist to create a flywheel effect where our objective remains to A. sign as many billers as possible, we constantly grow the dish.
As a reminder, our platform and the IP ecosystem exists to create a flywheel effect, where our objective remains to a signed as many builders as possible.
<unk> constantly grow the digital payment volume.
Speaker 2: C, expand IT and reach to as many partners and financial institutions as possible. And B, generate a warm lead list of all billers that are outside of our BillerDirect platform.
See expand <unk> reach to as many partners and financial institutions as possible and.
Generate a warm lead list of all builders that are outside of our biller direct platform.
Speaker 2: but process through our IP and network and therefore add them to our sales pipeline.
But process through our IP and network and therefore add them to our sales pipeline.
We have done a tremendous amount of work in 2021, including all of the exciting accomplishments I listed in.
Speaker 2: We have done a tremendous amount of work in 2021, including all of the exciting accomplishments I've lived.
Speaker 2: And as a result, we believe we are more drivers of future revenue than we have ever had before.
And as a result, we believe we have more drivers of future revenue than we have ever done ever had before.
Speaker 2: We believe these revenue drivers, combined with our highly visible model, provide attractive upside potential for 2020 and beyond.
We believe these revenue drivers combined with our highly visible model provide attractive upside potential for 2020 and beyond.
Speaker 2: Our 2022 guidance doesn't change, but hopefully this gives you an understanding as to why we feel good about 2022 and beyond.
Our colleague <unk> guidance doesn't change, but hopefully this gives you an understanding as to why we feel good about 2022 and beyond.
Many of you are new dependent the story. So let me take a moment to describe how we think about our business.
Speaker 2: Many of you are new to paymentless story. So let me take a moment to describe how we think about our business.
Our strategy is centered around capital efficient long term growth.
Speaker 2: Our strategy is centered around capital efficient long term growth. We view ourselves as a custodian of your capital.
View view of ourselves as a custodian of your capital.
And we take this role very seriously.
Speaker 2: As a public company, it is never lost on us. In fact, I personally think about it every day. That our long-term performance also impacts children's education plans, family retirement accounts and in deficit-free applications.
As a public as a public company. It has never lost on US in fact, I personally think about it every day.
Our long term performance also impacts children's education plans.
Family retirement accounts and vacation funds.
Therefore, we will continue to be a responsible execution of our business strategy as we aggressively pursue profitable growth irrespective of market conditions.
Speaker 2: Therefore, we will continue to be a responsible executor of our business strategy as we aggressively pursue profitable growth irrespective of the market conditions.
Let me now touch.
Speaker 2: Let me now touch quickly on the nature of bill payment market and the industries we serve.
Quickly on the nature of Bill payment market and the industries we serve.
Speaker 2: If Christopher Bullock's famous line was spoken today, it would likely say something like...
If Christopher <unk> famous line was spoken today, it will likely see something like.
Speaker 2: It's impossible to be sure of anything except death, taxes, and bills.
It's impossible to be sure of anything except that Texas and bills.
We all have bills.
Speaker 2: and they have to be paid, whether there is a financial crisis or a pandemic.
And they have to be paid whether there is a financial crisis or a pandemic.
Speaker 2: The majority of our clients are recurring services businesses such as utilities, government, financial services and insurance companies.
The majority of our clients are recurring services businesses, such as utilities government financial services and insurance companies do.
Speaker 2: due to the non-discretionary nature of these businesses, they aren't affected like other businesses by supply chain issues and geopolitical events.
Due to the non discretionary nature of these businesses they arent affected like other businesses by supply chain issues and geopolitical events.
We believe this gives us tremendous stability as we execute on our long term strategy for accelerating growth and capturing meaningful portions of the total addressable market.
Speaker 2: We believe this gives us tremendous stability as we execute on our long-term strategy for accelerating growth and capturing meaningful portions of the total addressable market.
Okay.
Through innovative offerings.
Speaker 2: This is one of the many reasons why we feel confident about our ability to execute and deliver long-term sustainable growth.
This is one of the many reasons why we feel confident about our ability to execute and deliver long term sustainable growth.
Speaker 2: And before I pass the call over to Matt, let me also touch on inflation for a moment.
And before I pass the call over to Matt. Let me also touch on inflows and inflation for a moment.
Our pricing and contracts are structured such that either our pricing increases automatically.
Speaker 2: Our pricing and contracts are structured such that either our pricing increases automatically, or we can adjust our pricing if our clients increase their fees to their customers. Therefore, we have...
We can adjust our pricing if our clients increased their fees to their customers.
Therefore, we have protection to maintain margins.
Speaker 2: This notion is not new at all and has been in our agreements for over a decade now.
This motion is not new at all and has been in our agreements for over a decade now.
And I also want to remind you that one reason we grew through the financial crisis way back when.
Speaker 2: And I also want to remind you that one reason we grew through the financial crisis way back when, and through the pandemic was because people still had to pay their bills. With that let me...
And through the pandemic was because people still have to pay their bills.
With that let me pass the call to Matt Matt.
Thanks Vishal.
Speaker 1: Thanks, D'Shawn. As a quick reminder, today's discussion includes non-GAAP financial measures. Please refer to the tables in our press release and set the strength of our performance in 2021.
As a quick reminder, today's discussion includes non-GAAP financial measures. Please refer to the tables in our press release and saw the strength of our performance in 2021.
If you recall vishal.
Speaker 1: four ecosystem objectives from last quarter, we've made progress in each of them.
Four ecosystem objectives from last quarter, we've made progress in each of them.
Speaker 1: signing and implementing a significant number of billers, rapidly growing our payment volume, expanding the reach of IPM, and expanding our sales pipeline through warm leads.
Finding and implementing a significant number of builders.
Rapidly growing our payment volume expanding.
Expanding the reach of our team and expanding our sales pipeline through long leads.
In the fourth quarter, we processed $83 3 million transactions, which represents a year over year increase of 53, 7%.
Speaker 1: In the fourth quarter, we processed 83.3 million transactions, which represents a yield-a-year increase of 53.7%, and an annualized run rate of more than 330 million transactions.
And on an annualized run rate of more than 330 million transactions.
This accelerated transaction volume was driven by a mix shift as we ramped business to business IP.
Speaker 1: This accelerated transaction volume was driven by a mix shift as we ramped business to business, IPN, inclusive of and in particular the pay various acquisition, and other non-biller direct products.
IPM inclusive of and in particular with the <unk> acquisition and other non biller direct products.
Speaker 1: These transactions are typically priced based on contribution profit because there is no interchange associated with them.
These transactions are typically priced based on contribution profit because there is no interchange associated with them.
We believe we have the opportunity to drive additional revenues with the volume over time as we extend our reach and scale.
Speaker 1: We believe we have the opportunity to drive additional revenues with this volume over time as we extend our reach and scale.
The transaction growth drove a 31, 2% increase in revenue over the same period in 2020, which resulted in revenue of $108 $1 million in the quarter and $395 $5 million for the year.
Speaker 1: The transaction growth drove a 31.2% increase in revenue over the same period in 2020, which resulted in revenue of $108.1 million in the quarter and $395.5 million for the year.
Contribution profit for Q4 was $45 $3 million or 36, 3% increase over the same period last year.
Speaker 1: Contribution profit for Q4 was $45.3 million, a 36.3% increase over the same period last year.
Speaker 1: For the four year contribution profit was $158.5 million, which represents growth of 31.5%.
For the full year contribution profit was $158 5 million, which represents growth of 31, 5%.
Speaker 1: Adjusted gross profit for the fourth quarter was $36.1 million, which is a 35.1% increase from Q4 of 2020, and it was $127.4 million for the year.
Adjusted gross profit for the fourth quarter was $36 1 million, which is a 35, 1% increase from Q4 of 2020 and it was 127 $4 million for the year.
Adjusted EBITDA was $6 3 million for the fourth quarter, which represents a 13 full year. Adjusted EBITDA finished at $29 5 million or 18 point, we are very proud of our performance.
Speaker 1: adjusted EBITDA was $6.3 million for the fourth quarter, which represents a 13 point full year adjusted EBITDA finished at $29.5 million or 18 point. We are very proud of our performance.
Across all these metrics.
Speaker 1: Operating expenses rose twelve point six million dollars to thirty three point four million dollars for Q4 2021 from the same period last year.
Operating.
Expenses rose $12 6 million to $33 4 million for Q4 of 2021 from the same period last year.
Speaker 1: Overall, this increase in operating expenses from last year was driven by increases in headcount from ongoing investments in our business and its growth, as well as our acquisitions and also about business model.
Overall this increase in operating expenses from last year was driven by increases in head count from ongoing investments in our business and its growth as well as our acquisitions and also.
Clothing amortization of intangible assets associated with the acquisitions.
Speaker 1: for the amortization of intangible offsets associated with the acquisition.
Speaker 1: Specifically, R&D expense increased $3.1 million, or 47.6%, from the fourth quarter in 2020, as we continue innovating with and for our customers and partners.
Specifically R&D expense increased $3 1 million or <unk> 47, 6% from the fourth quarter in 2020, as we continue innovating with and for our customers and partners.
Sales and marketing increased $6 $3 million of 73, 1% as we continue to add head count to drive new sales and expand partnerships given the significant market opportunity. We see also continued to ramp up relative to Q4 of 2020.
Speaker 1: Sales and marketing increased $6.39 million or 73.1% as we continue to add hay counts to drive new sales and expand partnerships, given the significant market opportunity we see. Also continue to ramp up relative to Q4 of 2020. The cost of corporate insurance.
The cost of corporate insurance and ongoing.
Investment in public company infrastructure.
Speaker 1: Gap net income was $4.7 million and EPS for Q4 was 4 cents. Non-GAP net income was $2.1 million and non-GAP EPS was 2 cents for Q4.
GAAP net income was $4 $7 million in EPS for Q4 was <unk> <unk> non-GAAP net income was $2 1 million and non-GAAP EPS was <unk> <unk> for the quarter.
Our full year effective tax rate ended up at 10, 4% you may recall that I indicated in our Q3 call to expect a full year effective tax rate of around 55%. During Q4, we received a discrete tax benefit associated with the deductibility of stock option exercises.
Speaker 1: Our full year effective tax rate ended up at 10.4%. You may recall that I indicated our Q3 call to expect a full year effective tax rate of around 55%. But during Q4 we received a discrete tax benefit associated with the deductibility of stock option exercises.
Speaker 1: And like most companies, we don't forecast discrete tax items. And without the discrete item, our effective tax rate would have been 52% for 2021.
And like most companies, we don't forecast we.
We don't forecast discrete tax items and without the discrete item our effective tax rate would have been 52% for 2021.
Speaker 1: As of December 31st, 2021, we had $168.4 million of cash and cash equivalents on our balance sheet, and this cash decreased primarily due to our acquisitions and the timing of customer payments.
As of December 31, 2021, we had $168 $4 million of cash and cash equivalents on our balance sheet and this cash decreased primarily due to our acquisitions and the timing of customer payments.
Speaker 1: At year end, our common stock share account was 120.64 million shares.
At year end, our common stock share count was 126 4 million shares.
Now from our Q4 and four results will turn to our 2022 to four year outlook.
Speaker 1: Now from our Q4 and four results, we've turned to our 2022 four-year outlook.
Speaker 1: We are introducing our 2022 four-year guidance based on our historical performance and current expectations for this year. Our revenue outlook for 2022 is in the range of $490 million to $495 million, which represents growth between 24 and 26 percent year-over-year.
We are introducing our 2020 full year guidance based on our historical performance and current expectations for this year are.
Our revenue outlook for 2022 is in the range of $490 million to $495 million.
Which represents growth between $24, 26% year over year.
We expect contribution profit to be between 204 in terms $6 million for the year, which is approximately 29% to 30% growth.
Speaker 1: We expect contribution profit to be between $204 and $206 million for the year, which is approximately 29 to 30 percent growth.
Speaker 1: We anticipate 2022 adjusted EBITDA on the range of 28 to $33 million. We're going to adjust the EBITDA margin 14 to 16 percent.
We anticipate 2022 adjusted EBITDA in the range of $28 million to $33 million with an adjusted EBITDA margin of 14% to 16%.
With regard to the adjusted EBITDA I want to remind you that while we were at 18, 6% for 2020 alone. It was a tale of two halves.
Speaker 1: With regard to the adjusted EBITDA, I want to remind you that while we were at 18.6% for 2021, it was a tale of two halves.
Speaker 1: meaning before we went public our adjusted EDI margin for the first half of 2021 was 24.4 percent.
Meaning before we went public our adjusted EBITDA margin for the first half of 2021 was 24, 4%.
Speaker 1: But for the second half of 2021, it was 13.8% due to the cost of being a public company, as well as the impact of the acquisition.
But for the second half of 2021, it was 13, 8% due to the cost of being a public company as well as the impact of the acquisitions.
Speaker 1: So our guidance for 2022 adjusted EBITDA on margin, we are actually including incremental improvement from our current run rates.
So our guidance for 2022, adjusted EBITDA margin were actually including incremental improvement from our current run rate.
We believe the combination of our expected grow that.
Speaker 1: Finally, we would typically expect our effective tax rate to be between 25 and 30 percent.
Finally, we would typically expect our effective tax rate to be between 25% to 30%. However.
However, due to the amortization of intangibles associated with acquisitions, we expect pretax book income to be essentially breakeven in 2022.
Speaker 1: However, due to the amortization of intangibles associated with acquisitions, we expect Pre tax book income to be essentially break even in 2022.
Speaker 1: This will cause our effective tax rate to vary from expectations, and accordingly, we are not providing forecasts for the effective tax rate for 2022.
This will cause our effective tax rate to vary from expectations and accordingly, we are not providing a forecast for the effective tax rate for 2022.
This guidance incorporates certain assumptions and does not incorporate the impact of any future acquisitions that we may undertake.
Speaker 1: Discounting incorporates certain assumptions and does not incorporate the impact of any future acquisitions that we may undertake. Directionally, we expect our contribution profit per transaction to be substantially similar to the level we saw in Q4 throughout 2022.
Directionally, we expect our contribution profit per transaction to be substantially similar to the level. We saw in Q4 throughout 2022.
Speaker 1: Some of the other assumptions include a consistent rate of growth in same-store sales to what we've seen historically, new customer implementations going live in line with expectations, even though that obviously has a dependency on our clients.
Some of the other assumptions include a consistent rate of growth in same store sales to what we've seen historically newco.
New customer implementations going live in line with expectations, even though that obviously has a dependency on our clients.
Speaker 1: and that those newly implemented clients have the transaction volumes and average payment amounts that we expect.
And that those newly implemented clients have the transaction volumes and average payment amounts that we expect.
Speaker 1: It also assumes minimal client attrition, as has been the case historically.
It also assumes minimal client attrition as has been the case historically.
As you know, we don't provide quarterly guidance and one of the reasons. We don't is because there can be quarter to quarter variations in the growth rate due to changes in average payment amounts mix of payment type and other items.
Speaker 1: As you know, we don't provide quarterly guidance, and one of the reasons we don't is because there can be quarter to quarter variations in the growth rate due to changes in average payment amounts, mix of payment type, and other items. But I did want to give you a bit of color on how we anticipate the year may progress as we do not expect to experience straight line growth from quarter to quarter during 2022.
But I didn't want to give you a bit of color on how we anticipate the year may progress as we do not expect to experience straight line growth from quarter to quarter during 2022.
Speaker 1: We expect higher year-over-year contribution profit growth in the first half of the year. We expect the second quarter to have the highest growth rate in the year because of the relative comp to last year.
We expect higher year over year contribution profit growth in the first half of the year at the second quarter has the highest growth rate in the year because of the relative comp to last year.
Speaker 1: The vast majority of sales, it was driven by variable implementation timing that can generally move a month or two earlier or later depending on client specifications and needs. Specifically with Q1.
The vast majority of sales that was driven by variable implementation timing that can generally move move a month or two.
Earlier or later, depending on client specifications and needs.
Specifically with Q1, please keep in mind that.
Speaker 1: be much lower or actually really even zero sequential contribution profit growth in the first quarter.
The much lower or actually really even zero sequential contribution profit growth in the first quarter.
Speaker 1: The higher average bill amounts associated with utility clients.
Due to higher average bill amount associated with utility clients.
With all that said, though even though we may see fluctuations in growth quarter to quarter as evidenced by the upper end of our guidance range. We believe we were at 30% growth business on an annual basis.
Speaker 1: With all that said, though, even though we may see fluctuations in growth quarter to quarter, as evidenced by the upper end of our guidance range, we believe we're a 30% growth business on an annual basis. And with that, I'll turn the call back over to Deshaun for some closer information.
And with that I'll turn the call back over to Sean for some closing comments.
Thank you Matt.
As Matt and I have shared we feel good about 122, primarily because of the hard work and the foundation building we did.
Speaker 2: As Madam, I have shared, we feel good about 2022 primarily because of the hard work and the foundation building we did in 2021.
In 2021.
Likewise, our focus and consequently too.
Speaker 2: Likewise, our focus in 2022 is to continue to deliver the expected performance.
Is to continue to deliver the expected performance.
Speaker 2: and to also set a great foundation to deliver similar results for 2023 and beyond.
And to also set a great foundation to deliver similar results for 2023 and beyond.
Speaker 2: That is the nature of our business, but also for over a decade now, our execution focus is always on a two year horizon, where we execute in the current era. Our 2021 results, without the hard work and the dedication, will sell and take care of our clients every day.
That is the nature of our business, but also for over a decade now our execution focus is always on a two year horizon.
Where we executed the currently our country 21 results.
Without the hard work and dedication.
They'll sell and take care of our clients.
Every day.
I would like to thank each and every member of our team for their hard work.
And with that we'll now open the line for questions.
Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad.
Speaker 3: Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered.
We like to remove that question. Please press star followed by team again to ask a question. Please star one.
Minder.
Speaker phone, please remember to pick up your handset before asking your question. We will pause here briefly ask questions are registered.
Our first question comes from Darrin Peller with Wolfe Research. Please proceed.
Speaker 3: The first question comes from Darren Peller with Wolf Research.
Speaker 4: Thanks guys. Congrats on finishing your first year as a Public.
Thanks, guys. Congrats on finishing your first year public as a public company.
Speaker 4: Um, you know, I want to start off with when we, when we look at the customer ads you had over the past six to nine months, you started off at 1300. If I remember correctly, you went up to about 1400 plus and now we're showing seven.
I want to start off with when we when we look at the customer adds you had over the past six to nine months you started off at 1300, if I remember correctly, you went up to about 1400, plus and now we're showing 1700.
Speaker 4: It's just a pretty dramatic move in a pretty short period of time. So if we could just touch on what's driving that, what kind of categories you're adding in, and maybe a little more color on sustainability or what you'd expect to see in the next, call it 12 to 24 months, that'd be great.
It's just a pretty dramatic move in a pretty short period of time. So if we could just touch on what's driving that.
What kind of categories youre, adding in and maybe a little more color on sustainability or what you would expect.
And the next call. It 12 to 24 months that would be great.
Okay.
Well the.
Speaker 2: The 1700 clients include the pay various clients as well that come through the acquisition. That is primarily the financial institutions.
The 700 clients include the.
<unk> clients as well that come through over through the acquisition that is primarily the financial institutions.
Speaker 2: So, and relative to remaining clients, I think first of all,
So and relative to <unk>.
Our remaining clients I think first of all.
Speaker 2: we remain very bullish and as you heard us talk about.
We remain very bullish.
As you heard us talk about our goal and our strategy is focused on continuing to build network and gain market share through acquisition of pillars and builder IPA continued to build.
Speaker 2: Our goal and strategy is focused on continue to build network and gain market share through acquisition of billers and build a IP and continue to build the IP and ecosystem and Bring as much volume as possible. So we we see the similar trend and Minus the acquisition, we see a similar trend in 2022 and beyond in terms of acquisitions of customers. Now in terms of the where they will come from
The IBM ecosystem and bring as much volume.
As possible so we see the similar trend in.
Yes, minus the acquisition, we see a similar trend in <unk>.
2022 and beyond in terms of acquisitions of customers now in terms of the where they will come from.
Bob.
Utilities insurance and our key verticals, the core verticals utilities insurance and government.
Speaker 2: utilities, insurance, our key vertical, the core verticals, utilities, insurance, government, consumer finance, telecom, as well as healthcare.
Consumer finance telecom.
As well as healthcare.
Speaker 1: The only thing I would add is that also financial institutions, I think with the addition of pay barriers, there ought to be a focus on financial institutions and adding, continuing to add more and more financial institutions to the stable of clients. Absolutely.
The only thing I would add is also financial institutions I think with the addition of <unk>.
To be a focus on financial institutions, and adding continuing to add more and more financial institutions to be things that will cause.
Absolutely.
Hey.
Speaker 4: Guys, just one quick follow-up is one, or maybe two parts to it, but when thinking about the guy in the outlook for 22 and beyond...
Just one quick follow up is when there are maybe two parts to it and thinking about the guide and the outlook for 'twenty two and beyond now.
Speaker 4: You know, number one, I mean, we're getting a couple of questions on the strength of the customer ads and transactions, but more in-line results on contribution profit, as well as really more in-line trend looking forward. So maybe just touch on the yield dynamics for a minute and what you're seeing or expecting to see on the yield and what you're able to charge fee per transaction, but it's changing it all.
Number one I mean, we're getting a couple of questions on the strength of the customer ads and transactions, but but more in line results on contribution profit.
As well as really more in line trend looking forward and so maybe just touch on the yield dynamics for a minute.
And what youre seeing or expecting to see on the yield and when youre able to charge a fee per transaction changing at all.
Speaker 4: And then also, is there an inclusion of anything for the JP Morgan partnership yet? On the contribution profit line, I think I might have said it in a fair remark, but we expect in 22 contribution profit per transaction to be consistent with what we saw roughly the level in Q4. As we said before, we continue to add larger and larger clients. We've been very fortunate and we've worked hard and earned them in winning larger clients than we've ever won. And of course,
And then also or is there an inclusion of anything further JP Morgan partnership part.
On a contribution profit line.
Hey, guys Might've said it in the prepared remarks, but we expect in 'twenty two provision profit per transaction to be consistent with what we saw roughly level in Q4.
As we've said before we continue to add larger and larger clients, we have been very <unk>.
Fortunate and we've worked hard and earn them.
And winning larger clients than we've ever one and of course.
Speaker 1: with greater volume for a client generally comes better pricing. And so certainly as we can do that larger client
With greater volume for our clients generally comes better pricing info.
Certainly as we can do that larger clients.
Tom.
<unk>.
Speaker 1: continued kind of pressure on the price per transaction line, but we think on the whole, we can keep it fairly consistent for 2022 with what we saw in Q4.
Continued kind of pressure on the price per transaction line, but we think on the whole we can keep it fairly consistent for 2023 with what we saw in Q4.
Speaker 1: And some of that also comes from, as I think Deshaun mentioned on the call, from other, as we continue to expand our B2B presence and the financial institution business in particular, those are priced on a contribution profit basis. There is no interchange, but that will be more, it will be akin to where we are currently on contribution profit per transaction.
And some of that also comes from US I think Vishal mentioned on the call from other as we continue to expand our <unk> presence in.
The financial institution business in particular, those are priced on a contribution profit basis. There is no interchange, but that will be more it will be akin to where we are currently on contribution profit per transaction.
And then with respect to the second part of JP Morgan.
Speaker 1: And then with respect to the second part on J.P. Morgan, lots of positive momentum there. But as you said, you know, when we're.
Lots of positive momentum there, but as you said.
When were there is two pieces of the business. If you remember one of the.
Speaker 1: There's two pieces of the business, if you remember there. One is migration of their existing accounts. The second is some of their existing clients that they had on the previous platform. The second is the go-to-market together with them. On the go-to-market together with them and the winning new clients, as you would imagine, a lot of those clients are on the larger end of the client spectrum. And so we've had very good results early on, but those are going to take a little bit longer to get up and running simply because of their size. And so there's not a lot of impact in 22 from revenue associated with those clients. That doesn't mean we haven't already won some and we're well underway on winning others, but the revenue impact doesn't really show up in a meaningful way in 22. On the migration.
Migration in their existing accounts the second is.
Some of our existing clients as they add on the previous platform. The second is the go to market together with them.
On the go to market together with them and the winning new clients as you would imagine a lot of those clients are on the larger end of the client spectrum and so.
We've had very good results early on but those are going to take a little bit longer to get up and running some political where size and so.
Theres not a lot of impact in 'twenty two from revenue associated with those clients that doesn't mean, we haven't already one volume and we're well underway on winning others, but the revenue impact doesn't really show up in a meaningful way in 'twenty two.
The migration.
Speaker 1: you know, there's time that is required to get prepped and talk to the clients, get them comfortable with it. So there again, also, there's not a whole lot of impact in 22. There is some in the back half of the year, but not not not very large. Okay. All right. Nice guys.
There is time.
Acquired to get prepped and talk to the clients to get them comfortable with it. So there again also theres not a whole lot of impact in 'twenty. Two there is some in the back half of the year, but not months not very long.
Okay.
That's helpful. Thanks, guys.
Sure.
Thank you Darren.
Barge with NBC Please Christian.
Speaker 5: Hey guys, thanks for taking my question.
Hey, guys. Thanks for taking my question.
I wanted to touch upon the IPL and real quick.
Speaker 5: advantages of the IPN. It gives you a lot more visibility into really the bill payment ecosystem.
The advantages of the IP and is it gives you a lot more visibility really to bill payment ecosystem.
Speaker 5: I mean, can you help us and investors better understand how the IPN dramatically expands your immediately addressable market? And the point on the automated biller discovery, I think a little bit more color around that would be helpful.
Could you help us and investors better understand how the IP again.
Dramatically expand your immediately addressable market in the point on the automated biller discovery I think a little bit more color on that would be helpful.
Yes, so well first of all.
Speaker 2: Thank you for the question. Look, as you rightly pointed out, IPN for us is a way to continue to garner insights into whether those billers are on our network directly. If they are on, great. Serve the existing customers better. We're not.
Thank you for the question.
Look.
As you rightly pointed out.
IP and for us.
As a way.
Two continue to garner insights into how whether those builders I don't know what network directly.
If they are on grade.
Serve the existing customers better.
To knock that go directly to them.
And those those customers.
Opens up doors for us.
Speaker 2: beyond the core verticals we talked about. There are several...
Beyond.
The core verticals, we talked about there are several.
Two were desktop.
Speaker 2: processing payments and it becomes a very warm lead for us. So the way to think about this is by having financial institutions.
Okay processing payments and it becomes a very warm lead for us.
So the way to think about this is it.
By having financial institutions.
Speaker 2: leverage our IPNAN bill centers on one hand...
Leverage our IP and in those centers on one hand there.
Speaker 2: modernizing their capabilities. On the other hand, using those capabilities and the payment volumes, we are able to garner insights as to what other verticals and what other key features in the capability.
They are modernizing their capabilities on the other hand.
Using those capabilities and the payment volumes, we are able to garner insights as to what other verticals and what other.
Key features in the App.
Thank you.
Speaker 2: capabilities we could add to our platform that allows us to further expand our time. So that is actually happening as we speak. Another thing which is interesting in the whole dynamic is, as you know, one of our key areas.
Capabilities, we could add to our platform that allows us to further expand our Tam so that is actually happening.
<unk>.
<unk>.
As we speak another thing, which is interesting and that whole dynamic is.
As you know one of our key areas of focus is.
Speaker 2: How do we reduce the gap between our gross revenue to the contribution profit, the net revenue? And this opens doors for us there as well. So we see that as a biggest strategy for us. And if you could repeat the second part of your question.
How do we reduce the gap between our gross revenue to the.
The contribution profit the net revenue and.
And this opens doors for us that as well so we we see that.
Our biggest our biggest strategy.
For us and.
If you could repeat the second part of your question.
No.
Speaker 5: No, I think you answered it. It was with regard to the automated bill or discovery. But as my guide, 50% margin of.
You answered it.
Two the automated biller discovery.
I guess my guide 50% margin.
At the mid <unk> at the midpoint some changes to your investment strategy there.
Speaker 5: At the mid point, two changes to your investment strategy there with regards to tightening supply or labor markets in that vein.
With regards to the.
Tightening supply.
The labor market.
Zane.
Not really.
Speaker 1: Not really. You know, I think we, as we've said before...
Inc.
As we've said before.
We're letting to some extent the strength of our business dictate how we think about spending in the sense of.
Speaker 1: You know, we're letting, to some extent, the strength of our business dictate how we think about spending in the sense of
Speaker 1: We feel like there's opportunity to increase the top line, then we believe it's worth the investment to, obviously, to spend the money to do that. We've been continuing to add people. Certainly, as we talked about on our previous call, as everybody's seeing, the hiring cycle is maybe a tad bit longer than it was, say, nine or 12 months ago, just because of the little bit of tightening labor market. We've continued to add theoli look good.
We feel like there's opportunity to increase the top line than we believe it's worth the investment.
Obviously.
To spend the money to do that.
We've been continuing to add people certainly as we talked about on our previous call as everybody is seeing the hiring cycle is maybe a tad bit longer than it was.
Say nine or 12 months ago, just because of the little bit of a tightening labor market, but we've.
Speaker 1: still been able to attract phenomenal people. I mean, some days I'm telling my recruiting team to slow down a little bit because they're finding such great candidates. But yeah, we're gonna continue to, as Deshaun said, on the prepared remarks.
Still been able to attract phenomenal people.
No.
Somedays I'm, telling my our recruiting team to slow down a little bit because they are finding such great damage.
But yes, we're going to continue to as Vishal said on the prepared remarks, our hallmark has been responsible growth.
Speaker 1: Our hallmark has been responsible growth. And we think that profitability is important, and we're going to continue to really weigh out every investment decision on, do we think it can drive additional growth? And if not, we're not going to do it. We're going to make sure that we're spending the money responsibly into driving growth to the top line.
We think that profitability is important and we're going to continue.
Really weigh out every investment decision on do we think it can drive additional growth.
And if not we're not going to do it we're going to make sure that we are spending the money responsibly into driving.
Driving growth to the topline.
Goodbye and have a good fair share.
Yes. Thank you Andrew I will say is is just keep in mind that because of our implementation timeline.
Speaker 1: Yeah, thank you, Andrew. The only thing I was going to say is, is just keep in mind that because of our implementation timeline, the results in revenue are lagging the investment in the sense that, you know, it takes us six, nine months to get a customer live. We're not going to see the revenue impact of the investments necessarily straight away. It takes a little bit of time to see those.
Results in revenue are lagging the investment in the sense that it.
It takes a six nine months to get a customer live.
We're not going to see the revenue impact of the investments necessarily straight away. It takes a little bit of time to females.
Good point.
Alright, thank you.
I appreciate it.
Speaker 3: Thank you, Andrew. The next question comes from Don Davis with the Raymond James. Please proceed.
Thank you Andrew Our next question comes from John Davis with Raymond James. Please proceed.
Speaker 5: Hey, good afternoon, guys. First, just want to start on net repretention. Maybe just comment a little bit, if not an actual number, direct, shall we, how it trended in 21 versus 20 and what kind is embedded in the 22 guide.
Thanks. Good afternoon, guys first just wanted to start on that Robert and churn.
Maybe just comment a little bit.
The actual number of direct surely our China in 'twenty, one versus 'twenty than without.
Is embedded in the 'twenty two guidance.
<unk>.
Speaker 1: Yeah, so consistent with what we've seen historically, we did not have not yet disclosed a number, talked about a number for 21, but I would say it's very consistent with what we've seen historically. So let's call it, you know, mid to upper one team kind of 115 to 120 range.
Yes so.
Consistent with what we've seen historically.
We did not have not yet disclosed the number of talks about number for 'twenty, one, but I would say, it's very consistent with what we've seen.
Historically, so let's call it.
Mid to upper teens.
I was kind of 115 to one <unk> range.
And so as we've I think laid out previously when we think about if we think about ourselves around about a 30% grower.
Speaker 1: And so, you know, as we've, I think, laid out previously, when we think about, if we think about ourselves around about a 30% grower, about roughly in the ballpark of half of that comes from expansion with existing accounts and roughly about half of that comes from new clients and 2022 is no different.
About roughly in the ballpark of half of that comes from it.
Spansion with existing accounts and roughly about half of that comes from new clients in 2022 with no business.
Okay, Great and then.
Speaker 5: Okay, great. And then the inorganic contribution for revenue or contribution profit in floor two, and then actually think about what's based on the guy from an inorganic perspective in 2022.
The inorganic contribution.
For revenue our solid contribution profit in <unk> and then how should we think about what's what's baked in the guide from an inorganic perspective in 2022.
Yes, we haven't broken it out because it's not material.
Speaker 1: Yeah, we haven't broken it out because it's not material to the overall numbers. But you know, it's in there and it's baked into the guidance for next year, what we expect to do. And there's certainly, you know, when you think about the acquisition, they obviously brought some clients with them. But the real value or a real value is the combination of the companies and what they're doing.
So the overall numbers.
It's been there and it's baked into the guidance.
For next year, what we expect to do.
And there are certainly when you think about the acquisition. They obviously bought some clients with them.
But the real value or a real value is the combination of the companies and what.
Speaker 1: We're able to do as far as providing bill payment capabilities to the financial institutions, et cetera.
We're able to do as far as providing bill payment capabilities to the financial institutions et cetera.
Speaker 1: So it's included in our guidance, but we haven't broken it out because it's not true.
So it's included in our guidance, but we haven't broken it out because it's Roger.
Okay, and I'll squeeze one last one.
Speaker 5: Okay, and I'll squeeze one last one in if I can. Just, Deshaun, you talk a lot about IPN, the preparative marks. Maybe just help us, you know, maybe in 21, ballpark contribution to revenue, and, you know, are you expecting IPN to contribute meaningfully more in 22? Just kind of curious will be an update from the revenue contribution profit perspective, right?
One if I can just shot you talked a lot of the IP and the prepared remarks.
Help us.
Maybe in 'twenty, one ballpark contribution to revenue are you expecting ICM to contribute meaningfully more in 'twenty, two just kind of curious.
An update from the from a revenue contribution profit perspective right.
Yes.
Speaker 2: Actually, one of the things we are doing internally now is
Actually one of the pace, we are doing internally now is.
Speaker 2: We have seen, as you have seen the trends, that the IPN and the core business, they're so intertwined because of the network effect which we were pursuing, we are seeing that already in action. And therefore, we are internally actually not even breaking out exactly how the IPN versus the core business. But...
We have seen as you have seen the trends that the IP and the core business. They are so intertwined because of the network of factories.
Pursuing we are seeing that already in action.
And therefore, we are internally actually not even breaking out exactly how.
The IPL versus the.
Our core business.
As you have seen from our numbers in the volume and the transaction growth. It is contributing to our growth as well as.
Speaker 2: As you are seeing from our numbers and the volume and the transaction growth, it is contributing to our growth as well as to frankly the network effect we were talking about. You want to add anything to that? Yeah, I'll just add on the revenue to contribution process. As we talked about previously, the
Two frankly.
The network effect that.
Do you want to add anything to that yes, I'll just add on the revenue with the contribution profit.
We've as we've talked about I think previously the.
The revenue line will certainly step down on a per transaction basis over time as we two things happened one we signed larger and larger accounts, but also as more of the mix of our business transitions to.
Speaker 1: The revenue line will certainly step down on a per transaction basis over time as two things happen. One, we sign larger and larger accounts, but also as more of the mix of our business transitions to becoming contribution profit only or business without where we don't carry the cost of the interchange such as B2B, as you mentioned, the IPN transactions, which includes the financial institutions as part of the pay various is working with.
Becoming contribution profit only or a business without where we don't carry the cost of the interchange such as <unk> as you mentioned the IPM.
Transactions, which includes the financial institutions as part of.
The <unk> is working with et cetera. So we will continue to see a.
Speaker 1: So we will continue to see a progressive increase in contribution profit as a percentage of revenue. I would not, and we can talk more about it obviously, but I would not model a massive step up for that this year. I think it will be a very slow step up throughout the year as we go through the year.
Progressive increase in contribution profit as a percentage of revenue.
Would not and we can talk more about it obviously, but I would not model a massive step up for that this year I think it'll be a very kind of a slow step up throughout the year as.
As we go through the year.
Okay. That's helpful. Thanks, guys.
Okay.
Speaker 3: Thank you, John . The next question comes from Timson Wong with JP Morgan. Please proceed.
Thank you John .
Next question comes from Tien Tsin Huang with Jpmorgan. Please proceed.
Speaker 5: Thank you. Great results here. I just wanted to ask on the pipeline for billers and partners now versus this time last year. Any big change here? Are your sales targets that you set for the sales team quota wise, is it higher for 22 versus 21? How does it compare? Just curious. Thank you.
Thank you great results here, just I wanted to ask about the pipeline for fillers and partners now versus this time last year.
Big change here or your sales targets.
That you've set for the sales team quota wise is it higher for 'twenty two versus 'twenty, one how does it compare just curious thank you.
Okay.
Great question opinion actually.
Speaker 2: The reason I'm explaining is because some of the discussions are already happening between me, Matt, and Jerry, and the rest of the team. So we are having those discussions. But yes, the pipeline is stronger than it was before. And the
The reason I'm just wondering is because some of the discussion is already happening within.
EMEA Madden, Jerry and the team. So we're having those discussions yes, the pipeline is stronger than it was before.
And the.
Speaker 2: As the combination of all of the things we have been working towards leading up to this day, if you will, from years past.
And it's the combination of.
All of the things we have been working.
Towards.
Leading up to this day, if you will from years past.
Speaker 2: It's the combination of the partnership framework we have put together both from the Biller side of partnerships, the companies which are helping us build Biller Network, as well as on the IT and ecosystem, and then as well as financial institutions partnerships, including JP Morgan Chase. So as a result of all that, combined with the
It's the combination of the partnership framework, we have put together both.
The set of partnerships the companies who are helping us.
Build dealer network as well as on the IP ecosystem and then.
As well as financial institutions partnerships.
Including JP Morgan Chase.
So as a result of all of that combined with.
The.
Speaker 2: frankly the better messaging, the network effect, the clear understanding in the market that there is a need for a platform and ecosystem like paymentes. As a result our targets for this year are bigger than they were last year.
And frankly, the better messaging the network effect.
The clear understanding in the market that there is a need for our platform and ecosystem like <unk>.
As a result.
Our our targets for this year on larger bigger than they were last year.
And.
Speaker 2: The team is very focused on that. And as I talked about in my prepared remarks as well, that we have many sources of revenue and that's part of that platform we have built here.
The theme is Athena is very focused on that.
And as I talked about in my prepared remarks, as well that we have many sources.
Of revenue and Thats part of that.
That platform, we have built here.
Yes, no it feels that way it seems like the net is definitely wider which is why I thought I would ask so so.
Speaker 5: Yeah, no, it feels that way. It seems like the net is definitely wider, which is why I thought I'd ask. So just my quick follow-up then, just thinking about the revenue drivers.
Just my quick follow up then just thinking about the revenue drivers.
Speaker 5: this year versus last year, do you expect it to be meaningfully different? I mean, given what you just said there with a lot more partners in place, I know you've signed a lot of larger billers as well. I'm just curious, do you think the wheel is going to spin a little bit differently to get to where you're targeting? To gain as much of the market share as we can and continue to expand our network.
This year.
Versus last year do you expect it to be meaningfully different I mean, given what you just sit there with a lot more partners in place I know you've signed a lot of larger.
Pillars as well.
I'm just curious do you think the wheels spin a little bit differently.
To get to where youre targeting to gain as much of the market share as we can and continue to expand our network and.
Speaker 2: And that will continue on. And we are.
<unk>.
<unk> will continue on and we are.
Speaker 2: We remain very excited actually. We are seeing tremendous trends, all aspects. If you think about it, billing companies are looking for a more unified platform. The bank has a nice user experience.
We remain very excited actually we are seeing tremendous.
Trends in all aspects, if you think about it a billing companies are looking for.
<unk> unified platform the bank.
<unk> user experience.
Of it all and consumers want choice they want in a way to be able to pay whatever they want whenever they want however, they want.
Speaker 2: of it all and consumers want choice. They want a way to be able to pay whatever they want, whenever they want, however they want. And we are able to do that. So as a result of that, I think
And.
We are able to do that.
So as a result of that I think.
Speaker 2: The net, as you said, is getting wider. And as a result, I think we are able to target clients in different industries than we were not thinking about. We are able to also watching our trends, the type of billers we're not processing payments for, but we are directly on our direct platform, but we are seeing them through the IP network. We are able to also restructure some capabilities and see, hey, what more could we add?
Then that as you said is getting wider and as a result I think.
We are able to target our clients in different industries that we were not thinking about we are able to also watching our trends.
Type of business, we are not.
Processing payments for but we are directly on our direct platform, but we are seeing them through the IP network.
We are able to also restructure.
Some capability there.
What more could we add.
So what you would start to see is a combination of large client is coming in.
Speaker 2: So what you would start to see is a combination of large clients coming in, whether it's coming through larger partners as well as directly, but also you will see a little bit more diversity of verticals in the go after as well. Initial U.S.
Whether it's coming through larger partners as well as directly but also you will see.
A little bit more diversity of.
Vertical seem to go after as well.
Yeah.
Speaker 2: Actually, opportunistically, just based on what we're seeing and then eventually pretty in a formal manner.
Chile Opportunistically just based on what we're seeing and then eventually pretty.
In a formal manner.
Okay. That's great. Thank you Vishal. Thank you Matt.
Thank you Damian.
Thank you Thompson. The next question comes from Jason Kupferberg with Bank of America. Please proceed.
Speaker 3: Thank you, Tinson. The next question comes from Jason Kupferberg with Bank of America. Please proceed.
Speaker 6: Thanks guys. I'm just curious how to think about cash flow conversion in 2022. Based on the adjusted EBITDA that you're forecasting, what do you want to talk about in terms of operating cash flow through cash flow? Thank you.
Hey, Thanks, guys just curious.
Just trying to think about cash flow conversion in 2022.
Adjusted EBITDA in the airports assay whenever you want.
You're talking about in terms of operating cash flow and free cash flow. Thank.
Thank you.
Yes, thanks, Jason.
Speaker 1: Yeah, consistent with what we've seen historically in 2021 and prior, no real changes to the drivers in cash flow conversions. I think...
Yes.
Systems with what we've seen.
Historically in 2021.
Prior.
No real changes to the to the drivers and cash flow conversion.
I think <unk>.
Speaker 1: You know, CAP software is a big impact. If you think about the difference between operating cash flow and free cash flow, we do have a lot of CAP live software, but there's no changes to any of the levels of drivers that would change cash flow conversion from a just to be consistent what we did in 21.
Cap software has a big impact if you think about it there are certain operating cash flow and free cash flow. We do have a lot of capitalized software but.
But I don't there is no changes.
So any of the.
Levels of drivers that would change the cash flow conversion from adjusted EBITDA consistent with what we did in 'twenty one.
Speaker 6: Okay, good. And then just with respect to the balance sheet, obviously in great shape and no dad and you haven't
Okay.
And then just.
We expect in the balance sheet, obviously in great shape and no debt.
Got it.
Speaker 6: The track record of some successful M&A. What does the pipeline look like there? How do you feel like that'll be a meaningful part of the story forfrogmenatchis in 2022?
The track record is unsuccessful M&A, what does the pipeline look like there now do you feel like that will be a meaningful part of the story, okay manifest in 2022.
Speaker 1: email inboxes got flooded with things.
Email inboxes got flooded with.
Things.
And so as we've said before we've been very opportunistic and disciplined in the past with M&A.
Speaker 1: And so, as we said before, we've been very opportunistic and disciplined in the past with M&A.
And we will continue to be so going forward I think for diseases as you heard deshawn and lay out kind of where we are and the things that obviously.
Speaker 1: and will continue to be so going forward. I think the good news is, as you heard Deshaun lay out kind of where we are in the things that these Colombian families right now are taking home are taking from sand in just two weeks ago right now.
For 2021, when we look at the goals, we want to achieve in 2022 and really beyond.
Speaker 1: 2021, when we look at the goals we want to achieve in 2022 and really beyond, there's no, there are no big holes in our strategy here.
There is no there are no big holes in our strategy.
Area, but its all kind of additives.
Speaker 1: Area, but it's all kind of additive to what we're already doing as opposed to say plugging a big gap or a hole that we have, which is a good position to be in.
As to what we're already doing as opposed to say plugging a big gaffer a holdup.
Which is a good position to be in Italy.
James.
Speaker 2: Do you have anything to add?
No I think I completely agree I think we'll continue to be selective.
Very disciplined.
But.
Doing acquisitions I wouldn't put it out.
Speaker 2: of the realm of possibilities. We'll continue to look at opportunities and if there's something comes along which we like and you think it's beatative, we'll do it.
We'll see.
But even more flexibility.
We'll continue to look at opportunities and if something comes along between life and you think it will be additive.
Okay.
Question comes from Ashwin <unk>.
Speaker 2: Hi, Darshan. Hi, Matt. Good to hear voices. Thank you.
Hi, there.
Hi, Matt.
General rises.
Hi.
And of course.
Speaker 2: Hey, I guess you know let me start with you have the you know 14 to 16 margin range and if you could kind of talk about what drives the you know 14 versus the 16 how much of that is you know explicit investments versus mix things like that.
Hey.
Yes.
Let me start with that you have the.
14% to 16 margin range and if you could kind of talk about what drives the.
<unk> wishes to 16, how much of that is exquisitely investments versus mix things like that.
If you could.
And I'll talk about that.
Yes, absolutely.
Speaker 1: Yeah, absolutely. So some of it obviously is dependent upon where we land on the top line and to the extent it flows through ultimately Badaa for sure. And there's a range on the top line so there's a flow through on that. But it also is one of the things we want to make sure that we give ourselves enough
Yes.
Obviously it is dependent upon.
Where we land on the top line and to the extent it flows through ultimately EBITDA for sure in Missouri on the top line. So.
There is a flow through on that.
But it also is one of the things we want to make sure that we give ourselves enough.
Speaker 1: of a range, to be honest, and transparency with you and the investors on, you know, again, we're a growth business and we think that, you know, being able to grow.
Of a range to be honest in transparency with you and the investors on.
Again, we're a growth business, and we think that being able to grow.
Speaker 1: in the 30% range is quite attractive. And to the extent that we have opportunities that can potentially add to that growth level, we want to have the ability to make those investments. So I'd say that's really the difference between kind of the 14 and 16 is, you know, throughout the years, we see opportunities to invest being in a position to do that. And, you know, as you would expect, a good majority of the time,
So in the 30% range.
<unk> is quite attractive and to the extent that we have opportunities that can add.
Add to that growth level, we want to have the ability to make those investments.
So I'd say, that's really the difference between kind of the 14 and 16.
Throughout the year as we see opportunities to invest being in a position to.
Do that in.
You would expect.
Majority of it.
And so those things you can't control.
So.
Speaker 1: So, you know, kind of with all the.
Kind of with all of those.
These factors and we felt like that was the <unk>.
Speaker 1: factors in, we felt like that was an appropriate range and just gave, again, ourselves a little bit of flexibility as we kind of worked through the year to have.
Appropriate range, and Dave again ourselves a little bit of flexibility as we kind of work through the year to have.
Speaker 1: additional investment dollars to the extent that we think that there's things that we can invest in that will drive additional top line.
Additional investment dollars to the extent that we think that.
There's things that we can invest in that will drive additional top line.
Speaker 2: Got it. Got it. And then, you know, you added new partners. Is there any change observable, I guess, in either payment type or bill amount size in the next four to ten years or sometime sometime in the boardroom, to give a whole different littleter experience for cash cash to SM TVs or Muller S06 car Honors and Co., and
Got it got it.
Then.
<unk> added new partners.
Any change observable I guess in.
Either payment type for bill amount size, you might be gaining affluent versus.
Speaker 2: versus subprime, you know, various different factors that you might.
Versus subprime various different factors that you that you might.
Might look at.
Speaker 2: might look at to figure out sort of the partner strategy and hone it. Can you talk a little bit more about that forward-looking perspective as well?
To do to figure it out.
Sort of a partner strategy in hone it.
Can you talk a little bit more about about about that forward looking perspective.
Speaker 2: Yeah, I think from what we're seeing is that
Yes, I think from.
What we are seeing is that.
Got it.
Speaker 2: larger billers are obviously a lot more open to doing partnership with us.
Larger builders are obviously.
A lot more.
Open to doing partnership with us.
Speaker 2: as a result of the ecosystem we have built in the platform, but also the partnership framework. But we haven't seen a major shift in terms of the payment mix or other changes.
As a result of the ecosystem, we have built in the platform, but also the partnership framework, but we haven't seen a major shift in terms of the.
Our payment mix or other changes.
Speaker 2: In fact, that's what makes this thing pretty attractive and I should say this entire business proposition we're talking about.
That's what makes this thing.
Pretty attractive.
This entire business proposition, we're talking about is that we have built what we needed to build to get to the point. We are at which is now some more about.
Speaker 2: We have built what we need to build to get to the point we are at, which is now it's more about having more storytellers.
Bob.
Having more storytellers.
Speaker 2: more ways to tell the story and more listeners and therefore more customers coming on board because we have the platform, we have the ecosystem, we have the network, all of the components needed to make it happen.
More ways to tell the story.
And more listeners and therefore more customers coming on board on board because we have the platform we have the ecosystem we have the network.
All of the components, we need it.
To make it happen.
I would.
Speaker 1: I would totally agree. The only thing I would add is we have definitely seen a widening in the payment amount.
Totally agree the only thing I would add is we have definitely seen a widening in the.
Payment amounts.
Speaker 1: kind of levels for different clients, meaning if I go back two years ago, before we started adding more and more large billers three years ago, I could have told you our average payment amount across all of our billers was $180, let's say, and it was fairly consistent. There wasn't a wide high and low on that $180, but as we've expanded into more verticals and doing more things, like we've got a client that we went live with in Q4 that the average payment amount is well over $1,000, and we've got another one that the average payment amount is $500 or $600.
<unk> kind of levels for different clients, meaning if I go back two years ago.
When before we started adding more and more large those three years ago.
I would concur that told you our average payment amount across all of our billings was $180, let's say.
And it was fairly consistent there wasn't a wide.
And LOE on a $100 million, but as we've expanded into more verticals and doing more things like.
We've got a client that we went live with in Q4, the average payment amount is well over $1000 and we've got another one that the average payment amount is five or $600 in the auto space and so I.
Speaker 1: in the auto space. And so I would say, you know.
I would say.
Speaker 1: On an average payment amount, it picked up slightly across all billers, but there's a bigger delta between high and low. There's nothing to necessarily draw from that other than a good thing that we're getting more and more different types of burs and more and more different types of verticals. But if we price them appropriately, the economic and financial statement output of that is consistent regardless of ultimately the payment type.
On average payment amount it ticked up slightly across all builders, but theres, a bigger delta between high and low but.
Theres nothing to necessarily draw from that other than.
Good thing that we're getting more and more different types of those borrowers are more and more different types of vertical, but what if we priced them appropriately.
<unk>.
Financial statement output of that is consistent regardless of ultimately the payment type.
Speaker 1: But there's definitely more divergence in what that looks like just because we've moved into more industries and different verticals.
But there is definitely more divergence in what that looks like just because we've moved into more industries in different vertical.
Got it thank you guys.
Sure.
Thank you Ashwin. The next question comes from will Nance with Goldman Sachs. Please proceed.
Speaker 3: Thank you, Ashwin. The next question comes from Will Nance with the Goldman Sachs. Please proceed.
Speaker 7: I had a question just on the revenue trajectory over the year, and it sounds like there are a handful of things that, you know, may start to kick in in the back half of the year. I think you mentioned some of the J.P. Morgan partnership will start to contribute towards the end of the year, but really, you know, it sounded like more 2023-weighted. I think last quarter you talked about a large client that was supposed to come on board, a larger-than-normal client coming on board towards the second half of this year. So I just kind of want to understand, like, hearing loud and clear you guys consider the business a 30 percent grower, is it possible that with the addition of these handful of things you guys have talked about, we could be exiting the year with a little bit of tailwind?
Hey, guys. Good afternoon, Thanks for squeezing me in here.
I had a question just on the revenue trajectory over the year. It sounds like there are a handful of things that may start to kick in in the back half of the year. I think you mentioned some of the JP Morgan partnership will start to contribute towards the end of the year, but really.
I'd like more more 2023 weighted I think last quarter, you talked about a large client that was supposed to come onboard a larger than normal client coming on board towards the second half of this year. So I just kind of understand Mike.
Hearing loud and clear you guys consider the business of 30% grow or is it possible that with the addition of these handful of things you guys have talked about we could be exiting the year.
With a little bit of tailwind.
Speaker 1: I'm going to not let Deshaun answer that question, no I'm kidding. Look, our guidance is our guidance.
I'm going to not let the short answer to that question.
Our guidance is our guidance.
Thank you.
Speaker 1: Yeah, we certainly said that there's some things coming out of the J. P. More partnership that were hitting late in the year. Those clients that you reference. We talked about going live late in the year.
Yes, we certainly said.
Theres, some things coming out of.
More of our ships that will hit in late in the year those clients that you referenced we talked about going live late in the year.
Speaker 1: Um, all of those things, you know, set us up well for, as we said, 2023 and beyond. Um, you know, I would.
All of those things set us up well for as we said 2023 and beyond.
I would just reiterate that our guidance is what it is but.
Speaker 1: just reiterate that our guidance is what it is, but we've got a lot of reason to be optimistic for how things shape up towards the end of the year. And we'll see, we've got a lot of work to do. As we talk about
We've got a lot of reasonably optimistic for how things.
<unk> up towards the end of the year and we will see we've got a lot of work to do as we've talked about.
Speaker 1: You know, our implementation timeline is such that when we look at 2022.
Our implementation timeline is such that when we look at 2022.
Speaker 1: revenue is kind of locked in as far as the clients signed up that will go live this year. Now, there's variability in the timing of when they go live and the volumes of when they go live, but the work that we're doing between now and the end of 2022 is what becomes, obviously, 2023 revenue, and so we've got a lot of work to do. I think it's...
Revenue carload locked in as far as the clients on.
That.
We will go live this year now there is variability in the timing of when they go live in the volumes of women alive.
But the work that we're doing between now and the inventory in 'twenty, what becomes obviously 2023 revenue though.
Got a lot of work to do I think.
Speaker 1: The board has set up well for us with some of the things that are happening late in the year, but there's still a lot of work to do this year to get 2023 where we want it to be.
The board has set up well for us with some of the things that are happening late in the year, but theres still a lot of work to do this year, so to get 2023, where we want it to be.
Speaker 7: Got it. That's helpful. If I can ask a follow-up. I just want to try the organic growth question a different way. I realize that you guys are not breaking that out because you don't really consider it too material. I just want to make sure I understand the comments on the quarterly cadence of growth throughout the year because it sounded like you said that it was material enough that we would notice just from a comps perspective in the first half of the year the growth being elevated and then falling off in the back half of the year. I was wondering if you could just help us understand the magnitude of that inorganic impact from comps in the prior year as we go from the first half into the second.
Got it Thats helpful.
I can ask a follow up I just wanted to try the organic growth question a different way.
I realize that you guys are not breaking that out because you don't really consider it too material I just wanted to make sure I understand the comments on the quarterly cadence of growth throughout the year because it sounded like you said that it was material enough that we would notice.
Just from a comps perspective in the first half of the year the growth being elevated and then falling off in the back half of the year. So I was wondering if you could just help us understand the magnitude of that in organics.
<unk> from comps in the prior year as we go from the first half into the second half.
Speaker 7: half and I you know I would kind of echo the earlier questions around you know ballpark what the acquisitions from the third quarter are contributing to the current run rate.
And have I would kind of echo the earlier questions around ballpark, what the acquisitions on the third quarter contributing to the current run rate.
Yes.
Yes, that's a fair point and I think really what we were.
Speaker 1: Obviously, Q3 and Q4 are tougher comps than Q1 and Q2 is really what we're trying to say. Part of the reason for that is even though not material, there's still some amount of acquisition in there. I would say a couple points. Really what we're trying to essentially say is...
Attending with obviously Q3, and Q4 are tougher comp than Q1, and Q2 is really what we're trying to say and part of the reason for that is.
Even though not material there is still some amount of acquisition in there.
Say a couple of points that really what we're trying to essentially say is.
Speaker 1: As we go through the year, it's going to appear, well, it is going to be that Q1 and Q2 growth rates are going to be higher than Q3 and Q4. And so essentially what I was trying to say is...
As we go through the year, it's going to appear well it is going to be that Q1, and Q2 growth rates are going to be higher than Q3, and Q4 and so essentially what I was trying to say is don't read into that that growth is slowing down because there's a lot of factors that play into the quarter on quarter.
Speaker 1: don't read into that that growth is slowing down because there's a lot of factors that play into the quarter on quarter results that we see and overall part of the reason we don't give quarterly guidance overall on an annualized basis you know we we think we're a 30 percent grower and so even if q3 and q4 aren't at that level that doesn't mean in our minds that we're slowing down the growth because we're still you know um
Yes.
Results that we see in overall for a reason, we don't give quarterly guidance overall on an annualized basis.
We think we're a 30% grower and so even if Q3 and Q4 on at that level.
That doesn't mean in our minds that we're slowing down the growth because we're still.
Speaker 1: believing ourselves to be a 30% grower for 2022 and into the future.
Believing ourselves to be a 30% grower for 2022 and into the future.
And I.
Appreciate you taking my questions.
Speaker 2: Well, I just made a quick point here.
Well I think I've made it.
A quick point.
Speaker 2: I may be a single voice here on the table, but I'm actually not very happy with 30% growth. So I continue to think about all the innovative ways we could get to that, what can we do to accelerate that even further?
I may be a single voice here on the table, but I'm actually not very happy with the 30% growth.
To think about all the innovative ways we could.
Get to that what can we do to accelerate the growth even further but the 30% number actually is important from a different perspective also that we want to remain a rule of 40 companies we want to be.
Speaker 2: But the 30 percent number actually is important from a different perspective also that we want to remain a rule of 40 companies. You know we want to be at you and the rest of the investment community has trusted us with your capital.
And the rest of the investment community has trusted us with your capital and it's not lost on us that.
Speaker 2: And it's not lost on us that families through mutual funds are investing in the public funds and they're investing in our business. And so we want to make sure that we are responsible and custodian of the capital and it's not lost on us that families through mutual funds are investing in our business.
Families to mutual funds are investing.
Public funds and then leveraging our business and so we wanted to make sure that we are responsible.
Custodian of the capital and as a result.
Speaker 2: We feel like that at 30% of it would be the margins we have, we have a rule of 40 companies. So that's the key reason why 30% is the number.
We feel like that at 30% of it with the EBITDA margins we have.
It will affect the company.
That's the.
A key reason why.
30% of the number.
Got it understood I appreciate the color.
Speaker 3: Thank you, Will. The next question comes from Dave Clowning with Baird. Please proceed.
Thank you will.
Next question comes from Dave Koning with Baird. Please proceed.
Speaker 7: Yeah, hey guys, nice revenue momentum. And maybe my first question, just transaction growth was so strong sequentially. Can you kind of review just how much of that maybe was from acquisitions? How much is kind of just normal existing client growth and how much was kind of newer clients? Like just so we can kind of see why it was, it just seemed to diverge quite a bit from normal.
Yeah, Hey, guys nice revenue momentum and maybe maybe my first question just transaction growth was so strong sequentially can you kind of review just how much of that maybe was from acquisitions. How much is kind of just normal existing client growth and how much was kind of newer.
Clients like just so we can kind of see why it was it just seem to diverge quite a bit from normal.
Okay.
Speaker 1: Yeah, I would say, and again, we haven't broken it out specifically, but I would say it's safe to say that even without the acquisitions, transaction growth was still, you know, well north of 40% and approaching the 50% level. And as we said before.
Yes, I would say and again, we haven't broken it out specifically, but I would say, it's safe to say that even without the acquisitions transaction growth was still.
<unk>.
Well north of 40% and approaching the 50% level.
And as we said before.
Our growing share as our number one priority and trying to get more and more transactions on our platform.
Speaker 1: Our growing share is our number one priority in trying to get more and more transactions on our platform.
Speaker 1: we as we think about the mix is changing through as we talked about B2B and some of the IPM stuff with financial institutions, et cetera, the pricing then becomes
We as we think about.
The mix is changing through as we talked about <unk> and some of the IP and stuff with financial institutions et cetera.
Pricing then become really on a contribution profit basis on the revenue on a contribution profit basis, because there is no real change associated with it.
Speaker 1: really on a contribution profit basis or the revenue on a contribution profit basis because there's no interchange associated with it.
Speaker 1: And so it changes the dynamic a little bit on revenue versus contribution profit versus the transactions. But it was still very strong, and we think, you know, as we go down the road, that will continue to pay dividends as we think about, I think you referenced, ways to minimize the gap between contribution profit and revenue and drive even more contribution profit out of those clients.
<unk>.
And so that changes the dynamic a little bit on revenue versus contribution profit versus the transactions, but it was still very strong and we think.
As we go down the road that will continue to pay dividends as we think about I think you shot referenced ways.
To minimize the gap between contribution profit and revenue and drive even more contribution profit out of those clients.
Speaker 7: Great, great. And maybe just a quick follow-up. Gross profit per transaction was a little bit down to, is it all the same factors that with contribution profit per transaction, and maybe is that even a worthwhile metric to kind of track?
Great Great and maybe just a quick follow up.
Gross profit per transaction was a little bit down to is it all of the same factors that.
That was the contribution profit per transaction, but maybe is that even though worthwhile metric to kind of track.
Speaker 1: For sure, I would look at, you know, personally, I don't know if you're talking about gap gross profit or just gross profit.
For sure I would look at.
First of all I don't know if were talking about GAAP gross profit adjusted gross profit.
Speaker 1: Because now with the acquisitions, we've got the amortization and tangibles that are flowing into cost revenue that kind of just start to distort, gross profit a little bit when you think about just the normal business. But I do think it's a good metric. It's very good from a financial perspective.
So now with the acquisitions, we've got the amortization of intangibles that are Florida, and the cost revenue that.
The start to the store GAAP gross profit a little bit.
When you think about just the normal business, but I do think it's a good metric.
Speaker 1: The main difference between contribution profit and adjusted gross profit is processing costs and other hosting and data center costs that we use, which are, you know, I think it's
The only the main difference between adjust insulin cartridge profit and adjusted gross profit as processing cost.
Other hosting and data center costs that we use.
I think.
Speaker 1: It's an important way to look at the business as well, but the same drivers. You should be able to understand that now that this code is broadcasted…
It's an important way to look at the business as well, but at the same drivers.
The play.
Yes, great. Thanks, guys.
Thank you Dave.
There are no additional questions registered.
Speaker 3: At this time, I'll pass the conference back to the management team for closing remarks.
At this time, so I'll pass the conference back to the management team for closing remarks.
Speaker 2: Well, thank you so much for joining the call. Really appreciate it. We'll talk to you soon. Bye-bye. Bye.
Well. Thank you so much for joining the call really appreciate it.
We'll talk to you soon.
Bye Bye bye.
Speaker 3: That concludes the payment to fourth quarter and full year 2021 earnings call. Thank you for your participation. You may now disconnect your line.
That concludes.
The payment this fourth quarter and full year 2021 earnings call. Thank you for your participation you may now disconnect your lines.