Q2 2025 Triumph Financial Inc Earnings Call
This morning as always, we'd like to thank you for your interest in Triumph and for joining us this morning to discuss our second quarter 2025 results with that. Let's get to business.
Aaron's letter last evening, discuss the noisy quarters results. But underneath that I'll be at positive distraction laid out a quarter with a lot going the right direction, particularly in our transportation businesses and around Revenue growth.
Speaker Change: We are demonstrating the ability to monetize what we built and the value. We add to our customers and shareholders that cordley shareholder letter published last evening, and our quarterly results will form the basis of our call today. However, before we get started, I would like to remind you that this conversation may include forward-looking statements, those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ the company undertakes. No, obligation to publicly revise, any forward-looking statement for details. Please refer to the safe harbor statement in our shareholder letter published last evening. All comments made during today's call are subject to that Safe, Harbor statement with that. I'd like to turn the call over to Aaron for a welcome and to kick off our Q&A Aaron.
Aaron: Thank you, Luke.
Good morning and welcome.
Aaron: Not sure how many of you made it through all 34, pages of the letter that was published last evening. If not, maybe you got an AI summary, that did it justice?
Aaron: Uh, we use AI in our business, but we do not use AI to draft this letter because frankly, we value the discipline and the grind to put it together.
Aaron: We don't draft it just for investors. We do it to recalibrate internally to focus on our goals and our strategy.
And we work hard to not have any throwaway phrases or sections and we avoid legal ease as much as possible. So
Aaron: I hope you find it as valuable to read as we do as a team to prepare
Aaron: Now as you saw there was a lot of noise in the quarter, the loudest noise was due to the successful resolution of the 5-year per fuffle with the United States Postal Service, it was long overdue but in the end it's what we expected.
Aaron: Beyond the financial recruitment of all that we were owed. I hope investors can see that. As just 1 piece of evidence that you can take Triumph at its work.
Aaron: We will work deliberately to deliver on our promises.
Aaron: Now, some investors don't always like what we have to say, what our strategy is. But we work very hard to never give you a reason to doubt what we have to say. And we said we would recover that those funds from the USPS and we did,
Aaron: Turning back to core results and strategy.
Aaron: The core transportation business had a great quarter of Revenue growth and I see lots of opportunity in front of us.
Aaron: Second credit, quality also improved materially.
Aaron: And finally, with regard to strategy, I would encourage investors who want to understand our strategy.
Pay close attention to the value chain section in the shareholder letter.
Aaron: It helps frame what we have been working on for quite some time. But only recently publicly revealed
Speaker Change: with that introduction and my personal welcome to Don favier. Our president of intelligence to the call, we will turn it over for questions.
Speaker Change: We will now move to our question and answer session. If you have joined via the webinar, please use the raise hand icon which can be found at the bottom of your webinar application.
Speaker Change: When you are called on, please unmute your line and ask your question. We will now pause a moment to assemble the queue.
Our first question will come from, Matt, only with Stevens. Please unmute your line and ask your question.
Matt Stevens: Hey uh thanks. Good morning. Appreciate you guys taking my questions here. Uh want to start on the the green screens acquisition. Uh now that the deal is closed any early observations uh that you can see. And just remind us of the timing of the of the integration of green screens and what's your initial expectations are as far as uh customer adoption uh, following the integration. Thank you.
Yeah, great question, man. I'm going to start and then let Don speak to specifically the customer meetings because she's in more of those than me. I mean, how you think about or at least how I think about green screens
Is there's the green screens that existed.
Matt Stevens: Which is what we bought.
Matt Stevens: There is the green screen that is now being integrated into triumphs over the next call at 90 days.
Matt Stevens: And then there is the Triumph intelligence product.
Matt Stevens: Acted ARR. They served the long tail of the brokerage community and had carved out a successful niche in demonstrating that they were able to take data and return it back to customers.
In a way that was frankly, better than others in the industry and they were winning a lot of business and growing.
Matt Stevens: That is now part of Triumph and over the next 90 days, what we are doing.
Matt Stevens: Is taking the data, we hold in Triumph.
Specifically about 40 billion of audit and payment data that is not currently part of what is inside of green screens and moving that data into their models.
Matt Stevens: Which as you would expect. And as we wrote about in the letter,
Matt Stevens: Is going to make their models better more precise and give them broader coverage.
Matt Stevens: and so finally, after that 90-day period,
Matt Stevens: We're now going to be talking about the Triumph intelligence offering, which does more than just provide modeling of buy and sell rate data. But does other things that we talked about in the letter,
Matt Stevens: And we're going to distribute that to.
Speaker Change: The customers that we already have and all the customers who already know us and so maybe don from that you could talk about what you've just seen since May 8th and and and what feedback you're getting great. Thank you Aaron. I that's a great question. I think look where less than 70 days into this and we are already starting to see great results.
Speaker Change: Um, being part of the Triumph family now. Um, first and foremost, you know, the goal of penetrating the top 60 or 66 of the top 100 freight brokers. We had historically, you know, with the attraction we were seeing as green screens been selling into the long tail of the market, and we started to make some Traction in the, the top tier Brokers. But we are already starting to see the results of of, really more engagement with that top 100 Brokers that Triumph brings to the table for us. Our ACV. Historically before the deal closing was about 37,000 in our pipeline right now, we are seeing that increase to $80,000 ACV. So a significant increase there. Um I think the other piece of that is the data the power of the data coming from the Triumph network with sight line to nearly 70% of of all Freight transactions. Uh that work is already underway. We have at this point ingested less than 5% of that data and
Speaker Change: Are seeing significant Improvement. Um in both our lane density coverage, which then leads to improved accuracy. Both on lesser traveled or less dense Lanes, which is what's most important to a freight broker but of of course the network. And finally a lot of Engagement with our customers, both on the iso and green screen sides independently as well as our joint customers on the value that we will be able to deliver to those customers. When
Speaker Change: By combining price and performance into a single intelligent solution.
Speaker Change: Yeah and and the final point and and it's so it's gone. Great Matt. Um the final point is of our 3 Transportation. Businesses factoring payments intelligence
Intelligence as a percentage will grow the fastest in the next 2 to 3 years and it won't be linear every quarter. But that 1 has the most upside, we've written about that in the past even as we were moving into it and nothing has changed my view that intelligence will will grow more quickly than any of our transportation related businesses.
Speaker Change: Okay, perfect. Thanks for the color on, on all that. Uh, and then just switching over to the payment side.
Speaker Change: I think you guys reported the IBA margin, this past quarter was closer to 14%. It's a pretty big improvement from where we have been would love to hear more about expectations. So that I would down margin moving forward from from here.
Speaker Change: All right, thanks for the question, Matt. Um yeah, I expect you but that margin to continue to improve as we continue to scale revenues without scaling expenses is fast. And so I I I think you should expect regular improvements. Uh, my long-term goal is to get us above 40%.
Speaker Change: Thanks for taking my questions, all back in the queue.
Speaker Change: Our next question comes from Joe Yunis. With Raymond James, please unmute your line, and ask your question.
Joe Yunis: Good morning.
Speaker Change: Joe.
Speaker Change: So I appreciate your opening remarks, particularly about the idea of using AI, to summarize, the shareholder letter um be taking that under advisement next quarter. Um,
You could talk about load pay a little more. You reported a really solid, you know, quarter on account growth. And it seems that growth should really accelerate in the back half of the year.
Speaker Change: Now that you have more accounts on your belt and date on this initiative, do you have a better sense on what the average annual revenue impact will be from each account?
Speaker Change: Sure. Yeah, I can take that.
so, um,
when you think about the average revenue per account, there are a couple of factors, you have to consider the, the first is the season of the accounts over time and just like any business checking account. It takes a while to get those accounts linked funded and actively used to the point where you can get a good sense for what the ongoing Revenue will be. The second factor is that we are adding a lot of new accounts every quarter. And so, when you think about the average revenue account for the foreseeable future here, I think you have to recognize that those new accounts will dilute the average revenue figure. But when you talk about a, a mature, seasoned account, um, you know, you're already seeing the investor deck, some statistics, that suggest that we're getting 700 or more on average. And in some cases, significantly higher
So yeah, okay. I I appreciate that. And then the next 1 for me. So given your initiatives, you know, with load pay Factory as a service.
You know, your intelligence offering with green screens, you know, all all these appear to be very disruptive to the industry. What type of push back have you seen from some of the competitors in the market?
Speaker Change: Oh uh yeah. How long do you have? Um, so the
look it, if you think about
If you think about how these things fit together, right? And and that's where I think, why I really honed in on that value chain.
Everything we do.
Speaker Change: In that, in those 5 parts of our value chain is something our customers.
Have asked us to do.
Now, when we say customers, what do we mean?
Speaker Change: Like, we serve different constituencies but primarily what we're talking about?
Is we serve Freight brokerages? And you know, we serve all different sizes of freight brokerages but the core part of our customer base. Certainly includes the Tier 1 or the largest brokerages. But we, we frankly serve
Speaker Change: All the way down to some really small ones and then secondly, in the carrier universe.
And in the carrier Universe, our customers are generally going to be the smaller carriers, which by numbers, make up the largest proportion of all carriers. Something like 96% of all carriers, have 4 trucks or less. And for us our sweet spot is serving carriers that probably I don't know. Kim would say 100 trucks or less we have some that are larger but but by and large
Small. Truckers
Speaker Change: so,
Speaker Change: If you think about on the audit side, let's let's just walk through the value chain. On the audit side, we do more audits than any known competitor. There are other people who do audit, but they don't do it at the scale or for the largest players.
Speaker Change: Like we do.
So I don't know that we disrupted, I mean, you could argue we disrupted there, but we just have have been able to go grab the largest part of the market, share. If you go to payments, there is no.
Real competitor at scale, doing payments from Brokers to factors or from Brokers to carriers, right? And that is something we pioneered with the payments Network. So kind of a green field opportunity and something that that we've grown really well.
Go to the next step. If you do audit, then you do payments. Now, you get back to where we started, which is liquidity. So, there are other factoring companies, who want to provide liquidity to carriers. How do they feel about our technology platform enabling CH Robinson and rxo and others to join the industry? I'm sure they don't love it.
Speaker Change: The point is those large Brokers were going to be coming into Financial products.
Speaker Change: Whether we were part of it or not, we just have the technology platform that empowers them to do so because they want to be bound more tightly to the carrier.
And if you take all that data that we have from doing audit and payments and factoring, and you talk about intelligence, there are incumbent intelligence intelligence providers. I would say there's
If you add green screen to the mix, there's like 3 to 4 who were well known in the industry. And some are much larger than others. How do they feel about Triumph?
Speaker Change: Stepping into intelligence. Again, I think they probably don't love it. The 1 thing I would point out about intelligence is it's not a zero sum game.
Speaker Change: Our goal is just to be their primary source because our data is better. Our models are more precise.
Speaker Change: So, you know, the in in all of those areas and then on the performance part, which we kind of fold into what we do in intelligence, um, there's no real known competitor there who provides truly Market neutral performance. And the same would be true. Lest I skip over the important 1 of load pay.
Speaker Change: There isn't somebody who has a dominant market. Share of providing banking services to small. Truckers, there are people who do it, we would suggest. And I can't point you to third-party data on this, but I would guess that by q1 of next year, we will be the largest in the industry once.
Speaker Change: And and in any event, once we get to 10,000 load pay accounts, I don't think there's anyone in the industry close to that. So who you're competing with to win load? Pay business are banks and credit unions.
Who generally don't care too much about small truckers. I know they don't care about them nearly as much as I do.
Speaker Change: So, different parts of that value chain, touch different competitive sets. Some of it truly is, um, areas where where there is no known competitor, others of it were already in a dominant Market position and in others there's going to be a fight and competitiveness is part of capitalism and so we're here for it and and I think the industry will be better for it.
Speaker Change: Very thorough answer. I appreciate that. I'll hop back in the CER.
Speaker Change: As a reminder, if you'd like to ask a question, please use the raised hand icon which can be found at the bottom of your webinar application.
Speaker Change: Our next question will come from Tim Switzer with Keith bet and woods. Please unmute your line and ask your question.
Tim Switzer: Hey, good morning, thank you for taking my questions.
Speaker Change: Um, for the, for the green screens acquisition, we're trying to think of the go forward Runner right here. Is it, is it correct to think of the near-term quarterly run rate to be about 2 and a half million of non-interest income and 4 and a half million of expenses, including the amortization. And then what's the timeline for breaking even on that? Um, you know, particularly as you, you know, start to feed in the data, you guys have
You want to take the near-term and short term? And yeah, Tim that, that's a, that's a fair characterization. I would say that we, we won't be talking after this quarter about green screens in isolation. Uh, you should be looking at our intelligence segment, broadly, because there was a little bit of, uh, of other activity there. But uh, yes, we're talking about roughly, uh, 10 million dollars in in revenue on an ongoing basis there. And, yes, that, that expense number that that you quoted makes makes a lot of sense. There's probably about a little over, uh, 2.2 million dollars or so from Green Screen specifically, uh, that we've added to our run rate and then that million 8,
Speaker Change: Of ongoing amortization so that contributes about million dollars to our quarterly expense run rate of that 104 that we talked about going forward.
Yeah. And and so Tim, it's it's like, let me just say, as I think you would have expected from us
Speaker Change: None of that surprised us. We knew when we bought green screens, what its Revenue was going to be. And we modeled
Speaker Change: what the intangibles would be and and and the impact on near-term earnings is is like call it 3 million, a quarter of drag
Speaker Change: That's not insignificant. We don't take it lightly but we did not make this decision lightly either and so you asked about what to expect going forward. What I expect Don and team to do going forward is to take that 10 million dollar run rate.
And grow it faster than any of our transportation businesses. Because number 1, it's starting with the smallest denominator, but number 2. You just heard her allude to the average contractual value. The ACV, historically for them is 34,000. If we look at their pipeline now,
Speaker Change: The average is, in the $80,000 range. Why? Because the distribution mechanism and the brand credibility of being part, of Triumph, Who services 66 at the top, 100 freight brokers in this country is materially different.
Speaker Change: It's also materially different that we touch. 64% of all Freight transactions in the United States. We have verified audited and paid data which is the cleanest data set. You can possibly get
Speaker Change: I would say on the record, No, 1 in the world.
Has that level of precision data about what's going on real time, in trucking audited down to the last penny and if you have that and you have the team that can deploy these models like our green screens team. What we're you know, calling intelligence can do.
Speaker Change: You're equipped to win.
Speaker Change: Payments and intelligence the 3 segments that make up our transportation business. I will be disappointed.
Speaker Change: If our transportation businesses in the aggregate, don't grow at 20% a year because we have invested heavily to build the opportunity to create Revenue growth there. And as I said earlier of those 3, the 1 on a percentage basis that I would expect will grow. The fastest is intelligence and so their ability to grow into that earnings draft over the next several quarters, and get to themselves where we do the exact same thing we talked about with payments which is now 14% positive ibida margin. It was negative -6060 % not all that long ago.
Speaker Change: I expect the same thing to happen, more rapidly with intelligence. So that's that's as much future guidance uh as we are able to give right now, but I hope that helps
Speaker Change: Yeah, that was very helpful. Appreciate all the color there. Um, and then on uh, the credit Trends, it's good to see a lot of the improvements there kind of all around. Um, can you help confirm what dollar charge offs? Looks like if we exclude the impacts from USPS and um the acquired portfolio you made and um you know what are the expectations for provision? Um, for the back half of the year.
If you normalize for those 2, things are charge-offs for less than a million dollars.
Speaker Change: So, an extremely good quarter from a credit perspective.
Speaker Change: To how to let you speak about the rest of the year.
Speaker Change: Yeah. So projecting credit losses. I I was just give you some general guidance. That the credit losses we experienced this quarter were pretty typical of what we would expect. I wouldn't say we had a great quarter with respect to credit loss expense. I also wouldn't say that it was a terrible quarter with respect to credit loss expense. So just use that as a a general reference point you know last year we were talking about as high as 20 million dollars of of credit loss. Expense going back further in history it was more like 10 million dollars of credit loss expense for the year, we're going to end up on average somewhere at the low end of that range.
Speaker Change: Yeah, and I want to be clear on the million dollars, that was charged off. That was that charge up, not just credit loss expense, but you've heard Todd say.
Roughly the low end of that range and and let me just unpack it. Just so it's clear on, you know, we opened the letter with this loan.
What happened is, we had the opportunity to buy a loan that we understood at a very steep discount to face value, right? We understand the equipment space, we understood the the specifics of this loan and so
Speaker Change: You know.
Some people may not say that's not core. Look, I'm not too proud if you're going to leave Nicholls on the ground.
Speaker Change: We're going to bend over and pick them up, right? That's just how this company has operated since day 1 since it was me and a laptop. Like it's we can see an opportunity to make money in the near term on a great risk, adjusted return, we should do that. Even if investors don't want to give us credit for it. That's fine. It goes into tangible Book value and making money. Now allows us to do things, frankly that all the money that we've made over the last few years, allowed us to buy green screens, which is highly diluted to Capital without diluting our shareholders in a meaningful way.
Speaker Change: So if you're going to, if, if circumstances give us the opportunity to get small near-term wins like that, even if they make our quarters noisy, we're going to do it. And, and that's why, um, that's in there, it's why it happened. And we'll, we'll recognize that back into revenue and whether it shows up in Topline revenue or recovery or reversal or provision.
Speaker Change: Look at Cash.
Speaker Change: And cash going into Tier 1. Capital is a good thing as long as you get it with by not taking undue risks.
Speaker Change: Great. Thank you guys. And yeah, certainly appreciate the strategy on that loan acquisition there.
Our next question will come from Gary Kenner with da Davidson. Please unmute your line and ask your question.
Uh, thanks. Good morning everybody.
Um,
Speaker Change: wanted to ask a question about the competitive environment again. I think a follow-up maybe on on somebody else's question. But in terms of, uh, dat and the acquisition that they did of the outgo payment platform, you see me that that is more specific to
Speaker Change: Uh carriers versus Brokers. So is that more of a competitive impact potential uh to the traditional factoring business than any other?
Or your of your transportation business.
They operated referral relationships before.
Uh in the small world syndrome here, their referral business started with Triumph some 8 or 9 years ago. So we understand how the offering Works. Um, we know that we we've seen the product that outgo and dat acquired it, and I'm sure they're going to try to use that.
Speaker Change: To grow. Um,
Speaker Change: Factoring revenue and it goes back to what I said, like competition is a fundamental part of capitalism and we're here for it like and the and the customers will benefit from it and it sharpens us. So, yeah, I I would think that's what they're aiming at. I can't speak to their entire product roadmap but that seems like what they were doing and
That'll just be 1 of about 400 factoring companies that that we compete with and and so on we go.
Speaker Change: Okay. Fair enough. Sorry to put you on the spot on that 1. Um, no, no problem. And then just, uh, I guess for a a in terms of the 1.2 million dollars on the USPS uh fee collection, looks like that's split between interesting. Come and fees. Give you first that a little more.
Of of how much was in each.
Speaker Change: That actually was all in interest income. So when we think about factoring fees, uh, that were acred, uh, it was factoring fees, but factoring fees typically end up in interest income.
Speaker Change: Okay. All right. Got it. Thank you.
Speaker Change: Our next question will come from Harold. Goch with the Riley, please let me your line and ask your question.
my question is, uh,
Harold Goch: Pricing. I know we have a lot of, um, early players on in monetization. Just want to get your thoughts on that. I don't know if I missed that on the call, but the growth is terrific. It'd be better if the it was a little bit better. Monetization, I want to know where you're at, on that?
Speaker Change: I'm sorry, we had a little bit of a hard time hearing. Some the question was referring to monetization of what of of Triumph pay, you know? Oh, the payments Network. Yeah. So
Speaker Change: Well first, I just wanted to before I hand it off to Todd, I just want to say congratulations to him. I mean what got built here, historically.
With, you know, the, the Melissa's work to get us to where we are was great. Um, and then when this the, when Todd stepped in the role, his ability to
You got to remember how, you know, 1 of the hard things about starting something totally new.
Is you your first?
Speaker Change: Foray with these customers. Is your begging them, right? You're asking them to do something, not only that you've never done, but that the industry is never done.
Speaker Change: Right? Outsourcing payments is scaled to create a network in brokered Freight.
Was not on anybody's freedom.
And so, I think you can develop a psychology. And, I mean, this is just deep into the weeds of how you run, a business of gaining market, share gaining market, share gaining market. Share, are we for real? Have we proven this out?
And and at some point along the way it's a healthy discipline and maybe it's my fault as a leader, maybe I should have been quicker on. This is to step back and go. Okay, we've done this long enough. Now we've done this well enough now
Speaker Change: it's time to start.
Having people pay us for the value we created and Todd was able to walk into this with a fresh set of eyes and go Aaron. There is a lot of value here and I'm like, great let me step out of the way and and so you take the rest of the questions. Yeah. So just to elaborate a little further on that in late March when Aaron asked me to to step in and take responsibility for payments, um, 1 of the first things I wanted to do was understand the value. We're creating for our clients and that has been the most encouraging lesson for me over the last 4 months. The reality is Case, by case client by client, we can put together the value that we're creating for them and it's it's very, very encouraging. And so with that underpinning I feel very confident going out and asking,
Speaker Change: For our fair, share of that value that's been created. And I, you know, to date we've you saw in the shareholder letter, we referenced the the clients that we've already had the repricing conversation with, um, and those conversations are are going just as we expected them to go, they will accelerate in the coming quarters. We'll start dealing with, um, the bigger clients, the bigger brokers in a more focused and concentrated way in the third quarter. And so, um, you know, we'll see where it all comes out. But I have a lot of confidence that we're delivering the value that earns the opportunity to reprice.
Speaker Change: Thank you very much.
Speaker Change: So it's part of the transition from
Speaker Change: Because of all the work that was done. And so I hope you're pleased with the revenue growth. You saw this quarter, we're not going to get that every quarter.
Speaker Change: But it is going to grow from here.
Thank you very much.
Speaker Change: Our next question comes from, Matt only with Stephen, please unmute your line and ask your question.
Yeah, thanks for follow-up, guys. Just a few questions here. Um, within factoring. I I thank you disclose that, the average invoice size was slowed by the market pressures and 2 Cube, but but also slowed by the mix of customers that you added as there were a few larger customers.
Looking forward. I think we're still assuming that factoring continues to grow at a pretty healthy clip. Should we anticipate a a similar Dynamic to continue where invoice price could be pressured as you add larger customers or, or do you think this 2q event that you disclose is more of a, a 1-off event within the next shift?
Speaker Change: you know, as we go up Market,
Speaker Change: A mix of carriers. Um, that might be doing different types of hauling and so some might do some shorter Regional type loads, which will reduce your invoice price. And so what we like to look at is and segmenting out our portfolio from our large segment versus our soft small segments, which when you look at a small segment, I think you see more of like a normal 1,200, um, invoice value, which kind of, um, pairs up with what we see in our payments.
Speaker Change: Segment that looks at a lot of small carriers, so as we go up Market, yeah, you may see a fluctuation in the invoice price overall.
Speaker Change: Yeah, Matt the the if you really, and this is our fault because we started training investors to look at average invoice size back. When all we did was factoring,
and, and, and if you want to really look at,
Average invoice size as a barometer of what the market is doing. You're probably better off looking in our payment segment than our factoring segment and what Kim just said so well I mean I hope you heard that smaller carriers even have smaller invoices on average than larger carriers. It's like 11,200 because they're doing shorter runs.
Speaker Change: What you see in our business is the mix shift. It's not just about large and small, it's about the nature of what these carriers do and it just so happens. That triumphs factoring business has a lot of shipper exposure in it. Meaning that our carriers not only run for Brokers, but they also run for shippers sometimes, you know, under under contracts and those are large, candy depends, but can be larger invoices.
Speaker Change: And so to look at triumphs factoring business in isolation, you have to understand the mix of our customers is more diverse than if you just had what I think. People assume factoring is, which is small carriers calling in the spot market for broker Freight. We do a lot of that and it's very, very profitable. But we have a mixed shift that incorporates other things and so you should not
Speaker Change: Think that the movement of the average invoice size in our Factory business has a perfect r squared correlation to what's happening in the market. As a whole there is some correlation you can obviously see that in the historical numbers when invoice sizes, ran up to 2400 and back in 2021, but it's not a perfect correlation. And and so, again, if I can get you to look at average invoice size as an approximation of what the spot Market is doing,
Speaker Change: Um, number 1, I'd say subscribe to our intelligence product and Don will do a tremendous job telling you what the Market's doing. But number 2 look in our payment segment versus our factoring segment because it's not as influenced by a mixed shift of customers.
Got it. Okay, appreciate the commentary from from Kim and Aaron, thank you for that. And then switching over to I think the letter last night had some good details behind supply chain, supply, chain financing some some good growth there sequentially. And I appreciate this provides the liquidity to some of your customers uh, especially
Speaker Change: For those, you know, within the industry that has some headwinds right now. I'm just curious about how much growth we could see in supply chain financing over the next few years.
Speaker Change: I'm pretty excited about the potential growth for supply chain financing. It fits very naturally with our brand promise of helping the players to transact confidently. We can inject more liquidity into the Brokers but we can do it in a way that protects the carriers as well. And I, I think we should just be doing a lot more of that.
Speaker Change: Is going to be hiring truckers to haul these loads.
Speaker Change: so if you think and I alluded to this before,
So, if that's true supply chain Finance allows what Todd is leading allows us to collect from the account deter which would be the shipper, the manufacturing company, whoever the broker is contracted with and to pay the carrier's directly.
Speaker Change: There are very few people who can do that and at scale and I I think we would probably buy it Far and Away be the largest
But it's not just about creating liquidity for these Brokers with what Todd's doing it's about making their business more efficient.
Speaker Change: And managing their cash flows better and then just so you can see how this all fits together, I think this is is really important.
Speaker Change: The work we do.
Speaker Change: In.
Speaker Change: Audit and payments.
Speaker Change: Was always around helping Brokers get more efficient in the 15% of their expense base. That was had nothing to do with hiring truckers, right? Just their back office, workflow automation, Etc. That's what audit and payments was designed to do to make their life easier and to improve their margins.
Speaker Change: Don't miss this fact and it goes back to why I'm so bullish on where intelligence goes, intelligence speaks to the 85% of their cost base, which is how much do I need to pay this trucker to run this load.
Speaker Change: And so when you look at the value chain, once again together we're now able to add value in the back office, the 15% but we're also able to add value. If this is the right word for it, in the front office of where of how we set our rates, with our customers. And with our truckers and holistically supply chain, Finance intelligence, all of this gets bundled together in a product Suite. That's designed to go back to exactly what Todd said, for every broker.
Speaker Change: To achieve their business goals and ultimately, for every trucker to thrive like that's that's what we're after and that's why it's designed the way it is.
Speaker Change: Yep. Okay, thanks for that. And then lastly, from me uh, I want to ask about deposits and specifically the the the non-interest bearing deposit growth has been really strong over the last year and I, I it's my understanding that for for Triumph.
Speaker Change: The nib deposits are a mix of of of mortgage escrow traditional banking DDA but also uh the float from the payments business, any color on kind of what that mix looks like and and specifically just trying to appreciate how much of that growth over the last year and I'd be deposits has been from from the payment side.
Matt Stevens: Sure, Matt I can break that down for you. So the largest share a little more than half of that is mortgage Warehouse deposit growth. Uh, little less than half of that is related to T, pay float growth. The community the other community bank deposit, uh, based the non-interest-bearing, deposit basis, been flat to down slightly. We have seen a little bit of migration out towards interest-bearing accounts, and we've also seen some large commercial clients needing to use their deposits for other business purposes. But other than that this Community Bank deposits are flat.
Matt Stevens: Perfect. Thank you guys for the commentary.
Our next question will come from Joseph Yukon with Raymond James. Please unmute your line, and ask your questions.
Joseph Yukon: Uh, again, thank you for taking my follow-up here. So just kind of wanted to go back to the factoring segment.
You know, so the number of invoices purchased had a pretty nice pickup in the quarter.
Does that figure include Factory as a service volume? And if so, can you give us a sense for how much of those purchases were done from your in-house factoring segment? You know, this is kind of a price times volume story and with the price being a little less,
Joseph Yukon: um, correlated with the spot rate Market.
Joseph Yukon: Just trying to better understand the foreign trajectory as the number of invoice purchases. Outpaces the market.
Joseph Yukon: So what you're seeing in the letter is um the mixture of both SAS and our um, factoring Core Business. And really what you're seeing is the growth is on um the first side of with us on the factoring portfolio and a little on the fast side. So in the coming quarters when Spas picks up and our second customer comes on board. Rxo next week, you may see um saz volume grow over the next coming quarters.
Joseph Yukon: All right. Um, and then
Joseph Yukon: 1 from me, here is
seasonality within your intelligence segments like with that kind of uh, EB and flow with
Joseph Yukon: um,
or I'll just open it up there.
Thanks for that question. Uh, know, there really is no seasonality associated with that business. And in fact, not only is there no seasonality, but historically, there has not necessarily been any seasonality as the market shifts, right? Greens, Greens. As a company was created during 2020 when the market was booming, right? Um, and but we had our largest growth in in a down Market period. So that that business is, is really stable from a seasonality and volatility perspective.
Perfect, thank you very much for answering my false questions.
Speaker Change: Our next question comes from a private investor Lee Pi. Please unmute your line and ask your question.
Hi there. Can you guys hear me?
Speaker Change: Oh, great. Thanks for taking the question. Um, going on a different direction. Could you go into more detail about the, uh, growth and non-interest expense under corporate and other
Uh, the 10q characterizes them as, you know, continued investment and shared services for all the other segments and certainly do appreciate, you know, that it's prudent to continue to internally invest, especially during down Cycles, but just like more, you know, color to understand, you know, how these Investments are going to deliver, you know, value for Triumph going forward.
Speaker Change: Well the the flavor of those those investments in our in our corporate segment particularly uh come in a few different flavors but the the predominant amount of growth that we've had in the next segment has been around things like uh information security and infrastructure, uh, that support all of these other businesses that were that were invested in.
Speaker Change: Can I answer your question or do you have uh, a follow-up to that uh know that answers the question? Thank you.
Yeah. And and so I just look, I think it's a great question and it's a very fair question, you know, we have to think about since we report segments
Speaker Change: like,
Speaker Change: How do we allocate things? Um, it has been
Speaker Change: quite a lot of, uh,
Speaker Change: as as you get deeper into handling the volumes of payments.
Speaker Change: And audit. And then
Speaker Change: The things we're doing and, and even intelligence and data security and fraud in our space.
Speaker Change: Um, we've really had to get out in front of that. Uh, it's just we're a bank, right? And more than just being a bank, we are telling the market. You can trust us to disburse $200 million every day and get it to the right people or we're on the hook. And I don't, you know, I don't know how closely you follow the transportation Market. But organized crime is here. I would argue state sponsored crime is here.
Here, and it is attacking. Every Vector in transportation, not the least of which are those of us who remit payments. I mean, A lot's been written about stolen loads and, and there's a whole lot and, and, you know, our fingers are are in that slightly, but they also aim at
Speaker Change: They know there's a they know that there's a ton of money being disbursed from this institution and so we just have to be bulletproof, but we are not ignorant of it. It is a fair question and what we owe you frankly. And and I I hope we laid the groundwork for this is we said, we are going to hold expenses flat from here while we grow Revenue, I would argue to you that the expense base that we have. You can, you could look at any specific little line item, um, but the bulk of it.
Speaker Change: Is.
There to be prudent in the face of a, of a Marketplace that that we play a critical role in. And that when I lay it at wake at night and think about things, I want to make sure we got the money to the right person, the right way. And we were able to identify people who have been hacked, which happens every day
Speaker Change: and so we just we feel the need to Bull Work, our defenses around that in order
Speaker Change: To fulfill the brand promise, right? If you read our slide deck, it's transact confidently. That is our brand promise that if Triumph is involved in your transaction,
For you to know that we've done, the work, the hard work, the credit work, the fraud work.
All of the, the regulatory work that you can trust.
Speaker Change: That we will get, we will do for you. What we said we will do for you and and so we've had some expense growth and I I I hear you or I think it's a a valid question. Hopefully that helps you understand the why?
Thank you all for being with us today. We look forward to seeing you in about 90 days. Have a great 1.