Q2 2024 Triumph Financial Inc Earnings Call

Unknown Executive: Published last evening. All comments made during today's call are subject to that Safe Harbor statement.

Comments made during today's call are subject to that safe Harbor statement with that I'd like to turn the call over to Erin for welcome Antica golf, our Q&A Erin.

Luke Wyse: With that, I'd like to turn the call over to Aaron for a welcome and to kick off our Q&A.

Aaron Graft: Thanks, Luke, and thank you all for joining us this morning. I have just a few comments before opening it up for questions. The big story this quarter is our progress in building density. Our network engagement stands at just under 47% as we sit here today. With the signing of CH Robinson and with Art Best, a top 20 broker, going live during the quarter, we have a sight line to achieving critical mass related to our network density. And monetization is what follows density. This is the way it works in network economies. We have a tremendous amount of momentum right now.

Luke Wyse: Thanks, Luke, and thank you all for joining us this morning. I have just a few comments before opening it up for questions.

Thanks, Luke and thank you all for joining US. This morning, I have just a few comments before opening it up for questions.

Unknown Executive: The big story this quarter is our progress in building density. Our network engagement stands at just under 47% as we sit here today. With the signing of C.H.

Speaker Change: The Big story this quarter is our progress in building density.

Speaker Change: Our network engagement stands at just under 47% as we sit here today with.

Unknown Executive: Robinson, and with ARCVEST, a top 20 broker going live during the quarter, we have a sightline to achieving critical mass related to our network, and monetization is what follows. This is the way it works in the network economy. We have a tremendous amount of momentum, and now that's what we see on the horizon. And while our eyes are on the horizon, it is not lost on me that we live in the present. And in the present, our earnings are under pressure for the reasons I wrote about in the letter.

With the signing of C H Robinson, and with art best or top 20 broker going live during the quarter, we have a sightline to achieving critical mass related to our network density.

Speaker Change: And monetization is what follows density this is the way it works in network economies.

Speaker Change: We have a tremendous amount of momentum right.

Aaron Graft: Now that's what we see on the horizon. And while our eyes are on the horizon, it is not lost on me that we live in the present.

Speaker Change: Now that's what we see on the horizon and while our eyes are on the horizon. It is not lost on me that we live in the present.

Aaron Graft: And for the present, our earnings are under pressure for the reasons I wrote about in the letter. There are some things we can control, and some that we cannot control. In choosing our path forward, we have focused mainly on creating long-term value at the expense of improving short-term results. That is why we continue to invest at a time when I think most people might slow down or become defensive. Now, taking to an extreme, that view can be cavalier. We do not want to be cavalier. Instead, we want to be intentional. And we think an appropriate guard rail to our aspirational growth is fixing our expenses at approximately 97 million per quarter going forward.

Speaker Change: And for the present, our earnings are under pressure for the reasons I wrote about in the letter.

Unknown Executive: There are some things we can control and some that we cannot. In choosing our path forward, we have focused mainly on creating long-term value at the expense of improving short-term results. That is why we continue to invest at a time when I think most people might slow down or become deficient. Now taken to an extreme, that view can be cavalier.

Speaker Change: There are some things we can control and some that we cannot control.

Speaker Change: In choosing our path forward, we have focused mainly on creating long term value at the expense of improving short term results.

Speaker Change: That is why we continue to invest at a time when I think most people might slow down or become defensive.

Speaker Change: Now taken to an extreme that view can be cavalier, we do not want to be cavalier instead, we want to be intentional.

Unknown Executive: We do not want to be cavalier. Instead, we want to be intentional. And we think an appropriate guardrail to our aspirational growth is fixing our expenses at approximately $97 million per quarter going forward. This allows us some room to make additional technology investments to deliver on our promises to our customers and our prospects, and it forces us to be disciplined about our talent management. This is healthy for us, and it will enhance our profitability both in the short term and in the long term.

Speaker Change: And we think an appropriate guardrail to our aspirational growth is fixing our expenses at approximately 97 million per quarter going forward. This.

Aaron Graft: This allows us some room to make additional technology investments to deliver on our promises to our customers and our prospects. And it forces us to be disciplined about our talent management. This is healthy for us. And it will enhance our profitability both in the short term and the long term.

Speaker Change: This allows us some room to make additional technology investments to deliver on our promises to our customers and our prospects.

Speaker Change: And it forces us to be disciplined about our talent management.

Speaker Change: This is healthy for us and it will enhance our profitability both in the short term and the long term.

Unknown Executive: In closing, the stakes are high. We are building a network that connects many to many to many in a very large market. Those opportunities are hard to find and even harder to execute on when you find them. But the rewards for those who win make the effort absolutely worth it. Those are my opening thoughts. Now, let's turn the call over to our next speaker.

Aaron Graft: In closing, the stakes are high. We are building a network that connects many to many to many in a very large market. Those opportunities are hard to find and even harder to execute on when you find them. The rewards for those who win make the effort absolutely worth it.

Speaker Change: In closing the stakes are high.

Speaker Change: We're building a network that connects many to many to many and a very large market.

Speaker Change: Those opportunities are hard to find and even harder to execute on when you find them.

Speaker Change: The rewards for those who will make the effort absolutely worth it.

Aaron Graft: Those are my opening thoughts.

Speaker Change: Those are my opening thoughts now lets turn the call over for questions.

Unknown Executive: Now let's turn the call over for questions.

Unknown Executive: We will now go to Q&A. If you have connected via Zoom and would like to ask a question, please use the raised hand feature at the bottom of your Zoom window, or if you've dialed in, press star 9. Once called upon, please feel free to unmute and ask your question.

Unknown Executive: We will now go to Q&A. If you have connected via Zoom and would like to ask a question, please use the raise hand feature at the bottom of your Zoom window, or if you've dialed in, press star 9. Once called upon, please feel free to unmute and ask your question. Our first question comes from Tim Switzer from KVW. Hey, good morning.

Speaker Change: Well now go to Q&A, if you have connected via zoom and we'd like to ask a question. Please use the raise hand feature at the bottom of your screen window or if you've dialed in press star nine once.

Speaker Change: Once called upon seizure freedom and mute and ask your question.

Tim Switzer: Our first question comes from Tim Switcher from KBW. Hey, good morning. Thanks for taking my question.

Speaker Change: Our first question comes from Tim switches from K B W.

Timothy Jeffrey Switzer: Hey, good morning. Hey, good morning.

Timothy Jeffrey Switzer: Hey, good morning, Hey, good morning, Thanks for taking my question.

Timothy Jeffrey Switzer: Thanks for taking my question. I certainly wish Todd the best on recovering. The Achilles there.

Unknown Executive: Certainly, which taught the best of recovering the Achilles there.

Speaker Change: I wish the best for recovery.

Speaker Change: The utilities there.

Unknown Executive: Um, well, the first question I have is revenue growth in the TVA segment has been kind of lumpy historically, and it was above 50% year-over-year for the last three quarters, but it slowed down a bit this quarter. What needs to happen for us to see an acceleration in revenue there? And, you know, is it simply an end to the recession, more brokers or factors on the network, and, um, more revenue-generating invoices? Can you guys kind of walk us through that?

Tim Switzer: The first question I have is the revenue growth in the tea base. I've been kind of chunky historically, and it was about 50% year-over-year. The last three quarters that slowed down at this quarter.

Tim: Well. The first question I have is the revenue growth in the two basic it's been kind of chunky historically and it was above 50% year over year, the last three quarters, but slowed down a bit this quarter with.

Tim Switzer: What needs to happen for us to see an acceleration and a revenue there and know is it simply an in-through session, more brokers or factors on the network, more revenue generating invoices. Can you guys kind of walk us through that?

Speaker Change: What needs to happen for us to see in.

Speaker Change: In acceleration in revenue there.

Speaker Change: Is it simply an industry recession more brokers are factors on the network.

Speaker Change: More revenue generating invoices.

Speaker Change: Can you guys kind of walk us through that.

Aaron Graft: You just nailed it; it's those three things, and so certainly the transportation recession is creating an issue for short-term earnings. But as you've seen, Triumphay is growing through those headwinds, and so while we've had payment volume growth and network engagement growth, we've also had expense growth. And one thing I want to point out is that our expense growth, the quarter of a quarter, while it was just under 6%, our growth year over year same quarter was 40%.

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Speaker Change: You just know that it's those three things and so certainly the transportation recession is creating an issue for short term earnings, but as you've seen in Tampa is growing through those headwinds and so and while we've had you know pay that volume growth and network engagement growth. We've also had expense growth and one thing I wanted to.

Speaker Change: Point out is that our expense growth quarter over quarter, while it was just under 6% our core our growth year over year same quarter. It was 40% and you're seeing a lot of that happen on the fee side. So the majority of that is in our fee growth, which is where we think is the most important part of the network that we can control and to be able to to remove it.

Aaron Graft: And you're seeing a lot of that happen on the fyside, so the majority of that is in our fee growth, which is where we think is the most important part of the network that we can control to be able to remove as much market volatility as we can. And so we're seeing that growth happen there, continue to reprise customers as we've talked about in the past. Certainly, our, as we bring on new customers, are using our new pricing models. And in that, you're seeing those changes happen in the mix of our revenue.

Speaker Change: Much market volatility as we can and so we're seeing that growth happen. There continue to reprice customers as we've talked about in the past I'm.

Speaker Change: Certainly as we bring on new customers are using our new pricing models and in that you're seeing those those changes happen in the mix of our revenue.

Tim Switzer: Okay, and my follow up there is, you know, the increases you've seen on generating more revenue from your invoices. It went from a little under 22% to a little over 22% this quarter, and you made more progress year over year.

Timothy Jeffrey Switzer: Okay, and my follow-up question there is, you know, the increases you've seen in generating more revenue from your invoices, it went from a little under 22% to a little over 22% this quarter, and you made more progress year over year. What strategies are you guys implementing to, I guess, become more effective at being able to charge, and you know, what are some of the challenges you're seeing in doing that?

Speaker Change: Okay.

My follow up there is the <unk>.

Speaker Change: Increases you've seen on generating more revenue from your invoices and went from a little under 22% to a little over 22% this quarter and you made more progress year over year.

Tim Switzer: So what strategies are you guys implementing to, I guess, become more effective at being able to charge and know what are some of the challenges you're seeing on doing that.

Speaker Change: So what strategies are you guys implementing too.

Speaker Change: I guess to get more effective at being able to charge and what were some of the challenges you're seeing on doing that.

Melissa Forman: That's a great question. So the difficulty in building this network is the connectivity, right? And that's where, you know, we feel like we are building a mo. And so it's taking network-enabled transactions and connecting them to the factor on the other side so that they can see that value come from the network. And so you've seen us grow the network transactions pretty substantially quarter reported this one. You know, it slowed down a little bit at a 13% growth, but that's because it gets harder and harder the bigger you get, right? The bigger your denominator, the percentage changes.

Unknown Executive: Yeah, that's a great question. So the difficulty in building this network is connectivity, right? And that's where, you know, we feel like we are building a remote. And so it's taking network-enabled transactions and connecting them to the factor on the other side so that they can see that value come from the network. And so you've seen us, you know, grow the network transactions pretty substantially quarter over quarter. This one, you know, slowed down a little bit at 13% growth. But that's because it gets harder and harder, the bigger you get, right? The bigger your denominator, the percentage changes.

Speaker Change: Yeah. That's a great question. So the difficulty in building. This network is the connectivity right and that's where you know we feel like we are building a demo and so it's taking network enabled transactions and connecting them to the factor on the other side. So that they can see that value come from the network and so you've seen us.

Speaker Change: ROE the the network transactions pretty substantially quarter over quarter. This one you know its slow down a little bit of a 13% growth, but that's because it it it gets harder and harder the bigger you get right. The the bigger your denominator the percentage changes and so what has to happen, though is when I have a transaction that.

Melissa Forman: And so what has to happen though is when I have a transaction that is on a broker side, this network enabled, and I'm connecting it to a factor. It's not just saying the factor is enabled and the broker is enabled. It's making sure those two relationships can connect because every factor management system is different.

Melissa Forman: And so what has to happen, though, is when I have a transaction that is on the broker side, that's network enabled, and I'm connecting it to a factor, it's not just saying the factors are enabled, and the brokers are enabled; it's making sure those two relationships can connect because every factoring management system is different. And so when you start to build density and those connections, that's when monetization can start. And we're building that now; we're building that foundation.

Speaker Change: That is on a broker side, that's network enabled and I'm connecting it to a factor it's not just saying the factors enabled and the brokers enabled it's making sure those two relationships can connect because every factory management system is different.

Melissa Forman: And so when you start to build density and those connections, is when the monetization can start, and we're building that now; we're building that foundation. When you think about where we're at from a factor's perspective, is on the network, about 21 to 22% of their portfolio now is being connected through the network. We continue to work on that and ensure that whatever's available on the broker side is usable and consumable on the factor side. And that's where the real value of the network comes into play.

Speaker Change: So when you start to build density in those connections is when the monetization can start and were building that now we're building that foundation, but when you think about where we're at from a factory perspective was on the networks about 21% to 22% of their portfolio now is being connected to the network we continue to.

Melissa Forman: When you think about where we're at from a factor perspective on the network, about 21 to 22% of their portfolio now is connected through the network. We continue to work on that and ensure that whatever's available on the broker side is usable and consumable on the factor side. And that's where the real value of the network comes in.

Speaker Change: Work on that and ensure that whatever is available on the broker side is it usable and consumable on the factory side, and that's where the real value of the network comes into play.

Aaron Graft: Yeah, you can't answer it any better than Melissa just did, but I think, Tim, I the only thing I want to add here is because it's something I've thought about, right, like it's, it's a fair question. And I think it's more; it's a question of why do things go slow before they go fast? Why wouldn't it be if this, if what we built here is a better mouse trail, which we all absolutely believe in? I think anyone who uses the product. Belize. Then why doesn't it just take off? Well, I think what you're fighting is the bias against change.

Speaker Change: Yeah Yeah.

Unknown Executive: You can't answer it any better than Melissa just did. But I think, Tim, the only thing I want to add here is because it's something I've thought about, right? Like, it's a fair question, and I think it's more of a question of why do things go slow before they go fast. Why wouldn't it be if this, if what we've built here is a better mousetrap, which we all absolutely believe, and I think anyone who uses the product. Then why doesn't it just take off?

Speaker Change: If you can't answer it any better than Melissa just did but I.

I think Tim I, the only thing I want to address because it's something I've thought about right like it's it's a fair question and I think it's more of a it's a question of why do things go slow before they go fast, but like why why wouldn't it be if this if what we've built here is a better mousetrap, which we all I absolutely believe in our figures.

Tim: Anyone who uses the product beliefs then.

Tim: Why doesn't it just take off.

Unknown Executive: Well, I think what you're fighting is the bias against change, right? Like, change is hard, change is hard in your personal life, change is hard in your company, and so. I think probably I know this when credit cards were introduced to retailers. They didn't go fast at first, like why are we using plastic? Where is the efficiency? Where am I gaining by taking this and just adding one more form of payment?

Speaker Change: Well I think what you are fighting is the bias against change I think it's change is hard changes hard in your personal life change is hard and in.

Aaron Graft: It's changed as hard. Change is hard in your personal life. Change is hard in for a corporation. And so, I think probably, I know this: when credit cards were introduced to retailers, they didn't go fast at first. Why are we using plastic? Where is the efficiency? Where am I gaining by taking this, just adding one more form of payment? How does that help me? And it's exactly what Melissa said: as we go and you create these connections, it starts to go faster and faster because people experience the value of the change. But what we have to overcome in the density building phase of the network is the bias to not change what's worked for the last 20 years.

Speaker Change: And for our Corporation and so.

Speaker Change: I think probably.

Speaker Change: I noticed when credit cards were introduced to retailers. There was they didn't go fast at first like why are we using plastic where is the efficiency where am I gaining by taking this just adding one more form of payment how does that help me.

Unknown Executive: How does that help? And it's exactly what Melissa said, as we go and you create these connections, it starts to go faster and faster because people experience the value of the change. But what we have to overcome in the density building phase of the network is the bias to not change what's worked for the last 20 years. Adding C.H.

Speaker Change: And it's exactly what Melissa said is as we go and do create these connections.

Speaker Change: It starts to go faster and faster because people experienced the value of the change, but what we have to overcome in the density building phase of the network is the bias to not change what's worked for the last 20 years, adding C. H Robinson, adding rguest, adding this volume crossing over 50% continuing on.

Unknown Executive: Robinson, adding ARCBEST, adding this volume, crossing over 50%, continuing on to our long-term goals. That density will overcome the resistance to change because you can just see the economics; you can see in your business how things change.

Aaron Graft: Adding CH Robinson, adding ART best, adding this volume, crossing over 50%, continuing on to our long-term goals. That density will overcome the resistance to change because you can just see the economics. You can see in your business how things change.

Speaker Change: And to our long term goals.

Speaker Change: That density will overcome the resistance to change because you can just see the economics you can see in your business, how things changed and that's why I think what Melissa and the team are doing is so great. But you just have to keep pushing the ball down the field three to five yards at a time and then youre going to turn around and look and see.

Unknown Executive: And that's why I think what Melissa and the team are doing is so great. But you just have to keep pushing the ball down the field, three to five yards at a time. And then you're going to turn around and look and see, oh, man, we have made a lot of progress. But sometimes, in a measured quarter to quarter, it doesn't always feel like that.

Aaron Graft: And that's why I think what Melissa and the team are doing is so great that you just have to keep pushing the ball down the field three to five yards at a time. And then you're going to turn around and look and see, oh man, we have made a lot of progress. But sometimes, in a measured quarter to quarter, it doesn't always feel like that.

Speaker Change: Oh man.

Speaker Change: We have made a lot of progress, but sometimes in a measured quarter to quarter. It doesn't always feel like that.

Tim Switzer: Okay, I appreciate it.

Unknown Executive: Okay, I appreciate it. If I could squeeze in one more, I know this might be an impossible question to answer. But, you know, what's the threshold of density that you need to where you really start to see, you know, the exponential effect of, you know, I guess it's really network effects here that we're talking about? You know, do you guys have any idea of when that occurs? Yeah, I mean, that's a, you know, great question.

Speaker Change: Okay I appreciate it if I could squeeze in one more I know this might be an impossible question to answer, but whats that threshold of density that you need or are you really start to see exponential effect.

Tim Switzer: If I could squeeze in one more, and I know this might be a possible question to answer, but what's that threshold of density that you need to where you really start to see the exponential effect of, I guess it's a really network that I see that we're talking about. You guys have any idea of when that occurs?

Speaker Change: I guess the network actually that we're talking about.

Speaker Change: You guys have any idea of when that occurs.

Aaron Graft: Yes, I mean, that's a, you know, great question. What we've said is we expect to cross over 50% by the end of this year. We're at 47% now. That doesn't include any of the Robinson volume. It doesn't include a lot of the volume that people who are already on.

Speaker Change: Yeah, I mean, that's a.

Speaker Change: Great question.

Unknown Executive: What we've said is we expect to cross over 50% by the end of this year. We're at 47% now. That doesn't include any of the Robinson volume.

Speaker Change: What we've said is we expect the crossover 50% by the end of this year were 47% now that doesn't include any of the Robinson volume. It doesn't include a lot of the volume that.

Unknown Executive: It doesn't include a lot of the volume that, uh, people who are already on. So, um, Long term, what we've said historically, I don't know if I've ever been precise about it, but we can be precise here. I think we'll get to 80%, and I said 24 and 25 are our years to continue to build density. Does that mean exactly that on December 31st of 2025, we're at 80%? No, I can't answer that.

Speaker Change: People, who are already on so.

Aaron Graft: So, long-term, what we've said historically, I don't know if I've been precise about it, but we can be precise here. I think we'll get to 80% density. And I said 24 and 25 are our years to continue to build density. Does that mean exactly that on December 31st of 2025 or 80%? No, I can't answer that. But I can see the pathway forward. If that's true, somewhere between 50 and 80%, the factoring companies who are the ones who I think benefit the most from the economies of scale on their side of the transactions start to see more than half of their transactions come through with the opportunity to connect to the network.

Speaker Change: Long term, what we've said historically I don't know if I've ever been precise about it but we can be precise here.

Speaker Change: I think we'll get to 80% density and I said 24, and 25 are years to continue to build density does that mean exactly that on December 31, 2025, or 80% no I can't answer that.

Unknown Executive: But I can see the pathway forward if that's true. Somewhere between 50 and 80 percent. The factoring companies, who are the ones who I think benefit the most from the economies of scale on their side of the transaction, start to see more than half of their transactions come through with the opportunity to connect to the network, and they can start to adjust their staffing models to recognize that efficiency. So there's no magical number, but I think it's somewhere between half and ultimate penetration of 80% because it's impossible to ever say you're going to get that long tail of the last 20%.

Speaker Change: But I can see the pathway forward if that's true.

Speaker Change: Somewhere between 50 and 80%.

Factoring companies, who are the ones, who I think benefit the most from the economies of scale on their side of the transaction start to see more than half of their transactions come through with the opportunity to connect to the network and they can start to adjust their staffing models to recognize the efficiencies. So there's no magical number but I think it is.

Aaron Graft: And they can start to adjust their staff training models to recognize the efficiencies. So, there's no magical number, but I think it's somewhere between half and an ultimate penetration of 80% because it's impossible to ever say you're going to get that long tail of the last 20%.

Speaker Change: Where between half and ultimate penetration of 80% because it's impossible to ever say, you're going to get that long tail of the last 20%.

Aaron Graft: And that's why I opened the letter saying 24 and 25 are the density building time. And monetization should still grow. Like we're growing revenue. I'm not asking for permission not to grow revenue. I'm asking investors to understand that being the first mover, that window is open, and we need to get to that density threshold between 50 and 80% in order to be able to change this industry and deliver value to our constituents. and two months. So that's not a precise answer; that's a band, and that's where we think it is.

Unknown Executive: And that's why I opened the letter saying 24 and 25 are density building times, and monetization should still grow like we're growing revenue. I'm not asking for permission not to grow revenue. I'm asking investors to understand that being the first mover, that window is open, and we need to get to that density threshold between 50 and 80% in order to be able to change this industry and deliver value to our constituents.

Speaker Change: And that's why I opened the letter, saying 'twenty, four and 'twenty five or the Dent does the density building time monetization should still grow like we're growing revenue I'm not asking for permission not to grow revenue I'm asking investors to understand.

Speaker Change: That being the first mover that window is open and we need to get to that density threshold between 50, and 80% in order to be able to change this industry and deliver value to our constituents. So that's not a precise answer that's a band and that's where we think it is.

Timothy Jeffrey Switzer: So, that's not a precise answer, that's a band, and that's where we think it is. Got it. Yeah, appreciate each of those. It's really helpful. I'll get back in the queue.

Speaker Change: Okay.

Tim Switzer: Got it. Yeah, appreciate the piece of that. It's really helpful.

Speaker Change: Got it I appreciate it.

Speaker Change: Really helpful.

Unknown Executive: I'll get back in the queue.

Speaker Change: I'll get back in the queue.

Gary Tenner: Our next question comes from Gary Tenner from DA Davidson. Please go ahead. Nice.

Gary Peter Tenner: Our next question comes from Gary Tenner from D.A. Davidson. Please go ahead.

Speaker Change: Our next question comes from Gary Tenner from D. A Davidson. Please go ahead.

Gary Tenner: Good morning. I'm going to ask about the conforming volume. You know, it continues to increase as a percentage of total volume in the payments segment. You know, it's kind of maybe slowed from the pace of growth. I think what's, as you pointed out, maybe 13% this quarter. As you think about C.H.

Gary Peter Tenner: Thanks, Good morning.

Unknown Executive: I wanted to ask about conforming volume. You know, it continues to increase as a percentage of total volume in the payments segment. You know, it's kind of maybe slowed from the pace of growth. I think Melissa, as you pointed out, maybe 13% this quarter. As you think about CH Robinson coming live, you know, let's say second quarter 25 is kind of a full quarter run rate, just for the sake of argument. But what do you think the addition of CH Robinson and their volume does in terms of pulling up the conforming penetration rate, if you will, kind of out of the gate? Yeah, I'll answer that.

Gary Peter Tenner: Wanted to ask about the conforming volume continues to increase as a percentage of total volume in the payments segment.

Speaker Change: Just kind of maybe slowed from the pace of growth I think more so as you pointed out maybe 13% this quarter and as you think about C. H Robinson coming alive.

Gary Tenner: Robinson coming live, you know, let's say second quarter, 25 is kind of a full quarter run rate, just your second argument. But what do you think the addition of C.H. Robinson and their volume does in terms of pulling up the conforming penetration rate, if you will, kind of out of the gate?

Speaker Change: Let's say second quarter 'twenty, five as kind of a full quarter run rate just for sake of argument but.

Speaker Change: What do you think the addition of C. H Robinson and their volume does in terms of pulling up the conforming penetration rate if you will.

Speaker Change: Kind of out of the gate.

Aaron Graft: Yes, I'll answer that a little bit differently, and I'll do it from the perspective of one factor because when you take their total volume and spread that across all the factors, faculty and industry, your percentages are going to change because they have to be connected to the network.

Unknown Executive: Yeah, I'll answer that a little bit differently. And I'll do it from the perspective of one factor, because when you take their total volume and spread that across all the factors in the factoring industry, your percentages are going to change because they have to be connected to the network. So CH volume to a network-enabled and connected factoring company would, on average, represent 20 to 25%, sometimes more of their entire purchase volume.

Speaker Change: Yeah, I'll I'll answer that a little bit differently and I'll do it from the perspective of one factor because when you take their total volume and spread that across all of the factors that are in the industry. Your percentages are going to change because they have to be connected to the network. So CH volume to a network enabled and connected factory and company.

Aaron Graft: So C.H. Volume 2A network-enabled and connected factoring company, on average, for most factoring portfolios, would represent 20 to 25%, sometimes more, of their entire purchase volume. So it's a substantial part of their everyday business. And today they have to manually go do those validations. And so being able to validate and do cash application through the network on an additional 20 to 25% of their portfolio is quite substantial.

Speaker Change: On average for most factoring portfolios would represent 20% to 25% sometimes more of their entire purchase volume. So it's a substantial part of their everyday business and today. They have to manually go do those validation and so being able to validate and your cash application through the network on an additional two.

Unknown Executive: So it's a substantial part of their everyday business, and today, they have to manually do those validations. And so being able to validate and do cash applications through the network on an additional 20 to 25% of their portfolio is quite substantial.

Speaker Change: 20% to 25% of their portfolio is quite substantial.

Gary Tenner: Okay. Okay, thank you.

Speaker Change: Okay.

Unknown Executive: Okay, thank you. And then, in terms of factoring as a service, Yeah, I don't know that you've talked about this a ton. Can you talk about, Aaron, what it means for, you know, what it exactly looks like, and then, you know, what it means economically in terms of benefits to TFIN as that gets built out?

Speaker Change: Okay. Thank you.

Gary Tenner: And then, in terms of factoring as a service, yeah, I don't know that you've talked about this a ton. If you talk about Aaron, what it would it means for, you know, what it what exactly looks like and then, you know, what it means economically in terms of benefits to teeth and as that gets built down.

Speaker Change: And then.

Speaker Change: In terms of factoring as a service.

Speaker Change: Yeah, I don't know that you talked about this a ton can you talk about what it what it means for.

Speaker Change:

Speaker Change: Exactly looks like and then what it means economically in terms of benefit is just too cheap and as that gets built out.

Tim Switzer: Yeah, Tim, let's let me let Tim answer operationally because he's the operational expert, and then I'll share some thoughts about what I think about financially.

Unknown Executive: Yeah, Tim, let's, I'm gonna let Tim answer operationally because he's the operational expert, and then I'll share some thoughts about what I think about financially. So go ahead, Tim.

Speaker Change: Yeah, Tim plus what I'm Gonna, let Tim answer operationally because he's the operational expert and then I'll share some thoughts about what I think about financially. So go ahead Tim.

Tim Switzer: So go ahead, Tim. So Gary, I think what's important to think about is that factoring the service gives our potential customer the ability to utilize our technology, our platform, our expertise in order to create different products and ultimately upgrade their technology. So what we've observed several things, but one thing specifically we've observed is that the factoring industry, as far as FMS providers, has not kept up with the pace of technology. And so by doing what we have an invested in, you know, instant purchase and other things that we're doing within the within our focus area, we are raising the bar and creating an opportunity for other factors.

Tim Valdez: So, Gary, I think what's important to think about is that factoring as a service gives our potential customers the ability to utilize our technology, our platform, our expertise, in order to create different products and ultimately upgrade their technology. So what we've observed Several things, but one thing specifically we've, we've, we've observed is that the factoring industry, as far as FMS providers, has not kept up with the pace of technology.

Tim: So Gary I think what's important to think about is that factoring in the service gives our.

Tim: Potential customer the ability to utilize our technology our platform our expertise in order to create different products and ultimately upgrade their technology. So what we've observed.

Unknown Executive: And so by doing what we have and investing in, you know, instant purchase and other things that we're doing within the, within our Focus Area, we are raising the bar and creating an opportunity for other factors or anyone that originates factoring transactions to generate and utilize our operational side of it. So if you can imagine factoring as a service and being able to integrate that with instant purchase, on top of that with load pay, it gives us a lot of leverage and a lot of value for that factor to not only fund and make decisions very quickly but to be able to open the doors and fund on a 24-hour basis.

Tim: Several things, but one thing specifically, we've as we've we've observed is that the factoring industry as far as Fms providers has not kept up with the pace of technology and so by doing what we have and invested in.

Tim: Instant purchase and other things that we're doing within the within our.

Tim: Our focus area, we are raising the bar and creating an opportunity for other factors.

Tim Switzer: Or anyone that originates factoring transactions to generate and utilize our operation side of it. So if you can imagine. Factoring is a service and being able to integrate that with instant purchase on top of that with load pay. It gives us a lot of leverage and a lot of value for that factor to not only fund and make decisions very quickly, but to be able to open the doors and fund on a 24 seven basis. And so why is that important? That's important because you have the situation that going into a holiday, and we have a specific situation about this.

Tim: Or anyone that originates factoring transactions to generate and utilize our operation side of it. So if you can imagine.

Speaker Change: <unk> as a service and being able to integrate that within some purchase on top of that with load pay it gives us a lot of leverage in a lot of value for that factor to not only fund that make decisions very quickly but to be able to open the doors and fund on a 24 seven basis and so why is that important that's important because you have the situation that going into a holiday and we have a.

Unknown Executive: And so why is that important? That's important because you have the situation going into a holiday, and we have a specific situation about that. You have a carrier that goes on holiday. He needs money for whatever repair and maintenance item. And he has paper in his truck that has value, so he can get cash into his bank. And so when you think about factoring as a service, that is the tool that gets the carrier the money they need when they need it. And so there are several components that factoring as a service will add value to a factor. Yeah, and

Speaker Change: Specific situation about this is you have a carrier that goes into a holiday you need money for whatever repair and maintenance item.

Tim Switzer: You have a carrier that goes into a holiday, needs money for whatever repair maintenance items, and he has paper and his truck that has value to it that can get cash into his bank. And so when you think about factories of service, that is the tool that gets the carrier of the money they need when they need it. And so there's several components that factory and service will add value to a factor.

And he has paper in his truck that has value to it that can get Kashmir was bank and so when you think about factoring is a service that is the tool that gets to that gets the carrier the money they need when they need it and so there are several components.

Speaker Change: But factoring in service will add value to a factor.

Aaron P. Graft: Yeah, and so on the financial side, I mean, Gary, because we're everything we do needs to ultimately pay off for our shareholders, right? There are no science projects here.

Aaron Graft: Yeah, and so on the financial side, I mean, Gary, because everything we do needs to ultimately pay off for our shareholders, right?

Speaker Change: Yeah, and so on the financial side, I mean, Gary because.

Gary Peter Tenner: Everything we do.

Gary Peter Tenner: Needs to ultimately pay off for our shareholders right. There are no science projects here.

Aaron Graft: There are no science projects here. So how do we think about it? Well, it's factoring in transportation as a two billion dollar revenue industry, which I think is directionally correct. And you look at the profitability or the operating efficiency of factors, and then you take out the sales function because we don't want to sell all factoring. That is, we've been very clear about that. Like there are other people who need to be out there engaging with these customers, small carriers, mid-sized, large carriers who can do that piece with excellence and don't need us. But there is still a, once you engage as a factor, once you buy that invoice, whether you've been in the industry 10 years or 10 days, that begins a process, right?

Gary Peter Tenner: So.

Gary Peter Tenner: Uh huh.

Aaron P. Graft: So, how do we think about it? Well, if factoring in transportation is a $2 billion revenue industry, which I think is directionally correct, and you look at the profitability or the operating efficiency of factors, and then you take out the sales function, because we don't want to sell all factoring. That is, we've been very clear about that.

Gary Peter Tenner: How do we think about it well.

Gary Peter Tenner: Factoring in transportation is a $2 billion revenue industry, which I think is directionally correct and.

Gary Peter Tenner: When you look at the profitability or the operating efficiency of factors and then you take out the sales function because we don't want to sell all factory that is we've been very clear about that like there are other people who need to be out there engaging with these customers small carriers midsize large carriers, who can do that piece with excellence and don't need us.

Aaron P. Graft: Like, there are other people who need to be out there engaging with these customers, small carriers, midsize, and large carriers, who can do that piece with excellence and don't need it. But there is still, once you engage as a factor, once you buy that invoice, whether you've been in the industry 10 years or 10 days, that begins a process, right? Underwriting, cash collection, you know, cash application, all the validation, verification, all these things that have to happen that are highly repeatable. They're highly repeatable, and they can be automated.

Gary Peter Tenner: But there is still a once you engage as a factor once you buy that invoice, whether you've been in the industry 10 years or 10 days.

Gary Peter Tenner: That begins a process right underwriting cash collection cash application all the validation verification all of these things that have to happen that are highly repeatable, they're highly repeatable and they can be automated.

Aaron Graft: Underwriting, cash collection, you know, cash application, all the validation, verification, all these things that have to happen that are highly repeatable. They're highly repeatable, and they can be automated. We believe, and this is, you can't go find this in a, you know, in some report, but we believe that in this two billion dollar revenue industry, factors spend between 500 to 600 million in back office expenses, right? That's what we think it takes them to do all the things you have to do to ingest the invoice all the way through applying the cash when it's paid.

Aaron P. Graft: We believe, and you can't go find this in some report, but we believe that in this $2 billion revenue industry, factors spend between 500 to 600 million in back office. Right, that's what we think it takes them to do all the things you have to do to ingest the invoice, all the way through applying the cash when it's. We want factors to be more efficient. We have said that there is $20 of friction on both sides of the transaction.

Gary Peter Tenner: We believe and this is you can't go find this in our you know in some report.

Gary Peter Tenner: We believe that in this $2 billion revenue industry factor spend between 500 to 600 million in back office expenses right. That's that's what we think it takes them to do all the things you have to do to ingest.

Gary Peter Tenner: The invoice all the way through applying the cash when it's paid.

Aaron Graft: We want factors to be more efficient. We have said that there's $20 of friction on both sides of the transaction. That's not all on the factors side of the transaction. I would think in factoring that friction cost, that whole back office cost, it's a wide range, but it's between $5 and $10. It's going to be $5 if you're servicing large customers because you're buying schedules of invoices. It'll be closer to $10. If you're servicing a small carrier because you do more of the work for them and you can't get the economies of scale, so connecting with Triumphay and digitizing all of that is going in and of itself to add efficiency.

Gary Peter Tenner: We want factors to be more efficient.

Speaker Change: We have said that there's $20 of friction on both sides of the transaction that's not all on the factory side of the transaction I would think in factory.

Aaron P. Graft: That's not all on the factor side of the transaction. I would think in factoring, that friction cost, that whole back office cost, it's a wide range, but it's between $5 and $10. It's going to be $5 if you're servicing large customers because you're buying schedules of invoices. It'll be closer to $10 if you're servicing a small carrier because you do more of the work for them, and you can't get the economies of scale.

Speaker Change: The friction cost that whole back office cost, it's a wide range, but it's between five and $10. It's gonna be $5, if you're servicing large customers because you're buying schedules of invoices it'll be closer to $10. If you're servicing a small carrier because you do more of the work for them and you can't get the economies of scale.

Speaker Change: So.

Aaron P. Graft: Connecting with Triumph Pay and digitizing all of that is going, in and of itself, to add efficiency. But if the factoring company is operating on a legacy technology that is incapable of ingesting that data the way we can give it to them that allows them to capture the inefficiency, then that value is lost on them. And so why we're doing this is we're saying to the industry, we have the data feed, we have the pipe from the brokers.

Speaker Change: Connecting with try and pay and digitizing all of that.

Speaker Change: Is going in and of itself to add efficiency, but if the factoring company is operating on a legacy technology that is incapable of ingesting that data the way, we can give it to them that allows them to capture the efficiency.

Aaron Graft: But if the factoring company is operating on a legacy technology that is incapable of ingesting that data, the way we can give it to them that allows them to capture the efficiency, then that value is lost on them. Why we're doing this is we're saying to the industry, we have the data feed; we have the pipe from the brokers. We're saying we're going to have 80% of all truckload broker transactions in our pipe. You should map to this data so you can make instant decisions, so you can reduce inefficiency, so you don't have to try to struggle with reading a legible document.

Speaker Change: They're not value was lost on them and so why we're doing this is we're saying to the industry. We have the data feed we have the pipe from the brokers and we're saying we're going to have 80% of all truckload brokerage transactions in our pipe.

Aaron P. Graft: And we're saying we're gonna have 80% of all truckload brokered transactions in our pipeline. You should map to this data so you can make instant decisions, so you can reduce inefficiencies, so you don't have to try to, you know, struggle with reading a legible document.

Speaker Change: You shouldn't map to this data. So you can make instant decision. So you can reduce inefficiencies. So you don't have to try to struggle with reading illegible documents like let's make the data pristine in the connection tight.

Aaron P. Graft: Like, let's make the data pristine and the connection tight. Well, their current technology isn't able to do that. And so if their current technology providers won't do it, and there are some who have done it, but for the most part, they haven't. And we got to go fix that problem.

Aaron Graft: Like, let's make the data pristine in the connection pipe. Well, their current technology isn't able to do that. And so if they, if their current technology providers won't do it, there are some who've done it, but for the most part they haven't, then we gotta go fix that problem. And if we're gonna fix that problem, we expect to be paid to fix that problem.

Speaker Change: Well their current technology isn't able to do that and so if they if their current technology providers won't do it and there are some who've done it but for the most they haven't and we Gotta go fix that problem and if we're going to fix that problem, we expect to be paid to fix that problem and so we expect to achieve.

Aaron P. Graft: And if we're going to fix that problem, we expect to be paid to fix that problem. And so we expect to achieve savings in this five to $600 million of expense that is being spent doing factoring much the way it's been done the last 10 years. We're going to change that window. That's what I'm talking about. The window is open for us to create structured data throughout the lifecycle of the transaction because we are connected to the source of truth, which is inside the broker's transportation management software.

Aaron Graft: And so we expect to achieve savings in this five to six hundred million dollars of expense that is being spent doing factoring, much the way it's been done the last ten years. We're gonna change that. The window, that's what I talk about, this window is open for us to create structured data throughout the life cycle of the transaction, because we are connected to the source of truth, which is inside the broker's transportation management software, holding that data and giving it to the people who are going to provide financing to the carrier in the format in which it lives. That changes things.

Speaker Change: Savings in this $5 million to $600 million of expense that is being spent doing factoring much the way. It's been done in the last 10 years, we're going to change that the window. That's what I talk about this window is open for us to create structured data throughout the lifecycle of the transaction because we're connected to the source of truth, which is inside the bra.

Speaker Change: <unk> transportation management software.

Aaron P. Graft: Pulling that data and giving it to the people who are going to provide financing to the carrier in the format in which it lives, that changes things. And so it's about making the network more resilient. That's one reason you do it. But it's also because if we can cut 30% of the cost, 40%? I don't know what it'll be at scale.

Speaker Change: That data and giving it to the people who are going to provide financing to the carrier in the format in which it lives.

Speaker Change: That changes things and so it's about making the network more resilient.

Aaron Graft: And so it's about making the network more resilient. That's one reason you're doing it. But it's also because if we can go cut 30% of the cost, 40%, I don't know what it'll be at scale, but of that six hundred million dollars of spend, then we expect to share in those benefits, right? Like that's how SaaS businesses work; you share in the value you create. So it's a big market to go after, Gary. It's not a science project; it's not just being done to make sure Triumph, hey, when it's being done for that, but it's also being done because it addresses a real economic expense that the industry faces, and we can make it better.

Speaker Change: It's one reason you do it but it's also because if we can go cut 30% of the cost.

Aaron P. Graft: But of that $600 million of spend, then we expect to share in those benefits, right? Like that's how SaaS businesses work. You share in the value you create. So it's a big market to go after, Gary. It's not a science project.

Speaker Change: 40% I don't know what it'll be at scale, but of that $600 million of spend and we expect to share in those benefits right like that's how SaaS businesses work is sharing the the the value you create so it's a big market to go after Gary It's not a science project, it's not just being done to make sure try and pay wins, it's being done.

Speaker Change: For that but it's also being done because it dress addresses a real economic expense that the industry faces and we can make it better.

Gary Tenner: Thanks, Aaron; I appreciate that.

Gary Peter Tenner: Thanks, John I appreciate that.

Gary Tenner: One last question just related to that, if I could, from a segment perspective, I mean, I guess since you're building this out to service other factors or provided as a service to other factors, it almost seems like it, like from a segment perspective, it could be factoring or in the past. It's a payment to business. So just, you know, the thoughts around that and as it relates to kind of the expense load associated with the, you know, with the build out there, do you talk about that?

Speaker Change: One last question just related to that if I could.

Speaker Change: From a segment perspective I guess.

Speaker Change: Since you're building this out to service other factors are provided as a service to other factors.

Speaker Change: It almost seems like it.

John: From a segment perspective, it could be.

Speaker Change: Factory.

Speaker Change: And the payments business.

Aaron P. Graft: It's not just being done to make sure Triumph pays wins. It's being done for that. But it's also being done because it addresses a real economic expense that the industry faces, and we can make it better.

So just the thoughts around.

Speaker Change: Around that and as it relates to kind of the expense load associated with the with the build out there can you talk about that a bit.

Gary Peter Tenner: Thanks, Aaron. I appreciate that. One last question just related to that, if I could, from a segment perspective, I mean, I guess since you're building this out to service other factors or provide it as a service to other factors, it almost seems like it, like, from a second perspective, it could be factoring or in the payments business. So, just, you know, the thoughts around that and as it relates to kind of the expense load associated with the build out there, can you talk about that?

Aaron Graft: Yeah, that's a great question and such a good question because it's something we talked about. I mean, this is sort of why the corporate segment exists, because we're starting to do things that touch all sides. Let me, I'm going to answer your question, which I think it, the answer is it ends up in payments because it's not us factoring as a service; it is providing a service to the people who use the network.

Speaker Change: Yeah.

Speaker Change: A great question and that's a good question because it's something we've talked about.

Speaker Change: This is sort of why the corporate segment exist because we're starting to do things that touch all sides. Let me I'm going to answer your question, which I think the answer is it ends up in payments because it's not us factoring as a service is providing a service to the people who use the network. So I think that's logically where it fits but.

Aaron Graft: So I think that's logically where it fits, but just understand like Load Pay, for example, the expense in developing Load Pay, some of that expense is showing up in the bank because underneath a Load Pay account is a checking account. And where do checking accounts live? They live in our banking segment. But the load pay structure and how we're going to market with it and how we're attaching it to the network. Well, that happens inside of our payment segment. But if you want load pay to really work, you need to do instant purchasing, which gives the money, you know, which allows us to pay like they alluded to this earlier.

Speaker Change: Just understand like low pay for example.

Speaker Change: The expense in developing low pay some of that expense is showing up in the bank because underneath our load pay accounts.

Speaker Change: Is it checking account and where do checking accounts live they live in our banking segment.

Speaker Change: But the loan pay structure and how we're going to market with it and how we're attaching it to the network.

Speaker Change: Well that happens inside of our payments segment.

Speaker Change: But if you want loan paid a really work.

Speaker Change: Do you need to do instant purchasing which gives them the money, which allows us to pay like they alluded to this earlier if a carrier gets a proof of delivery you signed at 11 P M being able to instantly purchase that doesn't really impress anyone unless you can have money in their account at 11 O. One P M well the technology for that in <unk>.

Aaron Graft: If a carrier gets a proof of delivery, you know, signed at 11 p.m., being able to instantly purchase that doesn't really impress anyone unless you can have money in their account at 11:01 p.m. Well, the technology for that, an instant purchase and the artificial intelligence and all the back testing we've done on billions of transactions, that happened in our factory. Segment. And so what we're finding is, as we're transitioning community bank to financial technology platform, is all three parts of our business add value to what we're creating. So the answer is fast lives and payments, but I just need you to understand, and we will try to call it out as best we can.

Speaker Change: <unk> purchased in the artificial intelligence and all the back testing we've done on billions of transactions that happened in our factoring segment.

Speaker Change: And so what we're finding is as we were transitioning community banks or financial technology platform as all three parts of our business add value to what we're creating.

Speaker Change: So the answer is faas lives in payments, but I just need you to understand and we will try to call. It out as best we can we use the bank.

Aaron Graft: We use the bank for a lot of this. We use factoring, and what we do inside of factoring to serve the network. And of course we use payments to host the network. So it's more symbiotic probably than it's ever been historically. Our disclosures around all of this will absolutely evolve as this grows. And when we set up our segments the way that we did, we had three very distinct lines of business. And in a lot of cases, we were intentionally keeping them separate. And as we have evolved and as we see what is possible for us to build to serve the industry over the long term.

Speaker Change: For a lot of this we use factoring in what we do inside of factoring to serve the network and of course, we use payments to host the network. So.

Speaker Change: It's more symbiotic probably than it's ever been historically.

Speaker Change: Our disclosures around all of this will absolutely evolve as this grows and when we set up our segments. The way that we did we had three very distinct lines of business and in a lot of cases, we were intentionally keeping them separate and as we have evolved and as we see what is possible for us to build to serve the industry over.

Aaron P. Graft: Yeah, that's a great question and such a good question, because it's something we talked about. I mean, this is sort of why the corporate segment exists, because we're starting to do things that touch all sides.

Aaron P. Graft: Let me answer your question, which I think the answer is, it ends up in payments because it's not us. Factoring as a service is providing a service to the people who use the network. So I think that's logically where it fits.

Aaron P. Graft: But just understand, like load pay, for example, The expense of developing Lodepay, some of that expense is showing up in the bank because underneath a Lodepay account is a checking account. And where do checking accounts live? They live in our banking, but the low-pay structure and how we're going to market with it and how we're attaching it to the network, all that happens inside of our payment segment. But if you want load pay to really work... You need to do instant purchasing, which gives us the money, you know, which allows us to pay, like they alluded to earlier. If a carrier gets a proof of delivery, you know, signed at 11pm, being able to instantly purchase that doesn't really impress anyone unless you can have money in their account at 11.01pm.

Aaron P. Graft: Well, the technology for that, an instant purchase, and the artificial intelligence and all the back testing we've done on billions of transactions that happened in our factory. And so what we're finding is as we're transitioning from community bank to a financial technology platform, all three parts of our business add value to what we're creating. So the answer is FAS lives in payments, but I just need you to understand, and we will try to call it out as best we can. We use the bank for a lot of this.

Aaron P. Graft: We use factoring and what we do inside of factoring to serve the network. And, of course, we use payments to host the network. So it's more symbiotic than it ever was historically; our disclosures around all of this will absolutely evolve as this grows. And when we set up our segments the way that we did, we had three very distinct lines of business. And in a lot of cases, we were intentionally keeping them separate.

Aaron P. Graft: And as we have evolved, and as we see what is possible for us to build to serve the industry over the long term, it's all kind of coming back together. So I can't paint you a crystal clear picture of what that will look like, because there's still a lot of things that we need to figure out. But you can expect that to evolve.

Aaron Graft: It's all kind of coming back together.

Speaker Change: Long term its all kind of coming back together, so I cant paint you a crystal clear picture of what that will look like because there's still a lot of things that we need to figure out, but you can't expect that to evolve over time.

Aaron Graft: So I can't paint you a crystal clear picture of what that will look like because there's still a lot of things that we need to figure out; that you can expect that to evolve over time.

Gary Peter Tenner: Thanks Gary. Great, thanks for the questions.

Unknown Executive: Thanks, Gary. Thanks for the questions.

Thanks, Gary Great. Thanks for the question.

Unknown Executive: Thanks all for your questions today. Please limit to two questions only.

Operator: Thanks to all for your questions today. Please limit yourself to two questions only. Our next question will come from Joey Yanchunis from Raymond James. Please go ahead.

Speaker Change: Thanks, all for your questions today, please limit to two questions only our next question will come from Julien <unk> from Raymond James. Please go ahead.

Joey Junus: Our next question will come from Joey and Junus from Raymond James.

Joey Junus: Please go ahead. Good morning. Good morning, Joe.

Good morning.

Joe: Good morning, Joe.

Joey Junus: So going back to the revenue component of T pay. The player call you mentioned that, due to the challenging environment, you elected not to increase pricing for T pay customers in 2024. We're also adding that you're not currently charging for all the services offered. I guess given the increasing density of T pay, how should we think about price increases in 2025 with the benefit from a customer migrating to your new pricing model. Or I guess set a different way of assuming a static market. How much incremental dollars should we expect T pay to generate from a hypothetical customer.

Joseph Peter Yanchunis: So, going back to the revenue component of T-PAY. On the prior call, you mentioned that due to the challenging environment, you elected not to increase pricing for T-PAY customers in 2024. We're also adding that you're not currently charging for all the services offered. I guess, given the increasing density of T-Pain, how should we think about price increases in 2025 or the benefit from a customer migrating to your new pricing model? or I guess it was said a different way.

Speaker Change: So going back to the revenue component of cheap a.

Julien: The prior call you mentioned that due to the challenging environment you elected not to increase pricing for <unk> pay customers. In 2024, we're also adding that youre not currently charging for all the services offered.

Speaker Change: I guess, given the increasing density of cheap thing how should we think about price increases in 2025 or the benefit from a customer migrating to a new pricing model.

Joseph Peter Yanchunis: Assuming a static market, how much incremental dollars should we expect TPay to generate from a hypothetical customer, you know, after these price increases occur?

Julien: Or.

So it a different way assuming a static market how much incremental dollars should we expect cheaper to generate from a hypothetical customer.

Aaron Graft: You don't have to, these price increase the car. It's not a static market. But the density changes and enables monetization.

Julien: After these price increases occur.

Unknown Executive: Oh, I mean, it's that it's not a static market. Right. But I mean, like, the Density changes and enables monetization. Can't give it to you in a formula, Joe. I get why you're asking the question. It's a totally appropriate question.

Speaker Change: Well I mean, it's not if it's not a static market right, but I mean like the.

Speaker Change: Density changes and enables monetization I mean, I I yeah.

Aaron Graft: I can't give it to you in a formula, Joe. I get why you're asking the question. It's a totally appropriate question. How this will go is we will onboard C.H. Right. And, and that volume will come, and you know what, by the time we're done onboarding C.H. Robinson, whether it's second or third quarter next year, there's going to be other names. And so when these contracts come up for renewal, we're going to be like, "Hey, when we negotiated this contract with you in the past." 15% of your transactions have the ability to be network transactions.

Speaker Change: I can't give it to you in a formula Joe I get why you're asking the question. It's totally appropriate question. How this will go.

Unknown Executive: How this will go is we will onboard C.H. Robinson, right? And that volume will come. And you know what? By the time we're done onboarding C.H. Robinson, whether it's the second or third quarter of next year, there's gonna be other names.

Speaker Change: Is we will onboard C H Robinson, right and and that volume will come in you know what by the time, we're done Onboarding C. H Robinson, whether its second or third quarter next year, there's going to be other names.

Unknown Executive: And so when these contracts come up for renewal, we're going to be like, hey, when we negotiated this contract with you in the past, 15% of your transactions had the ability to be networked. Today, that number is 60. You can change your staffing model. This is now like cash application looks entirely different for a factor when you do that.

Speaker Change: And so when these contracts come up for renewal, we're gonna be like Hey, when we negotiated this contract with you in the past.

Speaker Change: 15% of your transactions.

Speaker Change: Had the ability to be networked transactions today that number is 60%.

Aaron Graft: Today, that number is 60%. You can change your staffing model. This is now like cash application looks entirely different for a factor when you do that. So yes, did we are we holding pricing because we think that the we understand the freight recession? Sure. Of course, but it's this is what I wrote in the letter is. Businesses that can create economies of scale and then share those benefits back with their constituents create things. That is what we're after. We are going to create people who look at what we do and say, "Man, that is so much more efficient than we ever did it in the past."

Speaker Change: You can change your staffing model. This is now like cash application books entirely different for a factor when you do that so yeah.

Unknown Executive: So, Yes, did we hold prices because we think that the, we understand the freight recession? Of course, but this is what I wrote in the letter: businesses that can create economies of scale and then share those benefits back with their constituents create fame. That is what we're after.

Speaker Change: Yes, and we are we holding pricing because we think that the we understand the freight recession sure.

Speaker Change: Of course, but it's this is what I wrote in the letter is.

Speaker Change: This is this is the current create economies of scale and then share those benefits back with their constituents create fans.

Unknown Executive: We are going to create people who look at what we do and say, man, that is so much more efficient than we ever did it in the past. And I can see on my own bottom line that I'm making more money. And so the piece of it that Triumph's taking, you know, I get it.

Speaker Change: That is what we're after we are going to create people who look at what we do and say man that is so much more efficient than we ever did it in the past and I can see in my own bottom line that I'm, making more money and so the piece of it the trials, taking you know I I get it.

Aaron Graft: And I can see in my own bottom line that I'm making more money. And so the piece of it that Triumph's taking, you know, I get it. The growth in Triumph, hey, it was 22% annualized again, a lousy quarter in a soft market before Robinson's even here.

Unknown Executive: So the answer is revenue will continue to go up. I think if you annualize our fee revenue quarter to quarter, and this was a lousy quarter, but again, it's a quarter. But still, if you annualize fee revenue growth in Triumph Pay, it was 22% annualized. Again, a lousy quarter in a soft market before Robinson's even here.

Speaker Change: So the answer is revenue will continue to go up I think if you annualize our fee revenue quarter to quarter and this was a lousy quarter, if but again, it's a quarter, but still if you annualized fee revenue growth and try and pay it was 22% annualized again, a lousy quarter in a soft market before Robinson even here.

Unknown Executive: So what we ultimately have to do is we've got to take a $55 million revenue business and we've got to grow it to $100 million. And we've told the market that if you put all this together, we see a billion dollar opportunity. That's going to take a number of years, but we just have to keep adding revenue. And so if the world were static with the number of brokers we have now, in other words, If you onboarded everything we know about now, including Robinson, and you're between 50 and 60 percent, probably closer to 60 percent whenever that's done, you would see revenue go up, right?

Aaron Graft: So what we ultimately have to do is we got to take a $55 million revenue business and we got to grow it to 100 million. We've told the market that if you put all this together, that we see a billion dollar opportunity. That's going to take a number of years, but we just have to keep adding revenue. And so if the world were static with the number of brokers we have now. In other words, if you onboarded everything we knew about now, including Robinson, in your between 50 and 60%, probably closer to 60%, whenever that's done, you would see revenue go up, right, because we're adding more value to the factors and the brokers, as it were.

Speaker Change: So what we ultimately have to do is we got to take a $55 million revenue business and we got to grow it to a $100 million and we've told the market that if you put all this together that we see $1 billion opportunity that's going to take a number of years, but we just have to keep adding revenue and so if the world were static with the.

Speaker Change: The number of brokers, we have now in other words.

Speaker Change: If you onboard it everything we knew about now, including Robinson and you are between 50, and 60% probably closer to 60% whenever that's done.

Speaker Change: You would see revenue go up right, because we're adding more value to.

Speaker Change: The factors and the brokers as as as it were.

Aaron Graft: But I promise you there's going to be more volume coming. You know, I guess I shouldn't say promise, but I am committed to and staking, you know, we are betting very much that we're not done at 60, you know, high 50%. Like we're going beyond that. And every at incremental value, you know, every amount of density we add creates more value for the constituents for which we expect to be paid. And ultimately, we think it's $5 a network transaction, and we think we can collect that, and the brokers win, and the factors win, and the carriers win win, win, win.

Unknown Executive: Because we're adding more value to the factors and the brokers, as it were. But I promise you, there's going to be more volume coming. You know, I guess I shouldn't say promise, but I am committed to and staking, you know. We are betting very much that we're not done at the High 50 percentile, like we're going beyond that, and every incremental value, you know, every amount of density we add creates more value for the constituents, for which we expect to be paid.

Speaker Change: But I promise you there is going to be more volume coming I, you know I guess, I shouldn't say promise, but I'm I'm committed to and staking.

Speaker Change: We are betting very much that we're not done at Sig, Hi, 50, percentile like we're going beyond that and every add incremental value.

Speaker Change: Every amount of density we add creates more value for the constituents for which we expect to be paid and ultimately we think it's $5 of network transaction and we think we can collect that and the brokers win and the factors win and the carriers win win win win that's what we want that's why.

Unknown Executive: And ultimately, we think it's $5 a network transaction. And we think we can collect that. And the brokers win, and the factors win, and the carriers win, win, win, win. That's what we want. That's why we think we're building something that is unique and enduring and not a brittle business and not taking advantage of its participants, but instead enabling everyone to win. And that is what we're focused on

Aaron Graft: That's what we want. That's why we think we're building something that is unique and enduring and not a brittle business and not taking advantage of its participants, but instead enabling everyone to win, and that is what we're focused on.

Speaker Change: We think we're building something that is unique and enduring and not a brittle business and not taking advantage of its of its participants, but instead, enabling everyone to win and that is what we're focused on.

Joey Junus: I appreciate it.

Speaker Change: I appreciate it.

Unknown Executive: And just kind of going back to Robinson. Can you provide more color on the economics of the deal and how it relates to other customers? I mean, like, since you announced the deal, has your pipeline changed for both brokers and factors interested in joining the network? And can you give us a refreshed view on how much Incremental payment volumes are contracted to come online throughout the balance of the year?

Joey Junus: And just kind of going back to Robinson. Can you provide more color on the economics of the deal and how it relates to other customers. I mean, like since you announced the deal, has your pipeline changed for both brokers and factors interested in joining the network. And can you give us a refresh view on how much incremental payment volumes contracted to come online for the balance of the year.

Speaker Change: And just kind of going back to Robinson.

Can you provide more color on the economics of the deal and how it relates to other customers.

Speaker Change: I mean like since you announced the deal has your pipeline changed for both brokers and factors are just enjoying the network.

Speaker Change: And can you give us a refresh view on how much.

Speaker Change: Incremental payment volumes contracted to come online for the balance of the year.

Aaron Graft: Yeah, I'll let Melissa do this, but let's just speak about we would never disclose pricing for any individual customer, whether it's Robinson or our smallest customer; that would not be. That's just not how we would operate. What I would say is when Robinson is fully on board. When I tell you that we're going to charge $5 for conforming transaction and part of that's going to be born by the factor and part of it's going to be born by the broker Robinson is in my analysis and thinking about that. We're not going to price something with them that doesn't allow us to achieve what we promised the market we would go do.

Unknown Executive: Yeah, I'll let Melissa do this, but let's just speak about how we would never disclose pricing for any individual customer, whether it's Robinson or our smallest customer. That would not be. That's just not how we would operate. What I would say is...

Speaker Change: Yeah, I'll, let Melissa deals, but let's just think about we would never disclose pricing for any individual customer whether it's robinson are our smallest customer that would not be.

Speaker Change: That's just not how we would operate what I would say is.

Unknown Executive: When Robinson is fully on board, when I tell you that we're gonna charge $5 per conforming transaction, and part of that's gonna be borne by the factor, and part of it's gonna be borne by the broker, Robinson is in my analysis and thinking about that. We're not gonna price something with them that doesn't allow us to achieve what we promised the market we would do. I can't tell you exactly when, but we have a ton of work to do for them, and we're excited to be partnered with them. And as far as that announcement and what it means, Pipeline, Melissa, it's your phone that rings, so I'm gonna let you take that one. Yeah.

When Robinson is fully on board.

Speaker Change: When I tell you that we're going to charge $5 for conforming transaction and part of that is gonna be borne by the factor and part of it is going to be borne by the broker Robinson is in my analysis and thinking about that we're not going to price something with them that doesn't allow us to achieve what we promised the market. We would go do I can't tell you exactly when and we got a ton of work to.

Melissa Forman: I can't tell you exactly when, and we got a ton of work to do for them, and we're excited to be partnered with them.

Speaker Change: Do for them and we're excited to be partnered with them.

Melissa Forman: And as far as that announcement and what it's on pipeline, Melissa, it's your phone that rings. So I'm going to let you take that one. Yeah, I would say, you know, last quarter, I told you that I had not been more excited about the status of our pipeline in the history of Tram Pay. And I was very excited about where we were going and headed. I would just reiterate that this quarter. I am even more excited about our pipeline, even after these big announcements with C.H. Robinson and Archbeth because it continues to strengthen and grow.

Melissa: And as far as that announcement and what it's done pipeline Melissa. It's your phone that Ranga so I'm going to let you take that one yeah and I would say you know last quarter I told you that I have not been more excited about the status of our pipeline.

Melissa Forman: Yep, I would say, you know, last quarter, I told you that I had not been more excited about the status of our pipeline in the history of Triumph Pay, and I was very excited about where we were going and headed. I would just reiterate that this quarter, I am even more excited about our pipeline, even after these big announcements with CH Robinson and ArcBest, because it continues to strengthen and grow. We, you know, certainly don't usually announce deals ahead of their go-live, but we did with CH Robinson because of just the material volume that it contributes to the network, and we felt like we had to disclose that.

Melissa: In the history of try and paint I was very excited about where we're going and headed I would just reiterate that this quarter I am even more excited about our pipeline even after these big announcements in C. H Robinson, an arc fast and because it continues to strengthen and grow them, we certainly don't usually announced deals.

Melissa Forman: We certainly don't usually announce deals ahead of their go live, but we did with C.H. Robinson, because of just the material volume that it contributes to the network, felt like we had to disclose that. But for the rest of those that are in our current integration pipeline and not just in contract signing in late stage sales, we expected near if all of the volume that we have integrating this year and if 100% of C.H. was ramped, we would be close to the 60% market density point that Aaron was talking about earlier. And so that's a substantial, substantial jump from the 47 where we are today to being close to 60% at the end of the year, assuming C.H.

Melissa: Out of their go live, but we did with C. H Robinson because of just the material volume that it contributes to the network and felt like we had to disclose that.

Melissa Forman: But for the rest of those that are in our current integration pipeline, not just in contract signing and late stage sales, we expect to near, if all of the volumes that we have integrated this year and if 100% of CH was ramped, we would be close to the 60% market density point that Aaron was talking about earlier. And so that's a substantial jump from the 47 where we are today to being close to 60% at the end of the year, assuming CH is ramped up.

Melissa: But for the rest of those that are in our current integration pipeline not not just in contract signing in late stage sales, we expected near if all of the volume that we have integrating this year and if 100% of C. H was ramped and we would be close to the 60% market density point that Aaron was talking about earlier.

Melissa: And so that is the Samsung substantial jump from the 47, where we are today and two to being close to 60% at the end of the year assuming C. H was ramped. So we're excited about it that it's again, it's never been stronger yes. It does help make the phones ring him when youre able to add this kind of density in the market.

Melissa Forman: So we're excited about it. But again, it's never been stronger. Yes, it does help make the phones ring when you're able to add this kind of density in the market and bring additional value to the network to our constituents.

Melissa Forman: was ramped. So we're excited about it. That it's again, it's never been stronger. Yes, it does help make the phones ring when you're able to add this kind of density in the market and bring additional value to the network to our constituents.

Speaker Change: And bringing additional value to the network to our constituents let me just.

Melissa Forman: Let me just one thing by the end of the year, even if Robinson goes live, we won't have all that volume probably until 3rd quarter of next year. So think of a probably 3rd quarter of next year.

Unknown Executive: Let me just say one thing, by the end of the year, even if Robinson goes live, we won't have all that volume probably until the third quarter of next year, so think of probably the third quarter of next year, and do we know, and I'm asking in real time, but like, Expressing that in terms of dollar volume, what's in the pipeline. Approximately. Do I want to say it? I don't know. I don

Speaker Change: One thing and by the end of the year, even if Robinson goes live we won't have all of that volume probably until third quarter of next year. So think of probably third quarter of next year and do we know and I'm asking in real time, but like.

Melissa Forman: And do we know, and I'm asking in real time, but like expressing that in terms of dollar volume, what's in the pipeline approximately? Do I want to say it? I don't know. It's it's it's more than 10 million or 10 billion rather.

Speaker Change: Expressing that in terms of dollar volume what's in the pipeline.

Speaker Change: Approximately so I want to say it I don't know I don't know.

Unknown Executive: I don't know. I don't know. It's, it's, it's more than 10 million, or 10 billion, rather.

Speaker Change: It's it's up more than $10 million or $10 billion rather.

Okay.

Unknown Executive: Thank you for the question.

Joseph Peter Yanchunis: All right, well, thank you for taking my question.

Speaker Change: Well. Thank you for taking my question.

Jordan Gendt: Our next question comes from Jordan Gendt from Stevens.

Jordan Gens: Our next question comes from Jordan Gens from Stevens. Please go ahead.

Speaker Change: Our next question comes from Jordan against from Stephens. Please go ahead.

Jordan Gendt: Please go ahead. Hey, good morning. Thanks for taking my question.

Unknown Executive: Hey, good morning. Thanks for taking my question. I just wanted to get a little more color on the network transaction fees. You know, we've been teased about the percentage of improvement in network volumes, but I just want to appreciate just how much of TPay's revenue comes from the network fees. If you could disclose any of that, that would be great.

Jordan against: Hey, good morning, Thanks for taking my question I, just wanted to get a little more color on the network transaction is we've been getting piece about the percentage of improvement of network volumes, but I just want to appreciate just how much of Tpa revenue comes from the network fees. If you could disclose any of that that would be great.

Jordan Gendt: I just wanted to get a little more color on the network transaction fees. No, we've been getting teased about the percentage of improvement of network volumes, but I just want to appreciate just how much of T pay revenue comes from the network fees.

Aaron Graft: If you could disclose any of that, that would be great. We have that broken out that way. I don't think we did.

Jordan against: [laughter].

Unknown Executive: Unknown Speaker Let us come back to you on that. What you should be able to see right now in our disclosures is the volume of network fees for the quarter. We are not monetizing those at $5 a transaction right now. Hopefully, we've been clear about that. It's well below that number because we're rolling contracts, but I don't know that we have a precise number. And I don't want to just say it off the cuff right now and tell you something is wrong.

Speaker Change: We have that kind of broken out that we don't think we do I don't think we wouldn't let us come back to you on that what what you know what you should be able to see right now in our disclosures is the volume of network fees for the quarter. Okay. We are not monetizing those at $5 a transaction right now.

Aaron Graft: Let us come back to you on that. You know, you should be able to see right now in our disclosures is the volume of network fees for the quarter. Okay. We are not monetizing those at $5 a transaction right now. Hopefully we've been clear about that.

Speaker Change: Hopefully we've been clear about that that it's well below that number because we're rolling contracts, but.

Aaron Graft: It's well below that number because we're rolling contracts, but I don't know that we have a precise number, and I don't want to just say it off the cuff right now and tell you something wrong. But we can look at adding that disclosure going forward. What you should know is we give you the absolute number of network transaction fees, and we would say that we are not pricing it at $5 right now because on both sides, again, we're in the density building phase, right? So we're not charging full freight at this time.

Speaker Change: I don't know that we have a precise number and I don't want to just say it off the cuff right now and until you something wrong, but.

Unknown Executive: We can look at adding that disclosure going forward. What you should know is that we give you the absolute number of network transaction fees, and we would say that we are not pricing it at $5 right now because, on both sides, again, we're in the density building phase, right? So we're not charging full freight at this time. So that's as much as I can say right now. Yeah, what we do disclose is:

Speaker Change: We can look at adding that disclosure going forward. What you should know is we give you the absolute number of network transaction fees and we would say that we are not pricing it at $5 right now because on both sides again, we're in the density building things right. So we're not charging full freight are at this time.

Aaron Graft: So that's as much as I can say right now. Yeah. What we do disclose is the amount of the fees that we're collecting from brokers and what we're collecting from factors. And there's network fees embedded in each of that. Yeah. Okay.

So that's as much as I can say right now, but what we do disclose is the.

Unknown Executive: Yeah, what we do disclose is the amount of the fees that we're collecting from brokers and what we're collecting from factors, and there are network fees embedded in each of those.

Speaker Change: Amount of the fees that we're collecting from brokers and what we're collecting from factors and there's network fees embedded in each of that yeah.

Jordan Gens: Okay, perfect. Thanks for answering that.

Aaron Graft: Perfect. Thanks for answering that. And then maybe you just want to follow up on the expense guidance. It was pretty clear in the letter. He talked about kind of the near term expense, but I just want to maybe dig in more on the long term. You know, there's sales commissions that are going to be burning off over time that should provide some relief. So if you could have any, or if you have any commentary on that, that would be great. Thank you.

Speaker Change: Okay perfect. Thanks for answering that and then maybe just one follow up on the expense guidance.

Unknown Executive: And then maybe just one follow up on the expense guidance. It was pretty clear in the letter that he talked about kind of near-term expenses, but I just want to maybe dig in more on the long term. You know, there are sales commissions that are going to be burning off over time that should provide some relief. So if you could have any, or if you have any commentary on that, that would be great. Thank you.

Speaker Change: It was pretty clear in the letter you talked about kind of the near term.

Speaker Change: But I just wanted to maybe dig in more on the long term.

Speaker Change: Sales commissions that are going to be burning off over time that should provide some relief.

Speaker Change: So if you could have any or if you have any commentary on that that'd be great. Thank you.

Aaron Graft: It's hard to look past the next several quarters that we've committed to. You know, we are committing to keeping our expense levels within our current run rate for the foreseeable future. There's a lot that we need to do long term. What we want to really get across, though, is that we believe that for the foreseeable future, for what's in front of this right now, the roster has been assembled. We've added a lot of really high-level talent over the last several months and quarters in anticipation of building what we're doing right now. You know, we've spent some consulting dollars.

Unknown Executive: It's hard to look past the next several quarters that we've committed to. You know, we have, and we are committing to keeping our expense levels within our current run rate for the foreseeable future. There's a lot that we need to do long term.

It's hard to look past the next several quarters that we've committed to and we have we are committing to keeping our expense levels within our current run rate for the foreseeable future. There's a lot that we need to do long term, but we want to really get across though is that we we believe that for the foreseeable few.

Unknown Executive: What we want to really get across, though, is that we believe that for the foreseeable future, for what's in front of us right now, the roster has been assembled. We've added a lot of really high-level talent over the last several months and quarters in anticipation of building what we're doing right now. You know, we've spent some consulting dollars. We've added some people. We've added technology, and we are confident that where we are today is where we can be for at least the next few quarters.

Speaker Change: Sure for what's in front of US right now the roster has been assembled we've added a lot of really high level talent over the last several months and quarters in anticipation of building what we're doing right now.

Speaker Change: We've spent some consulting dollars we've added some people we've added technology and we are confident that where we are today is is where we can be for at least the next few quarters. We are going to have to be disciplined about what we take.

Aaron Graft: We've added some people. We've added technology. And we are confident that where we are today is where we can be for at least the next few quarters. We are going to have to be about what we take on and who we take on between, you know, well, for the next few quarters in order to be able to meet that commitment that we're making, but it's something that we'll confident that we will do. And on top of that, just know there are puts and takes in every quarter. Right? This is a little bit the vagria this system.

Speaker Change: Take on and who we take on between Oh for the next few quarters in order to to.

Unknown Executive: We are going to have to be disciplined about what we take on and who we take on between, you know, for the next We have a few quarters in order to be able to meet that commitment that we're making, but it's something that we're confident that we will do.

Speaker Change: To be able to meet that commitment that we're making but it's something that we're confident that we will do.

Unknown Executive: Yeah, and the fallout... On top of that, just know there are puts and takes in every quarter, right? This is a little bit of the vagary of the system. And we had a material consulting expense in this quarter. We could have delayed that.

Speaker Change: And default.

Speaker Change: On top of that just know there are puts and takes in every quarter right. This is a little bit the vagary of the system and we had a material consulting expense in this quarter.

Aaron Graft: And we had a material consulting expense in this quarter. We could have delayed that. We could have tried to go that way on our own, but we've watched enough, you know, banking as a service relationships blow up that we wanted to dot every i and cross every t, and it didn't matter that it was going to create a drag. I think it's important.

Unknown Executive: We could have tried to go that way on our own. But we've watched enough, you know, banking as a service relationships blow up, so we wanted to dot every I and cross every T. And it didn't matter that it was going to create a drag. I think it's important, and I'm not trying to, to back away from the question, but I just want to remind you of the North Stars. Right, like I think about three things.

Speaker Change: We could have delayed that we could've tried to go that way on our own but we've watched enough banking.

Speaker Change: Banking as a service relationships blow up that we wanted to dot every I and cross every T and it didn't matter that it was going to create a drag.

Speaker Change: It is important.

Aaron Graft: I'm not trying to back away from the question, but I just want to remind you of the north stars here, right? Like I think about three things. Think about talking about the network and all that's attached to it, which includes low pay, factoring as a service, all the things we want to do is a billion dollar revenue opportunity. We're at 55 million right now, right, so we got a lot to go do to get that done. The second thing that gets us there, that's an output, is getting to 80% of truckload density, and we don't stop there.

Speaker Change: I'm not trying to tow.

Speaker Change: Back away from the question, but I just want to remind you of the North stars here right like I think about three things.

Unknown Executive: Think about talking about the network and all that's attached to it, which includes load pay, factoring as a service, all the things we want to do as a billion-dollar Opportunity. We're at 55 million right now, right? So we have a lot to do to get that. The second thing that gets us there, that's an output, is getting to 80% of truckload density. And we don't stop there. There's LTL, there's other things, there's a shipper market, there's a ton of things we want to do. But that's a North Star, right, of getting to 80%.

Think about talking about the network and all of that's attached to it which includes loan pay factoring as a service all the things we want to do is a billion dollar revenue opportunity, we're at $55 million right now.

Speaker Change: So we got a lot to go due to.

Speaker Change: To get that done.

Speaker Change: The second thing that gets US there that's an output is getting to 880% of truckload density and we don't stop there Theres L. P. L. Theres other things that the shipper market, there's a ton of things that we want to do but that's a north star right of getting to 80%.

Aaron Graft: There's LPL. There's other things that's a shipper market. There's a ton of things we want to do, but that's a north star, right, of getting to 80% and then lastly, and it ties to this question. The question is for our payments segment, which is currently operating at negative 10%. We've given an interim goal of we want to be at 25% EBITDA margin. We don't know exactly when that will hit, but obviously to get to 25%, we got to improve 35%, and long term, the, this business, this network business needs to deliver above a 50% EBITDA margin, so billion dollars in revenue, 80% density in truckload brokerage, and over a 50% margin, that's a home run.

Unknown Executive: And then lastly, and it ties to this question, is for our payment segment, which is currently operating at negative 10%. We've given an interim goal of we want to be at 25% EBITDA margin. We don't know exactly when that will hit, but obviously, to get to 25%, we've got to improve 35%. And long term...

Speaker Change: And then lastly, and it ties to this question is for our payments segment, which is currently operating at negative 10%.

Speaker Change: We've given an interim goal if we want to be at 25% EBITDA margin. We don't know exactly when that will hit, but obviously to get to 25%. We've got a improved 35% and long term.

Unknown Executive: This business, this network business, needs to deliver above a 50% EBIT in March. So a billion dollars in revenue, 80% density in truckload brokerage, and over a 50% margin, that's a home run. That's what we're going after. You are right that in the short term, sales commissions do burn off, but those get backfilled. We need to go do account validations, checking account validations for thousands of new carriers that are going to come on when Robinson goes live. Why?

Speaker Change: This business this network business needs to deliver above a 50% EBITDA margin.

It's a $1 billion in revenue, 80% density in truckload brokerage and over a 50% margin. That's a home run like that's what we're going after.

Aaron Graft: Like, that's what we're going after. You are right in that, in the short term, sales commissions do burn off, but those get backfilled. I mean, we need to go do account validations, checking account validations for thousands of new carriers. They're going to come on when Robinson goes live. Why? Because we are the trusted party to stand between the criminals, the fraudsters, and the good actors, right? Like that's what we do. We handle people's money. And so there are puts and takes, right? Like, yes, sales commissions fall off, but we also have to do certain things to deliver on our network promises.

Speaker Change: You are right in that in the short term sales commissions do burn off but those get backfill I mean, we need to go do a count validation checking account validation for thousands of new carriers, they're gonna come on when Robinson goes live why because we are the trusted party to stand between the criminals the fraudsters and the good actors I think that's what.

Unknown Executive: Because we are the trusted party to stand between the criminals, the fraudsters, and the good actors. That's what we do. We handle people's money, and there are puts and takes, right? Like, yes, sales commissions fall off. But we also have to do certain things to deliver on our network promises. But just, I would again invite you to consider those North Stars.

Speaker Change: We do we handle people's money and so.

Speaker Change: There are puts and takes right like yes sales commissions fall off but we also have to do certain things.

Speaker Change: Two to deliver on our network promises, but just I would again invite you to consider those northstar's, that's what we think about.

Aaron Graft: But just, I would again invite you to consider those North Stars. That's what we think about. Right, and if you deliver those things and you're a bank investor here, if you can deliver that kind of margin and keeping everything else the same, like you're talking about an ROA approaching 2%. Right, you've seen what our factoring business does in a normal cycle. Obviously, the scalability and efficiency and the payments business. And we run a very efficient bank with a low cost of funds, right? I don't want that to be lost. And so you put all that together, and that's a high ROE earning institution.

Unknown Executive: That's what we think about. Right. And if you deliver those things, and you're a bank investor here, if you can deliver that kind of margin and keep everything else the same, like you're talking about an ROA approaching 2%. Right?

Speaker Change: And if you deliver those things and you're a bank investor here. If you can deliver that kind of margin and keeping everything else. The same like you're talking about an ROA approaching 2% right you've seen what our factoring business does in a normal cycle, obviously, the scalability and efficiency in the payments business and we run a very efficient bank with a low cost of funds right.

Unknown Executive: You've seen what our factoring business does in a normal cycle, obviously the scalability and efficiency in the payments business, and we run a very efficient bank with a low cost of funds, right? I don't want that to be lost. And so you put all that together, and that's a high ROE earning institution. But those three things that I talked to you about revenue, density, and EBITDA margin, like that's what we're, that's the goal we're pursuing, and everything we do begins or begins with that in mind.

Speaker Change: Want that to be lost and so you put all that together and that that's a high Roe.

Speaker Change: Turning institution.

Aaron Graft: But those three things that I talked to you about, the revenue, the density, and the EBITDA margin, like that's what we're, that's the goal we're pursuing. And everything we do begins, or begins with that in, in my. Perfect.

Speaker Change: But those three things that I talked to you about the revenue the density and the EBITDA margin. That's what we're that's the goal we're pursuing in everything we do begins.

Speaker Change: Begins with that in in mind.

Jordan Gens: Perfect, thanks for taking my question.

Unknown Executive: Thanks for taking my question. You got it.

Speaker Change: Perfect. Thanks for taking my question.

Hal Goetsch: Our next question comes from Hal Goach from E. Riley. Please go ahead. Hey, good morning, everyone.

how Dutch: You got it our next question comes from how Dutch from B Riley. Please go ahead.

Unknown Attendee: Hey, good morning, everyone. My question is about the factory and business. I know you don't have control over the freight industry. It's uncontrollable, but I wanted to get your perspective on the downturn in that, you know, if you look at a two-year stack, it's the high 30s down volume. It's like, even if I remove the price effects of invoice pricing, it's down probably 20. That would be a depression in my playbook for volume.

how Dutch: Hey, Good morning, everyone. My question is back to the factoring business I know you don't have control over the freight industry. It's uncontrollable well I wanted to just get your perspective on the downturn in the north.

Hal Goetsch: My question's back to the factory and business. I know you don't have control over the freight industry. It's uncontrollable. What I wanted to get your perspective on the downturn in that, you know, look at a two-year stack. It's it's high 30s down volume. Even if I remove price effects of invoice pricing, it's down probably 20. That would be a depression in my playbook for volume. And I know a lot of stuff that goes over the road is food and beverage, so that's a big part of what's in my waist in every, every two, every week for what comes to my house and gets shipped out and that had to go to a store.

Speaker Change: The two year stack, it's it's high thirties down volume.

Speaker Change: Even if I remove price effects of invoice pricing, it's down probably 20.

Speaker Change: That would be a depression.

Speaker Change #100: My playbook for Boeing.

Unknown Attendee: And I know a lot of stuff that goes over the road is food and beverage, so that's a big part of what's in my waste bin every week for what comes to my house and gets shipped out, and that had to go to a store.

Speaker Change #101: So a lot of stuff that goes over the road is food and beverage. So that's a big part of what's in my waste in every every every week for what comes to my house they get shipped out.

Unknown Executive: So could you just give us a perspective of what is really down? Like, where are inventories that you can see across the country, are they leaner than ever before? Are we about as low as wholesale or retail inventories can go? Just give us your thoughts on it because it seems like it's, It's been pretty difficult. I can't imagine having our third year of this. Thanks. I'll pick, I'll pick.

Speaker Change #102: I had to go to a store. So could you just give us a perspective of what is really down like where where inventories that you can see across the country with a leaner than ever before.

Aaron Graft: So can you just give us a perspective of what is really down, like where, where inventories that you can see across the country, are they leaner than ever before? Or are we about as low as, you know, wholesale or retail image voice can go? Just give us your thoughts on that because it seems like it's pretty, pretty difficult. I can't imagine having another third year of this. Thanks.

Speaker Change #103: Are we about is lowest wholesale where retailer inventories can go.

Speaker Change #104: Give us your thoughts on it because it seems like it's.

Speaker Change #105: Pretty it's been pretty difficult I can't imagine, having our third year of this thanks.

Aaron Graft: Well, I'll take, I'll take the first swing of that. How the interesting thing about what we see in the marketplace is there still a fairly large spread between contract rates and spot rates. We are seeing some stabilization of the spot rate market, which is a majority of the small carriers that I think Aaron referred to earlier, and we're starting to see that prop up. We've seen several quarters now. I mean, we look, second quarter was not great and probably hit our lowest watermark within that quarter. But one thing that we are seeing that we watch very closely is not only the duration of this cycle, but we also look at, you know, what’s pulling on those margins. We know the carriers, a lot of the small carriers are operating well below their costs.

Unknown Executive: Well, I'll take I'll take the first swing at that, Al. The interesting thing about what we see in the marketplace is that there's still a fairly large spread between contract rates and spot rates. We are seeing some stabilization of the spot rate market, which is a majority of the small carriers that I think Aaron referred to earlier, and we're starting to see that pick up. We've seen several quarters now, I mean, our second quarter was not great and probably hit our lowest watermark within that quarter.

Well I'll take I'll take the first swing at that al.

Speaker Change #106: The interesting thing about what we see in the marketplace that there still are.

Speaker Change #106: A fairly large spread between.

Speaker Change #107: Contract rates and spot rates, we are seeing some stabilization of the spot rate market, which is a majority of the small carriers and I think Aaron referred to earlier and we're starting to see that pop up we've seen several quarters now I mean second quarter was not great and probably hit our lowest watermark within that quarter.

Unknown Executive: But one thing that we are seeing that we watch very closely is not only the duration of the cycle, but we also look at what's pulling on those margins. We know that carriers, a lot of the small carriers are operating well below their cost. And so that's obviously not sustainable. We still see that small carrier segment, you know, taking most of the bullets and so.

Speaker Change #108: But one thing that we are seeing that we watch very closely is not only the duration of the cycle, but we also look at whats pulling on those margins. We know the carriers a lot of the small carriers are operating well below their cost and so that's obviously not sustainable we still see that small carrier segment.

Aaron Graft: And so that's obviously not sustainable. We still see that small carrier segment, you know, taking most of the bullets. And so one bright spot to kind of zero in on for us as we watch fuel very closely in the correlation with fuel and average invoice amount is specifically in that spot market. Why that's important is if average invoice amount is moving in lock step with fuel, then there's a level of pricing power. We haven't seen that consistently for the last two years. We're starting to see that now, meaning that if fuel goes up, average invoice amount goes up in lock step; there's about a week lag.

Speaker Change #108: Taking most of the bullets and so.

Unknown Executive: One bright spot to kind of zero in on for us as we watch fuel very closely and the correlation with fuel and average invoice amounts specifically in that spot market. Why that's important is if average invoice amount is moving in lockstep with fuel, then there's a level of pricing power we haven't seen consistently for the last two years. We're starting to see that now, meaning that if fuel goes up, the average invoice amount goes up in lockstep; there's about a week lag. If fuel goes down, we see fuel go down, or we see average invoices go down. And so fuel is having a really big impact on that.

Speaker Change #107: One bright spot.

Speaker Change #107: Zero in on for US as we watch fuel very closely and the correlation with fuel and an average invoice amount is specifically in that spot market.

Speaker Change #107: Why that's important is.

Speaker Change #107: If.

Speaker Change #107: The average invoice amount is moving in lockstep with fuel then theres a level of pricing power.

Speaker Change #107: We haven't seen that consistently for the last two years, we're starting to see that now meaning that if fuel goes up average invoice amount goes up in lockstep theres about a week lag.

Aaron Graft: If fuel goes down, we see fuel go down or we see in average invoices go down. And so fuel is having a really big impact on that. So, you know, I look at the duration. It almost matches the duration of the up cycle. And if you look historically at previous cycles, you know, 2013, 2014, 18, 19, those cycles lasted about as long as the up cycle. And I think worth the tail end of that. But I'm not, you know. We've seen headpakes before; we saw one at the end of quarter, the fourth quarter into the first quarter.

If you will goes down we see few will go down or if we see an average invoices go down and so fuel is having a really big impact on that so you know I.

Unknown Executive: So, you know, I look at the duration; it almost matches the duration of the up cycle. And if you look historically at the previous cycles, you know, 2013, 2014, 18, 19, those cycles lasted about as long as the up cycle. And I think we're at the tail end of that. But I'm not, you know, we've seen head fakes before, we saw one at the end of the quarter, the fourth quarter, into the first quarter. We're not prepared to say, you know, that we're done, this is good, times are, you know, all pastors are green ahead. We're just not quite there yet, but I think we're seeing enough that it is looking better. And fingers are crossed, toes are crossed, but we're not there yet.

I look at the duration it almost matches the duration of the up cycle and if you look historically at the at previous cycles. You know 2013, 2014, 18 19 those cycles lasted about as long as the up cycle and I think we're at the tail end of that but I'm not we've seen head fakes before we saw one at the end of quarter.

Speaker Change #107: In the fourth quarter into the first quarter, we're not prepared to say.

Aaron Graft: We're not prepared to say, you know, that we're done. This is good times, you know, all pastures are green ahead. We're just not quite there. But I think we're seeing enough that it is looking better, and fingers crossed, toes crossed, but we're not there yet.

Don: Don This is good times are now all passengers are green ahead.

Don: We're just not quite there, but I think we're seeing enough that that it is looking better.

Speaker Change #107: And fingers are crossed tozer cross, but we're not there yet.

Hal Goetsch: Okay. Thank you.

Speaker Change #107: Okay. Thank you.

Frank Schiraldi: Next question comes from Frank Charaldi from Piper Sandler. Please go ahead. Good morning. Just wondered if you mentioned the some of the sort of targets thresholds that 100 million in revenue that we've talked about in the past on the payments network. I'm just wondering if you would be able to sort of give some guard rails around the timing of that at this point. Do you think what’s a decent place to put that target? Is it sort of end the 20, 25 with that 25% EBITDA margin? Just curious if you can try to try to place that a bit for us.

Speaker Change #107: Okay.

Frank Joseph Schiraldi: Our next question comes from Frank Schiraldi on behalf of Piper Sandler. Please go ahead.

Our next question comes from Frank Schiraldi from Piper Sandler. Please go ahead.

Frank Joseph Schiraldi: Good morning. Just wondered, Aaron, you mentioned some of the sort of targets, thresholds, the hundred million in revenue that we've talked about in the past on the payments network. I'm just wondering if you'd be able to sort of give some guardrails around the timing of that at this point. Do you think? What's a decent place to put that target? Is it sort of the end of 2025 with that 25% EBITDA margin? I'm just curious if you can try to place that a bit for us.

Frank Joseph Schiraldi: Good morning.

Frank Joseph Schiraldi: Good morning, just wondered are you mentioned the.

Speaker Change #110: Some of the sort of target thresholds with the the 100.

Speaker Change #111: $1 million in revenue that we've talked about in the past.

Speaker Change #112: On payments network.

Speaker Change #114: I'm just wondering if you if you'd be able to sort of give some some guardrails around the timing of that at this point do you think what's a decent place to put that target is it sort of end of 2025 with.

Speaker Change #115: With that 25% EBITDA margin just curious if you can try to try to place that a bit for us.

Unknown Executive: Brad Voss is over here. Ready to tackle me.

Aaron P. Graft: Brad Voss is over here ready to tackle me. No, yeah, Melissa, I don't think that, on December 31, 2025, everything would have to go absolutely perfect to be at 100 million in revenue at that time. And so I don't think if I were underwriting this, I would not put it on it. So, is it midway through 2026? Is it the end of 2026? I'm not exactly sure. It's going to be lumped together. Right, like, I can't predict because this hasn't been done before, or at least I certainly haven't done it before, but I don't think it's, I know it's never been done in transportation.

Speaker Change #115: Brad losses over here and ready to tackle me.

Unknown Executive: No, yeah, I don't think that December 31, 2025, everything would have to go absolutely perfect to be at 100 million of revenue at that time. So I don't think, if I, if I were underwriting us, I would not put it then. So is it midway through 2026? Is it end of 2026? I'm not exactly sure; it's going to be lumpy. Right?

Yeah, Melissa I don't think.

Speaker Change #115: That.

Speaker Change #116: December 31, 'twenty twenty-five everything would have to go absolutely perfect to be at a $100 million of revenue at that time, and so I don't think if I, if I were underwriting us I would not put it then.

Speaker Change #116: So is it mid way through 2020 six as at the end of 2026, I'm not exactly sure it's going to be lumpy.

Aaron Graft: I can't predict, because this hadn't been done before, or at least I certainly haven't done it before, but I don't think it's; I know it's never been done in transportation. I believe I have the absolute firm conviction that density overcomes every objection. It just does. And so what's going to happen is you're going to, I mean, Triumph pay, pay the, like 126,000 carriers last quarter. I don't know that there were that many more active carriers last quarter; two have been paid. Like the inflection point on density is coming. Once that happens, I think the monetization, if you look at any other network business, follows pretty rapidly.

Speaker Change #116: I can't predict cause.

Speaker Change #116: Because it hasn't been done before or at least I, certainly havent done it before but I don't think it's I know, it's never been done in transportation.

Speaker Change #116: I believe.

Aaron P. Graft: I believe, and have the absolute firm conviction that density overcomes every obstacle. It just does. And so what's going to happen is you're going to hit an inflection point. And we are coming to that inflection point on dinner, where Triumph paid 126,000 carriers last quarter. I don't know that there were that many more active carriers last quarter to have been paid.

Speaker Change #116: I have the absolute firm conviction that density overcomes every objection.

Speaker Change #116: It just does and so what's gonna happen is you're going to hit an inflection point and we are coming to that inflection point on density.

Speaker Change #116: Where.

Speaker Change #117: I mean try pay paid like 126000 carriers last quarter I don't know that there were that many more active carriers last quarter to have been paid at the inflection point on density is coming.

Aaron P. Graft: The inflection point on density is coming. Once that happens, I think the monetization, if you look at any other network business, follows pretty rapidly. Okay, well, is that 2025? I don't know.

Speaker Change #117: Once that happens I think the monetization if you look at any other network business follows pretty rapidly. Okay. Well is that 2025 I don't know that's a lot of growth between now and the end of 2025. So I said, we're more focused on density is it 2026 I hope. So I mean look we know we got a double where our revenue right now.

Aaron Graft: Okay, well, is that 2025? I don't know; that's a lot of growth between now and the end of 2025, so I said we're more focused on density. Is it 2026? I hope so. I mean, look, we know we got a double where our revenue right now, because we got a whole lot more to go do after that. So if it were me, I'd put that into the 2026 numbers. I, you know, or beyond. But I don't have; I can't; our business is not linear enough.

Aaron P. Graft: That's a lot of growth between now and the end of 2025. So I said we were more focused on density. Is it 2026 yet? I hope so. I mean, look, we know we got doubled our revenue right now because we have a whole lot more to do after that. So if it were me, I'd put that into the 2026 numbers, you know, or beyond. But I don't have I can't. Our business is not linear enough, and I can't predict the state of freight well enough to give you specificity beyond.

Speaker Change #118: Now because we got a whole lot more to go do after that so if it were me I'd put that into the 'twenty 'twenty six numbers.

Speaker Change #118: You know or beyond but I don't have I can't.

Our business is not linear enough.

Frank Schiraldi: And I can't predict the state of freight well enough to give you specificity beyond that. All right, no fair enough.

Speaker Change #118: And I can't predict the state of freight well enough to give you specificity beyond that.

Frank Joseph Schiraldi: All right, no, fair enough. And then just talking about, you know, speaking on monetization, obviously, monetizing the factors gets you a significant way to that $5 per network transaction you guys have talked about. And I think, or I think that's kind of a yearly kind of, on a yearly basis, that decision is made. So how confident are you that you got C.H. Robinson, which obviously is a huge win

Speaker Change #119: Okay, Alright fair enough and then.

Frank Schiraldi: And then just talking about, you know, speaking on monetization, obviously, monetizing the factors gets you a significant way to that spot dollar or network transaction; you guys have talked about. And I know, or I think that's kind of a yearly kind of pH Robinson, which obviously is a huge win. We don't know when this freight recession's going to end. How confident are you? What's your comfort level that 2025 is going to be the year where you can really start fully monetizing the factors and get that, whatever it is, $3.50 per? Is that still looking good?

Just talking about you know speaking on monetization, obviously monetizing the factors gets you.

Speaker Change #120: A significant way to that $5 or network transaction, you guys had talked about and I know, where I think that's kind of a yearly kind of on.

Speaker Change #120: On a yearly basis that decision is made so.

Speaker Change #121: How confident you know you've got CH Robinson, which obviously is a huge win.

Frank Joseph Schiraldi: We don't know when this freight recession is going to end. How confident are you? What's your comfort level that 2025 is going to be the year where you can really start fully monetizing the factors and get that whatever it is, $3.50 per truck? Is that still looking good? Is that maybe pushed back another year, just given where we are in the recession? What are your updated thoughts there? Yeah, I mean...

Speaker Change #120: <unk>.

Speaker Change #122: We don't know when this freight recession is going to and how confident are you. What's your comfort level that 2025 is going to be the year.

Speaker Change #122: Where you can really start fully monetizing the factors and get that whatever it is $3 50 per.

Speaker Change #123: Is that still looking good is that maybe pushed back another year, just given where we are in a recession what are your updated thoughts there.

Aaron Graft: Is that maybe push back another year just given where we are on the session? What are your updated thoughts there? Yeah, I mean, so it's hard to predict. The benefit we have is we can look at our own factoring business, right? And we can test volumes in our own business, which happens to be 15% of the market. So, you got four of the top five, eight of the top 10, 24 of the top 30, and 59 of the top 100 brokers who are using us, some for audit, some for payments, some for both. And those who use us for one of the other, I mean, there's a lot of gain in that. By the way, if someone's just using us for audit, and then we bring on payments, there's some super opportunities there.

Speaker Change #124: No I mean.

Aaron P. Graft: So it's hard to predict the benefit we have is that we can look at our own facts. Right, and we can test volumes in our own business, which happens to be 15% of the total. So you got 4 of the top 5, 8 of the top 10, 24 of the top 30, and 59 of the top 100 brokers who are using us. Some for audit, some for payment, some for... And those who use us for one or the other. I mean, there's a lot of gain in that, by the way.

Speaker Change #125: So it's hard to predict the benefit we have.

Speaker Change #126: As we can look at our own factory business right and we can test volumes in our own business, which happens to be 15% of the market.

So.

Speaker Change #127: You got four of the top five eight of the top 10 24 of the top 30 and 59 of the top 100 brokers, who are using us some for audit some for payments some for both.

Speaker Change #127: And those who use us for one or the other I mean that theres a lot of gain and that by the way if someone's just using us for audit and then we we bring on payments, there's there's super opportunities there.

Aaron P. Graft: If someone's just using us for audit and then we bring on payments, there are some super opportunities there. Like, I think in every discussion and negotiation with a factoring company who uses our system, we will show them the volume that was when the contract was signed, and we will show you the volume that is and the volume that is scheduled to come. And we will have a discussion about what's fair, right? We want to treat them fairly.

Aaron Graft: Like, I think in every discussion and negotiation with a factoring company who uses our system, we will show them the volume that was. When the contract was signed, and we will show you the volume that is and the volume that is scheduled to come. And we will have a discussion about what's fair. We want to treat them fairly. We need factoring companies to do well. For this network to work. Frankly, the industry needs factoring companies to do well because they serve small truckers. And we can't do all of it. We aren't equipped. We don't want to.

Speaker Change #127: I think in every discussion and negotiation with a factoring company who uses our system, we will show them the volume that was.

Speaker Change #127: When the contract was signed and we will show you. The volume that is in the volume that is scheduled to come.

Speaker Change #127: And we will have a discussion about what's fair right, we want to treat them fairly we need factoring companies to do well.

Aaron P. Graft: We need factoring companies to do well for this network to work. Frankly, the industry needs factories and companies to do well because they serve small truckers. And we can't do all of it. We aren't equipped.

Speaker Change #127: For this network to work with frankly, the industry needs factoring companies to do well because they serve small truckers and we can't do all of it we aren't equipped we don't want to that's.

Aaron P. Graft: We don't want to, that's, nobody can do all of it. Like you need a robust industry. So I am, I am very, certain that.

Aaron Graft: That's nobody can do all of it. Like you need a robust industry. So I am very certain that the pricing adjustments will be done to reflect the value delivered. Will it happen in the context of the broader market? Sure. Like we said, we see green shoots. If Trump gets elected and tariffs come, and there's now a bunch of freight coming in the West Coast and that helps the market. Like these are all things we can't predict, but they will all go into the mix. But it ultimately comes down to how are we doing at taking a factoring company who's spending $10 to do all the back office on an invoice and lowering it to $7.

Speaker Change #127: Nobody can do all of it like you need a robust industry. So I am can I am very.

Speaker Change #127: Certain debt.

Aaron P. Graft: The pricing adjustments will be done to reflect the value delivered. Will that happen in the context of the broader market? Sure.

Speaker Change #128: The pricing adjustments will be done to reflect the value delivered well it happened in the context of the broader market sure.

Aaron P. Graft: Sure, like, and, you know, like we said, we see green shoots. If Trump gets elected and tariffs come, and there's now a bunch of freight coming into the West Coast, and that helps the market, like, these are all things we can't predict, but that will all go into the mix. But it ultimately comes down to how we are doing at taking a factoring company who's spending $10 to do all the back office on an invoice and lowering it to $7.

Sure.

Speaker Change #128: You know like we said, we see green shoots if Trump gets elected in tariffs come in Theres now a bunch of freight coming in the west coast and that helps the market. Like these are all things, we can't predict but they will all go into the mix, but it ultimately comes down to how are we doing at taking a factoring company who's spending $10 to do all the back office on an invoice in la.

Speaker Change #128: All right, it's a seven cap.

Aaron P. Graft: Can we show them the way? And we can show them the way with density, and we can help them show them the way with factoring as a service, right? For those who want to use it, we, I mean, it's not, we're not asking them to take it on faith. We can literally show them the way that it is done. So again, we expect to be paid for that, but we expect to be paid for that only to the effect that we are creating commensurate value for them. We want fans, not just customers, and we take a very long view on that.

Aaron Graft: Can we show them the way? And we can show them the way with density, and we can help show them the way with factoring as a service. Right for those who want to use it. We mean, it's not we're not asking them to take it on faith. We can like literally show them the way that it is done. So again, we expect to be paid for that, but we expect to be paid for that only to the effect that we are creating commensurate value for them. We want fans, not just customers, and we take a very long view on those relationships.

And we show them the way.

Speaker Change #128: And we can show them the way with density and we can help show them the way with factoring as a service right for those who want to use it I mean, it's not we're not asking them to take it on faith, we can like literally show them. The way that it has done. So again, we expect to be paid for that but we expect to be paid for that only to the <unk>.

Speaker Change #128: Effect that we are creating commensurate value for them.

Speaker Change #128: We want fans not just customers and and we take a very long view on those relationships.

Frank Joseph Schiraldi: That's it. And it looks like I might be the last question. I'm not sure.

Frank Schiraldi: And it looks like I might be the last question. I'm not sure, but if I could just sneak in one quick one, you brought it up around on terms of the potential Trump presidency and higher tariffs. Would that be that you think in the near term the number one thing that could boost us out of the freight recession and maybe with less need to get you know reduced capacity by that 15% you guys have talked about is that the number one. You know, kind of a Wolverine shaker of the freight industry that you see looking out to the election.

Speaker Change #129: Gotcha and then it looks like maybe the last question I'm not sure, but if I could just sneak in one quick one you've you brought it up Aaron on terms of a potential Trump presidency, and higher tariffs would that be do you think in the near term the number one thing that could boost.

Frank Joseph Schiraldi: But if I could just sneak in one quick one, you brought up the potential Trump presidency and higher tariffs. Would that be, in the near term, the number one thing that could boost us out of the freight recession and maybe with less need to get reduced capacity by that 15% you guys have talked about? Is that the number one, you know, kind of a mover and shaker of the freight industry that you see looking out to the election?

Speaker Change #130: Boost us out of the freight recession and maybe.

Aaron: With less need to get reduced capacity by that 15% you guys have talked about is that the number one.

Speaker Change #132: And of.

Aaron: Mover and Shaker.

Aaron: The freight industry that you see looking out to the election.

Aaron P. Graft: So, if it does, it's not a long-term fix. I-I-I-I don't think so.

Aaron Graft: So if it does, it's not a long-term fix, right? I don't think it's at the end of the day; it's about tonnage and capacity. I don't know that President Trump or President Biden or who members going to be president is going to have quite as much effect on tonnage as they would like to claim in their stump speeches, right? Like the economy is a mini headed thing. Of course, the more manufacturing that happens in Mexico, that's great for trucking, but even if it's happening in China and showing up on the West Coast. Yeah, it shows up in bunches, which we think is happening right now.

Aaron: So if it does it's not a long term fix.

Speaker Change #133: I don't think.

Aaron P. Graft: It's, at the end of the day, it's about tonnage and capacity. I don't know that President Trump or President Biden or whomever is going to be president is going to have quite as much effect on tonnage as they would like to claim in their stump speeches, right? Like the economy is a is a many-headed thing.

Speaker Change #133: It's.

Speaker Change #134: At the end of the day, it's about tonnage and capacity.

Speaker Change #135: I don't know that President Trump.

Speaker Change #135: Or president Biden or whomever is gonna be president is going to have quite as much effect on tonnage as they would like to claim in their stump speeches right like the economy is a is a is a mini headed thing.

Aaron P. Graft: Of course, the more manufacturing that happens in Mexico, that's great for trucking. But even if it's happening in China and showing up on the West Coast, Yeah, if it shows up in bunches, which we think is happening right now, like that's a short-term spike, that's, it's sort of like a hurricane creates a near-term spot, you know, opportunity long term. I still believe there's too much capacity. And so we are happy to participate in the upside.

Speaker Change #135: Of course, the more manufacturing that happens in Mexico.

Speaker Change #135: That's that's great for trucking, but even if it's happening in China and showing up on the West coast.

Speaker Change #135: Yeah, if it shows up in bunches, which we think is happening right now that's a short term spike that's it's sort of like a hurricane creates a near term.

Aaron Graft: Like that's a short-term spike that's sort of like a hurricane creates a near-term spot, you know, opportunity long term. I still believe there's too much capacity. And so we are happy to participate in the upside. We're happy for our carriers to get paid to in three dollars a mile because these people have fixed obligations and they work hard, and I want them to win. It doesn't change my long term thesis that we still have too much capacity for the freight that is to be moved in this country, and so whether it happens quickly or whether it happens slowly, we still need a normal.

Bot.

Speaker Change #135: Opportunity long term I.

Speaker Change #135: I still believe there's too much capacity and so we are happy to participate in the upside we're happy for our carriers to get paid two and $3 a mile. Because these people have fixed obligations and they work hard and I want them to win.

Aaron P. Graft: We're happy for our carriers to get paid two and $3 a mile because these people have fixed obligations and they work hard, and I want them to win. But it doesn't change my long-term thesis that we still have too much capacity for the freight that is to be moved in this country. And so, whether it happens quickly or whether it happens slowly, we still need to normalize.

Speaker Change #135: It doesn't change my long term thesis that we'd still have too much capacity for the freight that has to be moved in this country and so whether it happens quickly or whether it happens slowly we still need to normalize there.

Unknown Executive: Alize, there. Appreciate it. Thanks for all the color.

Frank Joseph Schiraldi: I appreciate it. Thanks for all the color.

Speaker Change #136: Appreciate it thanks for all the color.

Unknown Executive: Sure.

Speaker Change #136: Sure.

Unknown Executive: And there are no further questions at this time. Thank you.

Operator: and There are no further questions at this time. Thank you.

Speaker Change #137: And there are no further questions at this time thank you.

Unknown Executive: Thank you all for joining us. Hope you have a great rest of your summer and be careful playing pickleball. Thank you all for joining us.

Unknown Executive: Thank you all for joining us. Hope you have a great rest of your summer and be careful playing pickleball.

Speaker Change #138: Thank you all for joining US hope you have a great rest of your summer and be careful playing pickle ball.

Speaker Change #137: Yeah.