Q3 2022 Expensify Inc Earnings Call
Program to engage with them and get them too.
Leverage our full functionality and in all of this is to drive high margin subscription revenue and so all of this means that we have an incredibly efficient lead generation model, we have a super efficient sales model and this contributes to our high profit margins.
And the way. This Workspaces gets reminder, is everyone else in the world has an exclusively top down a business model, where they just a call in the CFO of the fortune 1000 or whatever it is and then let's see if it makes the decisions like beekeeper before anyone else in the organization learns at the product expense amount of difference employees learn about expenses.
<unk> and colleagues things like this they will download the app for free without waiting to be asked without asking permission and they'll just started using this turns every expense report into a highly targeted marketing message directly to the decision maker, who will then roll it up the rest of the organization is a completely different business model than everyone else in the industry and that's how we're able to get complete the results.
We think that we are the only products that can reach the full market and somebody can look across the board against all of them.
This functionality is been around forever, there's a million different players with different subsets upsets, but we think we're the only ones that can do all of that we can scale up the real enterprise to support the large requirement. So the large multinational public companies, where we can also scale down the consumer grade design, having something that's simple enough for individuals to adopt for sole proprietors and so we have a real global.
Excuse me, we're already generating revenue in multiple markets around the world.
And so this was a natural artifact of our business model, we allow ourselves to be pulled everywhere that has this problem, which coincidentally is everywhere. We don't just have our own card product will have a need of travel booking product as well and of course all of this is free and so all of this is basically about building the.
<unk> pre accounting solution that provides.
<unk> range of functionality everything from not just expense management corporate cards, but also invoicing bill processing payroll and so forth all for nine Bucks a seat and so again. This is the same strategy we've been talking about for a long time, we're making very good progress along that the latest says that we think that our chat functionality is really now live and being used by active customers.
And so the sum of all of this is that we are sort of three different ways to monetize it users first viral functionality that provides natural lead generation as we grow out through the social networks and friend groups of employees, but we transactional revenue through our corporate card and other products and then of course.
We have high margin subscription revenue for everything else and so we're trying to triple dip from all of these different things in order to make sure that we're getting the maximum value out of every single day.
Yeah.
So strategy is unchanged the market and the world is sometimes complicated and dynamic but fundamentally our strategy. We think our differentiation is that we have the luxury of being able to focus on the long term and so others are sort of scrambling to adapt.
Adapt.
Loss of funding sources or the economics, what got inverted or whatever it is fundamentally everything's the same here at <unk>, we're still focused on the same strategy and still focused on the same vision and.
So kind of talk about the obviously the market's been pretty nuts right now as you can tell but accented by is pretty steady we're still hiring remained hiring throughout we're still generating cash and despite all of this we're still focused our energy on the future and we're also buying back shares because we believe so strongly in feature of the business.
And so we kind of dive into some of those one is that we have our sales team to give you an update and some of them. None of this is new we've been talking about doing it for a long time, but just kind of give an update of where we are we've got about 70 salespeople, which are focused on onboarding new customers and so this is.
At a group that we've been building for a long time and we've.
Rolled them out to you about.
A sizable fraction of our organic lead source, but we haven't run out of I guess sort of exhaust their own leaves sort of the focus right now is about fully engaging our sales team to take care of our existing lead channel and then on top of that in parallel we are building an SDR group design.
<unk> designed to do outbound calling into getting more leads and so first of all we're calling or just you know conference lift things like this are network, calling into our 14 years of like failed trials churned customers and everyone else that basically there and then we're going to do the same with buying everything else. So yes, a lot of the same tactics are the same.
As you can see us in the industry, but our lead source is actually quite different and thats differentiation. There because we're not calling the same people that everyone else column, we're calling people that already know something about expensive five so it's a much warmer lead source and so we think it's showing a much better results.
Next as we mentioned our account management group. So this is a group that has again been growing steadily over time right now customers that account for about 40, 41% of revenue are being actively managed by an account management and so.
We're still scaling that we're targeting about 90% coverage by the end of the year, but this is something thats basically methodically moving.
Moving up coverage steps I mean function the account managers, obviously do wide variety of things to focus on retention ensuring that every customer set correctly are cross selling all of our different functionality and so forth, but one particular function. That's used for this call is that they are also moving our pay per use customers over to annual subscriptions now pay per use is valuable and that is building.
The higher rate, but its a fault and especially in market conditions like this we see higher paper usage and so we really want to have slow and steady growth in the future.
And I think the key to that is having annual subscriptions and having as much as possible in a steady sort of committed revenue base and so the account managers are not just there to accelerate expansion of our existing customers and retain them, but also stabilize revenue we get out of them.
And Thats what type of the accounting channel again, we've talked about the kind of channel million times. It's been important it remains important about 50% of the revenue that we get from the accounting channel is nothing overseen about we'll call. It heartland manager and so as Heartland managers are dedicated points of contact to talk directly to the accounting firms and then provide onsite training will talk.
And things like that and so.
Again, we're expanding us out the goal is of course to get complete coverage, we're working our way up to this there's a lot of accounts out there and work with tons and tons of them.
And so one consequence of this which is kind of interesting is that as we engage more directly and proactively with the accounting firms. We're finding a lot of accounts in these firms have not yet actually gone through our training and don't really know much more expensive they might even have a sense by clients.
Basically under management, but they've never taken the time to get what we call expense by approved it's going through our central University, and so forth and so a lot of this has been finding a bunch of opportunity where there are existing accounts that use expense aside but just haven't gone through training and haven't gotten our certification and that means that they havent been giving.
A prudent accounting discount to clients and so as we're kind of cleaning up a lot of this.
Revenue impact, which Ryan is going to talk about in a bit but fundamentally department managers are about building out deep loyalty in this industry such that we can extract the maximum lead generation retention in the long term.
And we mentioned that we are building up towards our event called expense economy since it kind of.
A time when we can really demonstrate how much we care about these accounting channels as well as spend it really close time to understand their needs and responsibilities and so essentially content mix in may it's been very exciting for this industry and we can keep pushing towards it.
Next.
We've been talking about all of our engineering is really focused on building a next generation platform and so this is what we talked about one of the many ways. We're focused in the future is that we feel that fundamentally.
The future is going to be owned by whoever has the most robust III content platform that can do all of this functionality in a highly seamless way everyone else out there is a scrambling to stand up basically their existing products, probably given the economy, maybe we will see some acquisitions in there as people try to sort of Frankenstein together their own.
Platforms are basically a bunch of different products that kind of assembled this check boxes that might work in a top down sales manner, where basically if someone is buying based off of a checklist, but thats sort of fragmented product experience doesn't work on a bottom up manner that has to be highly integrated experience and we're the only ones who have the luxury of being able to devote our engineering resources base.
On this long term vision, because we're convinced that the long term market is going to be owned by whoever can capture the viral dynamic of this market and that can only happen with highly integrated products and so where we are right. Now is our chat platform is really robust and it's being used on a daily basis with live customers and all of these have been teams we've talked about so for example.
<unk> when they are calling to a customer they're not just calling on the phone, especially creating what's called an expense by workspace and then reaching out to them via expensive off so the conversation basically learning what the product is happening on the product likewise when it does our lead the dental happens.
In the platform and our.
Our sales team can actually sit down and work with them on the platform to configure their products to make sure that it's perfect for their needs. The handoff to an account manager likewise happened inside of the part B of a chat room made with all of the administrators.
In the financing so that they can talk about the configuration and in our account management can talk alongside with them and then of course finally, the partner managers. When we are working with these accounting firms will create chatroom the entire partnership basically on our on our platform. So we can directly engage with all the accountants in platform about how to <unk>.
A little more expensive.
Super seamless integrated experience that we're very very proud of.
That's in lives in use today next up we're really working on bringing a law.
Level of Polish and stability to the mobile experience such that we can advance towards using this for employees again, it's a long term roadmap, we talked about again and again the roadmap hasnt changed its very very exciting and we're making good progress along it.
And then finally talk about payroll you might have seen that actually we launched payroll it slides that we've been using it ourselves for like almost two years now and now we're onboarding customers onto it now we're still a little constrained we haven't gotten all of our money transmission licenses. We are still working on New York, Texas, Hawaii, Massachusetts, So theres still.
Can't support every single customer, especially customers that have across multiple states.
But it's a very powerful solution, we're very proud of them. In fact this solution has been refined for a lot of very sophisticated needs to kind of needs that we need as a large public company.
And are most of our engineering focus and the payroll product is about simplifying it down for the smaller businesses have hourly workers that have different payroll requirements.
Rent apartments tenant.
Contact us and so forth so payrolls live.
Markets and so we're excited about that but again, we expect this to be something that grows overtime.
And so maybe.
Got rid of the product with some of them are very excited about is that buybacks. So we think that right. Now is a great time to be buying as much buy shares and we think thats. So much that we got authorized $450 million share repurchase in May and September we made our first purchase of about $4 million.
Now actually starting tomorrow morning.
Sort of open open a market, we're going to be buying back up to $6 million basically as quickly as we can and so I think we're still at $40 million for opportunistic buybacks. As we go now we've said that we're going to do buybacks. We think that a great. We have a business that generates a ton of cash and this cash is not competing with our customer acquisition every.
Good thing we have is fully funded in terms of our growth initiatives. We feel are fully funded and yet we still make more money and so we think a great way to return that value back to shareholders by repurchasing shares. This is a strategy that is not that we intend to do consistently over time and so we've demonstrated a couple of times now this is something you're going to see again and again going forward.
And with that I'll turn it over Brian Greg.
Let's talk about the numbers.
So we had an increase in paid members in Q3 761000, and also I want to talk a little about the Preplanned and now we're not going to give updates every quarter, but we said we'd update you when we hit milestones. So we crossed the 15000 customer milestone for the free plans, where it's 15000 different companies currently using pre plant.
Revenue was $42 5 million, which is a very slight decrease from last quarter and I'll talk about that next.
Slide and on an annualized basis, our revenue was $170 million.
Yes.
So in Q3, we did see some downward pressure on our argument.
As expected and we believe it would be temporary so David mentioned and our partner managers engaging with our accountants for finding that while there is a ton of accounting.
Using extent find out all of them are part of a program. So as we engage with them, we're getting them enrolled in the program. So they get our preferred pricing. So that does put some downward pressure on the <unk>, but we ultimately believe that should be a good thing because we see that accounting within the program grow.
Our business way faster than accounts outside of the program. So there's just.
Hey, good long term change.
Change also we saw some currency headwinds just due to the strength of the U S. Dollar and also the expense side card so card volumes growing.
You've probably seen that in the release, but also our cashback as contra revenue. So the interchange growth Cashback also gross to net the contra revenue pulls down the revenue number however, as we've talked about every at every call. Our interchange is still not categorized as revenue yet.
We believe it will be shortly but not yet so basically we are getting all the downside of cashback, which pulls down revenue, but we don't get too.
We don't have it being pushed back up by the actual interchange so it's still cash coming into the business, but in terms of how it's being presented.
Pushed up revenue and also had a third thing, we're seeing more and more actual cardholders and cardholder stupid discount on their expense high subscription again, they generate more cash through the interchange and then they would have in the discounts that would've been a positive but we have a couple of things pointed downhaul without interchange pushed back up that just creates downward pressure.
So it's a little confusing, but the actual net net is that everything is growing and were adding cash and things are good.
Speaking of it sounds like hard.
Year on year interchange growth and was 115% and our gross interchange was just under $2 million One point amendment.
So I want to talk a bit about cash flows our operating cash flow was a negative $9 million, but.
I wanted to talk about free cash flow this quarter, because operating cash flow includes customer funds customers move a lot of money through our system and due to the timing of payments and when the quarter ends that actually can distort the number a little bit usually it's very consistent but due to the timing of the customer.
Funds actually pushed operating cash flow negative. So when you look at actual free cash flow and you pull our customer funds.
No customer money, just pure money that we've generated.
We saw positive $4 7 million for Q3 on.
On a GAAP net loss basis, $8 2 million non-GAAP net income, which is net loss.
With taking out stock based comp positive $5 1 million adjusted EBITDA was $9 million with an adjusted EBITDA margin of 21%, which is quite strong.
We maintain our long term guidance.
A multiyear basis, we still believe that we can grow 25% to 35%, obviously economies a little challenging now, but we still believe on a multi year period that this is the right measure.
So to summarize Q3, how we think the business is extremely healthy we have strong free cash flow and a more profitable on adjusted EBITDA basis. Our paid members continue to grow expense by cards up 115% last year, and we're seeing very strong enthusiasm from our customers for our product roadmap, which is chat payroll.
And just to leave you with some good news here. So Q3 was a little slow, but we don't normally do this but we thought that we would give you a little teaser on how Q4 is doing so October was our best month ever again. So in October we had 783000 paid members and.
We expect revenue to come in between 14, 3% and $40 seven for the month of October So, we don't give guidance, but given kind of the.
Volatility in the market.
So your bone and give me a little teaser on how Q4 is doing so far.
That's all for the <unk> and I will jump over to Q&A I think I know you want to take it away.
So the first step we have JP Morgan with Cowen.
<unk>.
No.
Good afternoon, guys. Thanks for taking my question.
Hello, I'm, a little more color on how average paid members came in this quarter would you guys thought it was within your internal expectations and then is that number kind of coming in softer than Q2 of funds now.
Additive turns hop yourself, how would you kind of categorize that.
Great question, Michael So as you can actually see this turn I think you've broken out monthly so.
One thing that we're noticing when the market is.
But that the paper the volatility of the pay per use can swing a little bit more than we'd like which is why we have this focus on account managers.
Previously, we didn't really have account managers really engaging with our clients how much and now we are really making that a focus and a big goal of that initiative is to converge.
More pay per use users to subscription, which should reduce any volatility that we see or at least lessen the volatility that we're seeing and we'd be the escaping so.
You can see that Q3 came in a little softer than expected versus the end of Q2, but it also kind of rubber banded right back.
And better than it was before in October and as we get more and more.
All of our users as a percentage on subscription revenue, we should see that volatility decrease.
And just a follow up from me on gross margins also coming in a little bit softer I think we spoke about in prior quarters that also being a function of you guys, adding more account managers, so not looking for guidance here, but would it be fair to say that given you're trying to kind of ramp that up that that would continue and Chris asked into FY <unk> and beyond.
It's a good question.
<unk>.
So, yes, I think that we will continue expanding.
<unk> management program and that will obviously have a cost with it.
But I'd say I wouldn't expect that to be a super significant cost to fundamentally the team. We feel is pretty fully staffed I think that right now we're not focused on.
It's less about hiring more people and more about increasing the efficiency and the engagement with the people. We currently have and so I wouldn't view it as because we have.
X percent coverage right now that's going to be twice as much to get more I think it's more but we have plenty of time, it's really about just increasing the improving the efficiency and the processes that we havent troubling.
Okay great.
Thank you guys. Appreciate it thank you and see you next.
Next time, we have coaching from bank of America.
Hey, guys. Thanks for taking the questions I wanted to ask kind of on the.
The new STR and the capacity that Youre doing the account management teams. So when we look at the third quarter results is it fair to assume that the costs associated with those the increase capacity or is that all incorporated within the third quarter results, where should we anticipate more of that to come.
Basically we're saying before they are hired at the end or where they are at the beginning of the quarter does that basically.
We had a fully baked.
As the third quarter, a good representation of the increased capacity from a cost perspective.
Going forward, we should see more str's, yes, we should see more str's, but.
Is that still the less the least mature of those organizations, but I would say the guys in the account managers are pretty mature at this point yet.
Str's scale up the ability to generate more leads at some point will outpace the capacity of our existing team and then that will cause more sort of sales hiring but.
We still need to we'd had to scale up the STR team first before we need to scale up the sales team I would say yes.
Got it Okay, and then I wanted to spend a moment on this slide right here that you have this October best month ever again.
782000, and that's a pretty good number considering the fact that it does feel like the economy and overall SMB sentiment is a little bit worse off today than it was maybe in previous months. So maybe talk a little bit about what youre seeing out there that is driving that subscriber growth in October .
So the.
The volatility of pay per use kind of makes the story a little confusing right. So we're adding customers throughout the entire quarter, but.
Because of pay per use.
People are expecting less than that number can go down so as you can see it.
End of <unk>.
Q2, and then at the start of Q3, we saw that actually decrease and thats not a churn off of any of customers Thats, just a kind of a decrease in activity amongst our existing customers.
But we continue to add customers throughout the whole time, so I would say that.
When.
Smbs are struggling we could see some lower activity, which is why we've.
We're addressing that by with the account managers and just focus on moving more people of subscription because we want to reduce the volatility of that paper use introduces into.
Our revenue.
Got it got it thanks, Brian Thanks, so much for taking the questions from me.
Next we have George from Citi.
Hi, Thanks for taking my question I'm on for Steven George We can you hear me.
Richmond.
Hello.
You hear me okay.
We're just going to listen very very carefully.
Do you have any better.
No but go for it.
Okay, sorry, I'll try to speak up a little bit I, just wanted to ask I mean, the growth equation between user growth and <unk>, which one do you feel it's more macro sensitive which when he feels a little more under kind of you guys control.
Yeah, which is more under our control <unk> user growth.
I guess.
Yes.
Specific macro some steam.
Sure.
This is Jeff.
Yes. Thank you.
If you are not.
Our price change for instance, or be influenced to think over time the mix of our business changed second more people choose subscriptions versus people use.
It is more consistent with the fleet plan to snap.
But please remember Ken gcs faster expansion within existing companies are protection when the customer reception.
Sensitive metric I'd say, maybe we have.
Maybe I didn't understand your question, but we have I would say more control over paid members because <unk>, there's the volatility of what percentage of.
Our company is going to exceed their subscription and overages.
I'd say, we're trying to.
Rain in the volatility of the paper you segment by getting more people in my subscription so.
But I'd say, we have less control over that which is why we are rolling out the account managers and taking this because we want to reduce that volatility.
I would love more control over both yes.
Yes.
Got it got it. Thank you for the color there and then one follow up on the macro sensitivity have you seen any change in customer behavior on either up hearing.
Downturn. Thank you.
Okay. Good question. So no we have not we just look at this I said that the mix of people on Denver Atlanta Controle plan has been consistent we haven't seen any change there and one reason to think about that is it's not that.
Hi, you choose to upgrade as you liked the product more rather you upgrade as you as your company gets more sophisticated and so there's really not a downgrade case, where it's like I just don't want to like these features as much as kind of like your visitors needs. These features and so you just kind of have to stick with it. So as you upgrade over time, but it's more of a ratchet function.
And it's also a slow function as a basis.
Itself matures.
I'll give you laid off after staff you wouldn't downgraded your plan that's a great way to business requirements are actually still the same.
Yes, that's a great way to think about it.
Call Me next time.
Thank you.
Okay.
Sorry, I couldn't hear me I Didnt mean to speak over the next time, we have granted from Piper Sandler.
Hey, guys can you hear me yes.
Yes, yes, yes.
Awesome. Yeah. This is your tomorrow I'm jumping in for Brent. So I just wanted to double click on the factors that we saw influence revenue growth this quarter.
Called out a lot of things kind of internally around the subscription management change.
Can you point to in terms of macro level factors that may or may not be influencing customer activity during the corner during the quarter.
Just kind of more macro level of recessionary headwinds that might have influenced activity.
I think with the <unk>.
Obviously inflation is high.
Watch the news right.
Hertz smbs by more than anyone else.
I think I just saw from Bloomberg that like 30% of F&B, they're having trouble paying their rent, but yeah. So I'd say that.
The reaction, but how that translates to us is in a.
We're seeing our customers the less active.
As a percentage of their employees and B if they are on a subscription.
Subscription.
Pay the same rate, but if they have a.
They are mostly pay per use where they have some percentage of their use.
Users on pay per use and those employees arent using the program because they are not.
Some people are not traveling to wherever they're doing because money is tight and then we see their activity go down. So we're not seen churn off but we are seeing what we did see in Q3 was.
And overall kind of decrease in the number of pay per use.
Users yes.
To build on this a little bit about I think the F&B is also I think to a degree.
<unk>.
Affected by in terms of the overall sentiment and emotion of macroeconomic sort of policy and geopolitics and things of that so it's like if you look at this chart, which is kind of committed to having the screen every time or below that green line something huge happened in the world.
So like the first time it was like Covid, and then likely kind of pick back up then our crop and then it picks back up and then you can even see this most recent one it's like Russia, and the Ukraine, and I think thats it takes the world.
<unk> to react to these huge huge monumental changes happening and I think everyone just puzzles a little bit again, they don't churn off there just like whoa, Where's kind of pulled back a little bit to reassess what's going on and then a few months later, it's like okay. Okay. We're good now and so I feel like.
A big part of this is also about.
Again, the business model performs when the economy performs in a stable fashion.
After economic situation is stable when something comes and gives a big they can now kick in the stomach like the world. It takes time for everyone to absorb that and Thats I would say when our model underperforms the screen line, but normally we just keep going.
Got it alright.
It's not it's not all Doom and gloom, yes, yes exactly.
Yes.
People have absorbed the impact we understand essentially it's like what is it.
Like how do we coexist with a rationalization with the.
And the massive inflation and so forth people are like okay, I get it I guess.
<unk> as adjusted by business I've done the things I need to do and now I can get back to growth and I think that's why we're seeing such a good October .
Okay very helpful color there I guess last one for me just on that paper use topic.
Im not sure if you've disclosed this or if you can give any additional color here, but how much.
Today, roughly is paper use versus subscription and is there a steady state mix of where you'd like that to be.
Over the long term thank you.
Yeah. Good question.
So pre COVID-19 it was in the lower to mid 20% of users and what that generally means is.
If you have a 100 employees roughly your subscription is probably.
At 75, and you had 25 apps.
And over at a 25 places like generally yes.
Since.
Covid, we have seen that number come up too.
Lower 30%, which is higher than it's ever been and wishes.
I think in the IPO people ask like how big is it going to go and we said well its never been <unk>. So probably wont have <unk>, we have been over 30%.
Several quarters now so we are.
And we're going to address that and where would the comments we're going to try to do this big push for subscription because it's gotten I think bigger than we ever expected and as it gets bigger the volatility it's more it's not really.
What we wanted to happen so we're stepping in addressing that and it's a constant challenge.
Too expensive or the SMB customers.
Yes, yes.
Cool.
Moving on to Daniel from being Okay.
So.
Ryan maybe you can spend some time talking about what exactly were the timing issues on the settlement like did the quarter end on a Friday and he didn't settle or I guess like what does that what does that mean conceptually the timing issues.
Yes.
It's not issues. So this is something that's always been in the business but.
As customer funds go in and out that's recorded on our balance sheet, how much we have in how much road that type of thing.
And it's generally been consistent but occasionally it can.
If more cash.
It goes in or out it can it change this number which is so you see operating cash flow is a negative but while we've cleaned it up which is why we're talking about free cash flow, we will be reporting on this going forward because.
We've seen that.
It's presenting itself negatively and it doesn't really tell the whole story right for the company.
Generation almost $5 million for cash flow, but the operating cash flow doesn't tell that story because it distorted by customer funds, which has no real impact on our cash position.
Or the strength of the business or anything like that so we're going to just we'll be showing free cash flow going forward.
Less confusing for everybody.
Okay, and then can you remind us about.
How you approach risk management, I mean, clearly smbs are under stress.
You mentioned that for several quarters now how do you make sure that that stress doesn't flow through to your business in terms of bad debt or alright.
Thank you.
So we have two different types.
Settlement for the expense by card, we have daily settlement and monthly silicone.
Daily settlement is.
<unk>.
Incredibly safe very low risk.
Settlement, what it basically means as you swipe your card.
We're extending your basic 24 hours of credits and then.
You pay us back the next day and then we pay visa using the funds that you just we just collect it from you so the timing of how.
How much the length of time that we're extending credit is very low and as we've seen that any losses. There are exceedingly small now monthly settlement is higher risk, but we also.
Moving billions and billions of dollars over the last 10 years. So we've.
<unk> gotten really good at risk.
Risk management, so we have a number of.
Actually I.
<unk> I don't know what youre talking about it but yes.
Thank you.
There are a number of broad detectors.
Yes, so I would say monthly settlement.
A little bit higher risks and daily settlement, but we're not seeing any uptick at all in terms of defaults, but new if you want to add.
Add to that.
First thing is by and large most of our large customers are on <unk>.
We launched monthly we still didn't see a huge amongst customers go from daily demand team and then we've also seen an uber meant over lending basis, new part adopting company Steve.
No.
I think monthly has to is the fact that you read about it.
It's just going to sneak in a market with other providers because we are apples to apples, but it seems to have been rumored that they needed monthly mortgage demand.
The marketplace, which is always that theory now.
So that's one.
Genesis.
Monthly settlement who's eligible to stay on market sentiment.
It has we haven't created a degree of disability Internet finance, which we due to variety of fleet.
Cash balance flat asset. These are finally, two which we know what's going on and get back to the good even the degree of visibility we have limits can be and the greater access to market sentiment.
And the team.
That's how we sort of play around with that risk and at the same time that we wanted to be discovered as we also want to offer a good user experience. So there's always some timing of every months none from delinquency CBE have adjusted very well.
We are collecting all within the law, but previously.
Holding our usage of our platform over getting feedback and evolved largely quite successful for a smartphone or tablet.
Always watching this space we have at this point as we go into a recessionary market you want to be careful with it.
I think just one more question.
Purpose of the expense like hard it's not to extend credit to companies that don't have resources to support it.
Yes.
We are just giving them an avenue to spend the money. They already have so it's not it's not as risky it's just.
An efficient methods to disperse the cash that they have they already have so it's not like people are running their business off of their.
They're essentially and that they need the credit in order to make ranch or anything like that it's just we monitor bank balances and we always make sure that they have enough cash to pay off there.
The card or we decrease their women and maybe just to add 100 point that on the.
A reason why companies like.
Off the cuff it seems like everyone would want monthly settlement because it would be like why wouldn't you want to borrow.
A month's worth of credit is it feels like there's like no downside to that but we'd say most companies have the money they don't actually need the credit and so we'd say well, but if you do daily settlement. We can offer you much much higher limits, because so much lower risk for us and so it's a question of do you want to optimize.
Sure.
Timing of cash flow or do an optimized for the highest level of spend and most customers are like well actually I have the money I don't really care about the cash flow I would like the highest possible limit and Thats. One reason why everyone goes for the daily options, because it's fundamentally just a better experience for the customer and it's low risk for us.
Gotcha. Thanks for all the color, maybe if I can squeeze in one more Brian what's the latest timeline in terms of cleaning up the financial reporting with regards to the Marquette a contract in the interchange fees.
Great question. So we are so close and I was really high.
I know youre going to ask this.
I really wanted to tell you is it was done but so the latest update is.
We believe currently hopefully by the end of <unk>, we believe hopefully hopefully by the end of the year.
We will be rolling out the new cards to have that.
We'll have the new treatments one thing Thats important to note is.
Once the.
New treatment is accepted by everyone, providing orders all that stuff, we still need to record. So we'll spend probably a quarter or two sending out the new cards with the new treatment, but we believe that we can start signing up these cards by end of the year, but we will have.
Morris.
I'm sure you'll ask Scott Mark.
Next next earnings call I really thought it was going to have at this time.
We're not quite there, but we're very close.
Alright, thanks, everyone. Thank you.
Next we have.
From JMP.
Okay.
A new arm.
Rents had gone for Pat Thanks, so much for the questions.
Kurt.
Sure.
<unk> seen are involved and how do you expect to maintain that culture to continue to grow a quick follow up.
Thank you.
Jason can you repeat that.
Yeah, Hey, guys.
Right.
Yes, sorry could you just repeat that question on overtime is something about how do we intend to maintain it as we grow.
Okay I want to talk about the culture, you've created expenses by how have you seen it evolve and how do you expect to maintain that culture, you can continue to grow.
Yeah, Great question. So I mean, accenture is a pretty special place and but Thats special and it doesn't happen by accident everything we've done has been pretty methodical to construct an environment that really empowers everyone.
To deliver the absolute best and.
And so the question is how do we maintain that over time.
I think it's because we've we're not sacrificing in everyday and that sounds obvious but like.
Thank you.
Not to any foundry.
And they were like yes, I want to build a business that's I wouldn't say it forever, but then they just build a business. So they just don't like and the like and so over time most businesses just compromise everyday on the culture and Cannibalized basically the business.
We havent done that we are very very methodically invested in our employees and in that culture and preserving the pillars of it. So one example would be our LTE share structure now when we're going public we were like Wow. This.
This seems like you are really going overboard.
Order to create incentives for employees to be focused and long term markets on the up and up everything is perfect.
Would you even care everything is always going to be good.
Well.
Maybe things like when I started to specify it was at the bottom of the greatest depression since the great depression, and so as we've seen hard times in the past and we know the.
The importance of a team that's willing to look past the temporary.
Sort of distractions and noise of the market and stay focused on the long term and so our LTE share structure is just one example of why our employees.
We're just focused on the long term they see the same numbers that you're seeing but theyre looking at that Green line and then I guess cool Greenlight is good the green line is up into the right and sure maybe not every single month, maybe that every single quarter, but if you look at the trends the trends are overwhelmingly clear and so we're all very committed to this future we believe in the strategy.
<unk>.
We like each other because we worked hard to hire the right people.
Invest in our people, we do extensive performance management to get everyone up to the.
I get the best out of everyone. So.
No single thing I would say that I point to for how we intend to scale. It but there is maybe I guess I would say there is no reason we couldn't scale. It there's nothing that we're doing that isn't designed to scale.
<unk>.
We've been built from day, one to be a long term business and so we've only put in place a cultural components that scale profitably indefinitely and so I'd say this is the reason we're able to do it is because we made a point to do it and we never give up on that.
I'd say, we also we hire.
On methodically and slowly which means that when the market.
Turns on the Diamond goods that you don't have to lay off 20% better company, which can't be good for morale.
We have enough.
More than enough people and we're growing and.
But we're not worried by this.
Doctors were doing the same thing today that we were doing the.
But the plan was a couple of months ago and.
The strategy Hasnt changed.
This strategy works.
It's generally every month is our best months now that's at 100% true, but its name century, it's mostly true.
And so I'd say, it's a strategy that works and we believe in it and we're going to keep investing.
Thanks, So much guys I appreciate it.
Okay.
Last but not least mark from loop capital.
Hi can you hear me Okay, Yes, that's great. Thank you Mark.
So thanks for taking my question and Brian question for you.
Last year during Q4 during the December quarter, the company's strong influx of Oversubscription from a pay per use customers and I'm wondering if you expect any re occurrence of that already.
A question on Gaslog.
It is a very good question because last year October was a little soft and so it was November December was gangbusters and right now we're seeing a strong October .
November is looking good I don't know about December .
It is.
I can't tell you if December is when we get it or not.
I would say.
October performance was probably all the guidance what was it.
In terms of.
Q4, and it looks good but I can't say, whether we're going to have a gangbusters December not because the pay per use code.
Fluctuate and I generally, we see people come in and a year or more people than normal to submit but.
That's the downside of the paper, you said, hey, more but there are less reliable.
We're working on we're working on increasing the reliability of that ship.
Great and then on the margin front.
Provide specific margin guidance at this time, but it kind of a high level just give us a sense of how we should be thinking about how the firm balances revenue growth versus operating margins.
Yes.
I would say.
Margins will probably stay similar.
We might see a temporary downtick as we scale up.
Some of our.
Other teams, but I think long term that we're going to see margins improve similar to when we introduced our <unk> system.
Margins go down and then go way up.
The efficiency of that increased were applying everything we've learned from our customer support costs of your system and we're applying that to our sales motion. So I think we'll see.
Yeah.
Similar increase in efficiency over time, but we're still in their early days of that so I'd say for the near term, it's probably going be similar ish and then long term it'll get better.
Great. Thank you.
Thank you.
Okay great.
Greg.
Yes, well. Thank you so much it's always a pleasure talking to you all and so I guess, we'll talk again in another quarter or so.
Thank you good day.
Thank you.