Hey, welcome to the AvidXchange third quarter 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ryan Stahl, General Counsel. Please go ahead. Good afternoon, everyone, and thank you for joining us for the AvidXchange Holdings third quarter 2021 conference call. With me today is Mike Praeger, AvidXchange's Co-Founder and Chief Executive Officer, and Joel Wilhite, AvidXchange's Chief Financial Officer. Before we begin today's call, I'd like everyone to please take note of the safe harbor paragraph that is included at the end of today's press release. This paragraph emphasizes the major uncertainties and risks inherent in the forward-looking statements we will make this afternoon. Please keep these uncertainties and risks in mind as we discuss financial guidance, operational outlook, future strategic initiatives, and potential market opportunities during today's call. Today's call will also include a discussion of non-GAAP financial measures as that term is defined in Regulation G. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. Accordingly, at the end of today's press release and in the investor supplement, each found on AvidXchange's investor relations website, we have provided reconciliation of these non-GAAP financial measures to the company's financial results prepared in accordance with GAAP. With that, I will now turn the call over to Mike Praeger. Thank you everyone for joining us for AvidXchange's first earnings call as a public company. It's great to be connecting with all of you today. Our transition to a public company was a significant milestone for AvidXchange, and we were able to celebrate that occasion by ringing the NASDAQ bell from our campus here in Charlotte, North Carolina, just a few weeks ago. We achieved this through a lot of hard work, and I want to thank all my AvidXchange teammates for making this a reality. I'm so proud of all we've collectively accomplished in the last 20-plus years in building our business. Joel Wilhite and I are excited to share our third quarter results as well as an overview of our business, future growth strategies, and where we are seeing momentum and continued success in driving our AvidXchange business flywheel. With that, I'll begin my remarks with our third quarter highlights. Total revenue for the quarter was over $65 million, an increase of 37% from Q3 of 2020. We processed over 16 million transactions during the quarter, an increase of over 17% from Q3 of 2020. Overall, our third quarter results reflect continued strong demand for our software and payment solutions, along with solid execution against our key growth initiatives. The strong momentum we are seeing in the business gives us confidence in our full year 2021 financial outlook, which Joel will discuss in more detail later in the call. Now, before I talk about some recent and exciting new business developments, since it's the first time we are discussing our quarterly results in a conference call format, I thought it'd be helpful to drill down deeper into how our business works. AvidXchange is a software company that is purpose-built to help middle-market companies automate their accounts payable and payment processes. In addition, I'd like to spend more time discussing our long-term growth plan through the lens of our AvidXchange business flywheel, along with our strategies to capture the significant greenfield opportunity that we believe exists in the middle market. Approximately 42% of U.S. business-to-business payment volume is still paid by using paper checks. We believe that number of middle-market companies manually approving invoices and utilizing paper checks is actually much higher. With that, let me start off by articulating the market opportunity that we see in front of us. We believe that the middle market segment is the largest portion of the overall accounts payable automation and business-to-business payments market. In addition, this large and growing market is facing unique challenges, such as inefficient legacy solutions that are manual and paper-intensive, complex integration requirements supporting various vertical industries, unique business process requirements in supporting ERP or accounting software solutions, high costs related to manual complex accounts payable workflows, and finally, a status quo mindset of traditional long-tenured finance leaders being reluctant to change. As companies continue to automate complex accounts payable workflows and replace paper checks with alternative electronic payment methods, we estimate more than $20 billion in addressable annual revenue opportunities across both accounts payable automation solutions and business-to-business payment transactions for the middle market. In addition to providing B2B payments, we see a large unmet need in supplier financing, which we believe is an additional $20 billion of white space opportunity, bringing our total estimated addressable market to over $40 billion. To take advantage of this opportunity, we've created AvidXchange, which is purpose-built to deliver a significant value proposition by seeking to make inefficient and expensive paper-based B2B payments and invoices obsolete for middle-market companies. We seek to deliver further value to our mid-market buyer customer by automating their accounts payable, invoice, and payment process, managing their complex business rules and supporting multiple general ledger systems and converting paper-based checks into intelligent electronic transactions. Simply speaking, our mission is to eliminate both the paper invoice and the paper check for our customers. We also seek to deliver value to our supplier customers by providing payments efficiently and securely, managing their business rules for their preferred digital payment acceptance methods, and providing rich remittance data along with visibility into their invoice and payment statuses. In addition, we provide value-added invoice financing services through our emerging Invoice Accelerator offering, which is a key feature of our AvidPay Network, designed to enable suppliers to better manage their cash flow through directly controlling when they receive payment. This two-sided network that we built, serving both buyers and suppliers, generates a tremendous flywheel effect for our business. Our AvidXchange business flywheel shows how we work to create value for our buyer and supplier customers, and it reinforces and accelerates other value we generate, driving continued growth by delivering a great customer experience for our 7,000 buyer customers and over 700,000 supplier customers on the AvidPay Network. Our AvidXchange flywheel begins with gear number one, which is delivering great accounts payable automation and payment software. We believe our ability to deliver a great software automation experience draws buyers to our platform. Our product removes the paper, automates business rules and workflows, along with reducing payment fraud risk, bringing all invoices and payments into one cloud-based platform that can be accessed anytime, anywhere by all of our customers. To accelerate the first gear of our flywheel, we're working to maximize our go-to-market strategies horizontally across the middle market, along with focusing on eight specific core verticals, which include real estate, the homeowner association, or HOA market, financial services, which includes Tier 2 and Tier 3 banks, along with credit unions, construction, media, healthcare facilities, social services and nonprofit organizations, along with education, through our hybrid go-to-market strategy, utilizing both direct and indirect channels. Our direct sales force leverages our deep domain expertise in these verticals and over 120 referral partner relationships to identify and attract buyers that would benefit from our accounts payable software solutions, along with automating their payment process via the AvidPay Network. On the indirect channel side, our strategy is built on key accounting system integrations, reseller partners, and other strategic relationships, such as our exclusive strategic partnership with Mastercard through their Mastercard B2B Hub, which includes Fifth Third Bank, along with Bank of America, and other financial institutions such as KeyBanc and third-party software providers such as MRI Software, RealPage, and SAP Concur. New customers in the third quarter spanned across AvidXchange's core verticals, including Goodwin & Company within our HOA vertical, Case & Associates Properties, and Hyde Development within our real estate vertical, along with Fusion Transport and BPS Supply Group, just to name a few. Customers across each of our verticals are looking to add both AvidInvoice to automate their accounts payable process along with AvidPay to automate their supplier payment process. One recent example, Incurrent Holdings, a Florida real estate firm, had a history of incorrect and delayed payments to its vendors due to a flawed accounts payable system that was costing them several thousand dollars a month. Using AvidXchange software, they're able to achieve three key objectives. First, they're able to customize their workflow approval functions to automate their invoices and payments. Second, they wanted to reduce incorrect payments and non-approved payments. Third, they wanted to have real-time, anywhere access to their accounts payable data. We're seeing good traction in our financial services vertical. As an example, the pace of credit union customer additions has expanded by 38% year to date, with credit union additions more than doubling. By drawing buyer customers to our AP automation software platform, we enable the second flywheel gear, which is maximizing the number of transactions we manage on our platform. By combining our business model to be the system of record for all buyer AP transactions, along with managing the entire payment file for their payments, we're able to maximize the overall number of invoice and payment transactions that we manage for our customers. Furthermore, we strive to provide a great customer experience through integrations between our buyer customers' accounting systems and our invoice management platforms in our AvidPay Network. Today, we manage over 210 integrations with the most widely used accounting and ERP systems, and we support a variety of payment methods depending on the supplier's preference, including virtual card, or VCC, enhanced ACH or our AvidPay Direct offering, and physical checks, while delivering rich remittance data to streamline the reconciliation process, supporting the middle market and the various industry verticals that make up the middle market. We view these strategies and integrations as critical key differentiators for AvidXchange. Our competitors don't necessarily want all their customers' volume, whereby they focus on only specific transaction types, which we believe creates a real long-term advantage for us, as we want both to own the buyer and the supplier customer experience and deliver an industry-leading and unique long-term value proposition to our customers. The development of channels and partnerships for distribution is also key to enabling the growth of transactions on our platform. Further proof of our continued progress in maximizing the number of transactions under management is that we processed over 16 million transactions in the third quarter, up approximately 17% year-over-year. Once a customer's invoice and payment volume is on our platform, we seek to create additional value by utilizing the AvidPay Network to facilitate the conversion of paper checks to intelligent e-payments, which is our third gear. We have over 700,000 suppliers that we pay through the AvidPay Network. We combine specifically designed business process with technology to dynamically manage the various business rules, along with managing the preferred payment methods for these suppliers. By managing their payment business rules, we also manage how they would like to receive their electronic remittance data, so they can apply the payment to the correct supplier account and invoice number, along with enabling suppliers to more efficiently reconcile their outstanding invoices. We're excited to see continued growth in the number of enrolled e-payment suppliers receiving electronic payments from the AvidPay Network. e-payment suppliers are defined as those suppliers that we've enrolled in one of our various AvidXchange virtual card payment offerings, as well as our AvidPay Direct modalities. AvidPay Direct is our version of ACH Plus, where we settle through ACH but wrap the transaction with electronic remittance data the supplier needs to automatically apply and reconcile each payment, giving them the payment speed, security, and remittance data that they require. We consider AvidPay Network to be our secret sauce, and is a significant competitive advantage versus others who have primarily outsourced their supplier payment engagement and settlement efforts. We've made a large investment each year since we launched the AvidPay Network in 2012 and anticipate significant future return on our investment, given that we expect our AvidPay Network to be a long-term differentiator and driver of future margin expansion as we own the entire supplier experience from invoice submission through the payment acceptance by systematically automating each supplier's unique business rules for payment, acceptance, and delivery of remittance data. Our AvidXchange business flywheel accelerant is a continued focus on automating key business processes to improve the speed and reliability of our payment offerings, along with additional monetization features created for our fourth gear. Our fourth gear is designed to leverage the data of our network to further increase the value proposition we are delivering to both our buyer and supplier customers, which leverages the 20-plus years of data that we've captured detailing each buyer and supplier transaction. Our single cloud-based platform for invoices and payments enables us to abstract all the learnings from these buyer and supplier relationships and use it to target new verticals for expansion, as well as new innovations, such as advanced spend management analytics, as well as data related to specific invoice types, such as utility bills, insights into the management of their cash flow, and financing features for our customers. A great example of this today is our emerging Invoice Accelerator offering, in which we utilize the data of our AvidPay Network, along with the historical payment trends between buyers and suppliers, to underwrite specific invoices that are eligible to be advanced for next-day payment, creating a very unique and differentiating value proposition for our supplier customers, enabling them to get paid when they want to get paid. Focusing on how we can invest in accelerating our AvidXchange business flywheel not only provides us with increased transactional monetization opportunities, but also serves as a source for continued innovation, growth, and market leadership across the middle market. To summarize, we believe we built a powerful flywheel business model that is well-positioned to capitalize on this massive growth opportunity and the adoption catalyst propelling our business by executing on our focused key strategic growth drivers, which include, number one, driving the number of overall transactions processed by acquiring new buyers and suppliers, along with increasing the number of transactions processed between each of our existing buyers and their suppliers. Number two, increasing conversion of paper checks to electronic payments. We believe there's a significant opportunity to increase the penetration of electronic payments as paper checks still comprise over 42% of overall business-to-business payments in the United States today across all sectors of the middle market. We estimate that the number of companies predominantly using paper checks across the middle market to be significantly higher. AvidXchange is the leader in driving e-payment adoption through our innovative products and processes. Number three, innovation and delivery of new products. We'll continue to leverage the rich data and business insights that we've accumulated across buyer and supplier transactions, enabling us to strategically leverage this data to develop new innovations and capabilities. Number four, entering new vertical markets. We'll continue to supplement our organic growth by pursuing strategic mergers and acquisitions to expand new verticals and horizontal capabilities. For example, in Q3, we entered the media vertical by acquiring FastPay, a leading provider of payments automation solutions for the media vertical industry. Number five, cross-border and international expansion. We're currently developing a cross-border payments offering targeted for general availability for customers across multiple software leases over the course of 2022. On top of our unique market opportunity, flywheel effect, and moat that we've already developed within the middle market, we're in the early days of seeing four catalysts unfold that we believe will be accelerators across the middle market for our offerings, which include, first, the pandemic highlighted the importance of automation for business continuity and support, work from home, and hybrid workforce models. Second, there have been growing concerns over fraud risk and data privacy with paper invoices and paper checks. In fact, the majority of payment fraud in the middle market occurs with paper checks. Third, familiar technology with users having experienced benefits of cloud-based solutions for automation in other back-office processes. Fourth, which long- term may be the most impactful of all the catalysts, is the generational shift, or millennial effect, as I like to call it, with tech-savvy younger generation finance leaders taking on increased leadership roles in middle market companies. We are certainly excited about the future of AvidXchange, and I look forward to updating you on our progress during future calls. In closing, we delivered strong third quarter 2021 financial and operating results, and our momentum heading into 2022 is very encouraging. We continue to drive success for AvidXchange and our customers by growing and enhancing our offerings, services, and talent to help more businesses transform and automate their accounts payable and payment processes. We believe our results and continued progress against our key growth initiatives are indicative of our commitment and focus on creating long-term value for all of our stakeholders for many years to come. Now I'll turn the call over to Joel so he can provide a review of our financial results from the third quarter and review our 2021 full year guidance. Joel? Thanks, Mike, and good afternoon, everyone. I'm excited to talk to you today about our strong Q3 financial results and provide guidance for the full year 2021. Given that this is our first earnings call as a public company, I'll briefly talk about our revenue model and drivers. We have a highly visible revenue model based on the durability of our buyer relationships and the recurring nature of the revenues we earn. Our revenues are predominantly derived through software revenue from our buyers and revenue from payments made to their suppliers. We generate software revenue from our buyers through our focus on gears one and two of our flywheel, delivering great AP automation software and maximizing transactions on our platform. Software revenue comes primarily through fees that are calculated based on the number of invoices and payment transactions processed, which is why one of our key metrics is total transactions processed. To a lesser extent, we also generate some recurring maintenance and subscription fees. While our buyers are typically billed and paid on a monthly basis, they're usually under a multiyear contract with revenue recognized over the term of the contract. We generate payments revenue through the payment volume from gears one and two noted previously, which is optimized by our gears three and four of our flywheel. Gears three and four focus on delivering value to our suppliers through e-payments and leveraging data across our network. As we facilitate payments from our buyers to their suppliers, we offer electronic payment solutions to those suppliers. Our electronic payment solutions currently include virtual credit cards and an enhanced ACH payment product called AvidPay Direct. Therefore, Total Payment Volume is also another key metric. Now let's turn to our results for the three-month period ended September 30, 2021. Total revenue increased by 37% to $65.2 million in Q3 of 2021 over the third quarter of 2020. The increase was primarily driven by the addition of new buyer invoice and payment transactions and increased e-payments to suppliers. Additionally, in recent months, we've been experiencing modest tailwinds from the increased average payment size, which we believe is driven, at least in part, by a recent uptick in inflation. Our strong revenue growth also resulted in our total transaction yield expanding to $4.05 in the quarter, up 17% from $3.46 in Q3 of 2020. Software revenue, which accounted for 34% of our total revenue in the quarter, increased 30% in Q3 of 2021 over the same period last year. The increase was primarily driven by 17% growth in transactions processed in the quarter, as well as the benefit of $2.1 million of revenue associated with the acquisition of Core Associates, which closed in December 2020. Payment revenue, which accounted for 65% of our total revenue in the quarter, increased 40% in Q3 2021 over the same period last year, primarily driven by 40% growth in total payment volume in the quarter. Non-GAAP gross profit increased 48% in Q3 2021 over the same period last year to $39.5 million, resulting in a 450 basis point improvement in non-GAAP gross margin for the quarter to 61%. non-GAAP gross margin improvement was driven by increased total transaction yield in the quarter, as well as continued operational efficiency. Moving on to our operating expenses. These expenses increased by 38% in Q3 of 2021 over Q3 of last year. Sales and marketing costs increased 37% in Q3 of 2021 over Q3 of last year, driven by continued investment in our direct and channel strategies as well as acquisitions. Research and development costs increased 42% in Q3 of 2021 over Q3 last year. This increase reflects our continued investment in new and enhanced products for both buyers and suppliers, together with investments in our platform that will drive our growth going forward. General and administrative costs increased by $5.2 million in Q3 of 2021 over Q3 of last year and reflect the growth in our business and also includes investments associated with our preparation to operate as a public company. Overall, our GAAP net loss was $35.5 million for the quarter, driven by continued investments in our growth strategy, as seen in sales and marketing and R&D, as well as our preparation to become a public company. On a non-GAAP basis, adjusted EBITDA was a loss of $6 million in Q3 of 2021 compared to a loss of $6.2 million in Q3 last year. While we expanded our transaction yield and non-GAAP gross margins, our continued investments in our growth and our platform continued. We ended the quarter with cash and cash equivalents of $150.9 million. On October 13, we completed our initial public offering, in which we issued and sold 26.4 million shares of common stock at a public offering price of $25 per share. We received $620 million in net proceeds after deducting underwriting discounts and commissions of $39.6 million. We believe that we are well capitalized to execute on our growth strategies. I'll now move on to guidance. As we mentioned in our press release, we're providing the following guidance for the full year 2021. Total revenue for the year is expected to be in the range of $244.5 million-$245.5 million. At the midpoint, this would represent growth of 32% on a year-over-year basis. Adjusted EBITDA in the range of -$30.1 million to -$28.1 million. In summary, we delivered strong third quarter 2021 financial and operating results, and our momentum heading into 2022 is very encouraging. I'd like to turn the call now back over to the operator and open up the line for Q&A. Operator? We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Our first question today comes from Will Nance with Goldman Sachs. Everyone, good afternoon. Congrats on the first quarter. Hey, thanks, Will. Maybe I'll just kick it off on some of the traction you're seeing on the AvidPay network. Just wondering if you could help kind of flash out people's understanding of, you know, the penetration of the network with your current customer set, and then how that compares to kind of new business. Yeah. As it relates to kind of the AvidPay network, and I think your question is related to adoption related to you know existing and how it maybe relate to new customers. We kind of think of it on a transactional basis. Today, across the entire network, about 40% of all transactions we're able to monetize either through you know one of our forms of AvidPay virtual card or our AvidPay Direct payment offerings. That's pretty consistent across the different industry verticals that we're in. One of the things when we take on like a new customer, to get up to their kind of full adoption cycles, that you know period is typically a six to nine-month period for a new customer to get to their full adoption period. I don't know, Will, if you had any kind of follow-up to that question. No. That's great. I appreciate the details. Just maybe second, you mentioned Invoice Accelerator a handful of times on the call. Yeah. Just wondering if you could give us an update on kind of what the timeline is to roll that, you know, broadly out to the entire supplier network and, you know, any signs of kind of demand coming from your client base from them. Yeah. Great question. Invoice Accelerator is one of the, you know, areas that we're super excited about and, you know, certainly think it's, you know, kind of the next, you know, kind of the third leg of our kind of monetization model. So today it's still, you know, kind of an emerging offering, you know, kind of sub $5 million in revenue, but growing quickly. We've been, you know, kind of metering it from the standpoint of, today it's only available to less than 10% of our overall, supplier base. That's really kind of due to two things. One is, as we continue to perfect kind of the algorithms related to determining the eligibility of invoices, that we choose to advance. The second thing is that, you know, we are executing on our balance sheet today. Going forward, we expect to make it available to, you know, our full supplier base, you know, probably, you know, kind of systematically over the next, you know, 18 months or so. As part of that process, also look to take it off balance sheet with one of our existing financing partners. Got it. That's helpful. Appreciate you taking my questions. Congrats again. Yeah. Thanks, Will. Thanks, Will. Appreciate it. Our next question comes from Tien-Tsin Huang with JP Morgan. Thanks so much. I'll echo what Will said. Congrats on the first quarter out the gate here as a public company. It looks clean and solid here. Thinking about bookings and signings, guys, just how did that come in versus plan? How do you see the year closing out with respect to new sales? I did see that deferred revenue was up nicely, so must be a good sign there. Yeah, great question, Tien-Tsin. I'll take it. You know, first thing I'd guide you is just give you the way our revenue model works, 'cause I wouldn't necessarily correlate, you know, the change in deferred revenue to sales. We're excited about the sort of the performance this year. We've seen great, you know, continued strong demand for our solutions. You know, we've talked about kind of a mix of, you know, some really great tailwinds from COVID and then some sustained kind of headwinds, you know, in places. We were pleased to sort of deliver better than our internal forecast from a sales perspective. You know, we don't provide a bookings or ARR figure, but we do have, you know, good confidence in being able to deliver our long-term, you know, our guidance for Q4 and sort of our outlook for 2022. Felt good about the production in the quarter. Okay, good. On my follow-up, quickly, just on the partner front, how are those conversations, and do you feel like you're closer to maybe securing a few more larger partners? Just curious how that's going. Yeah. Great question related to kind of the partners. When we think of partners, they fall into kind of a handful of different buckets. One is within the bank channel, the other is with kind of our software partners. Within each of the two categories, we have both referral partners and we call reseller partners. Typically reseller partners are the more substantial partners that are able to actually white label our platform and use their own sales force and go-to-market strategies to sell to, you know, to their customers. Within the bank channel, I think as we've previously messaged, one of our newest partners is Bank of America, and they began onboarding customers earlier this year. We're really, you know, excited about, you know, the evolution of that bank channel, and believe that, you know, Bank of America has the capability to be, you know, one of our leading, you know, partners, once they complete their ramp up. The second, you know, kind of piece on the software partners, we continue to see good momentum across, you know, kind of, a handful of partners, including kind of RealPage, and SAP as well as MRI Software within the real estate vertical. What I would say is that, you know, we are very selective in terms of adding new reseller partners. That number, you know, that base of, you know, we expect to, you know, grow by, you know, a small amount each year. Where we're adding more partners is on the referral side. That, you know, today we're up to, you know, 120-plus different referral partners, and we continue to kinda grow that nicely. That's, you know, what we're currently seeing and, you know, excited about, you know, the interest level that we're getting from, you know, both partners as well as customers. Very good. Thank you both. All right. Thanks, Tien-Tsin. Our next question comes from Ramsey El-Assal with Barclays. Hi, gentlemen. Thanks for taking my question this evening. I wanted to ask about the transaction yields which went up sequentially pretty nicely. Joel, what are the primary drivers there? It didn't look like it was a mix shift to software. Is FastPay a contributor there? What can you tell us about why that stepped up sequentially? Yeah, thanks, Ramsey. Great question. Yeah, there's a handful of drivers that you know kinda contribute. A couple that I would point out, and I kinda mentioned in our prepared remarks, to some degree, we think there's a little bit of you know we're seeing an average payment size increase. We think there's a little bit of inflation driving that. And you know some mix impact as well. To a lesser extent, you know we do have inorganic contribution to that as well, as you mentioned from FastPay. You know kind of a handful of drivers there. Okay. My follow-up is about longer- term strategy and is a two-parter. The first part is going forward. Can you talk, give us sort of your most updated thoughts on expanding your vertical mix? Are you sort of now focused on trying to penetrate the verticals you're in versus expanding into new verticals? Also over the longer- term, would you contemplate either moving upmarket or downmarket more broadly? Yeah. Thanks, Ramsey. No, that's a good question, one I get routinely. You know, to remind you, within the eight verticals that we're in today, we believe that we're still in kind of single digit penetration across all eight. Probably in the financial services vertical, with the growth of kind of Tier 2 and Tier 3 banks as well as credit unions, we may be approaching kind of 20%. Still, you know, big runway within the you know the eight verticals that we're in today. What we expect is to continue to focus to really penetrate those, you know, over the next 18-24 months, as well as continue to be, you know, kind of aggressive as well as opportunistic in terms of adding to those verticals. I think as we referenced, we like to add, you know, a handful of new vertical focuses each year as we evolve, and, you know, expect that to be the case in the coming year as well. Great. Thanks. I offer my congratulations as well, getting out of the gate here. Great. Thanks, Ramsey. Thanks, Ramsey. Our next question comes from Josh Beck with KeyBanc. Thanks, team, for taking the question, and my congrats as well on new life as a public company. I wanted to ask a little bit about the macro. Across other industries and calls, we've heard a little bit more about supply chain, labor shortages, these type of effects. I'm just curious across your base if there's any chatter or, you know, any trends that you're seeing take shape on those fronts. Yeah, I think that's a great question. You know, certainly within, you know, the macro environment, it's something that's kind of top of mind for a lot of our customers. Typically what we've seen within, especially kind of the eight verticals that we focus in, as well as some of our horizontals, they haven't been significantly impacted, you know, directly by supply chain. Certainly probably the labor component, especially customers that have a retail focus, have been, you know, kind of impacted, the most. You know, where we're probably, you know, seeing some of that impact is reflected in the yield number, and that relates to some of the, you know, what we believe is kind of inflation of just average payment sizes, ticking up, slightly. We think that, you know, is kind of directly related to some of the, you know, kind of macro impacts of supply chain as well as inflation. Okay, great. It seems like maybe on the margin it's perhaps a tailwind or at least what you've seen this quarter. Yeah. Okay. Exactly. You know, maybe a question for you, Joel, as well, just with respect to the guidance philosophy. Obviously, you had flashed your numbers prior to this report, so maybe didn't get to see you know, exactly how things come in versus your philosophy. You know, just help us understand maybe what you've embedded into Q4 level of conservatism, those types of things. Yeah, great question, Josh. I mean, you know, as if you compare the, you know, the flash numbers in the S1 relative to what we delivered, we were, you know, kind of at the, you know, nice beat across across each. I think we were on the high end of the transaction count, which we, you know, we see that volume as we sit at the end of the quarter. So obviously now looking forward, we see, you know, we've seen a little bit of the volume activity, but honestly it's you know, there's things we control and there's things we don't control, and I think we're playing it kinda right down the middle. You know, again, high confidence that we can sort of deliver those results from where we sit today. Very helpful, team. Thank you both. Thanks, Josh. Okay, thanks, Josh. Our next question comes from Darrin Peller with Wolfe Research. Hey, guys. Thanks. Hey, Darrin. Hey, Darrin. Hey. You know, when we look at the actual payments revenue growth rate, it was obviously very strong, but it really does look like it was driven by the volume growth underneath it, which is great to see, except I'm just trying to understand the dynamic of contribution from incremental monetization of payments. Obviously we know you guys are decently along, although still having maybe 20%-25% of your total volume really monetized in a sense, or I think you've said maybe 40% of transactions when considering the AvidPay Direct or VC, there's still a huge runway, I think, right? Just curious how you're approaching that, how you think we should think about that over the next few quarters, and then more importantly, longer- term, what you're doing to try to take advantage of that lever. Thanks. Yeah, Darrin, I'll take a shot first. Really, you know, as we've talked about this, you know, and Mike talked about gear three of the flywheel, right? The opportunity we see ahead of us over the long run for really continuing to increase the penetration, you know, we take that whole payment file at the end of an AP process, and then we kinda optimize payment against the supplier network. So I, you know, I wouldn't focus as much on the next couple quarters, but I would really say over the long run, we have high conviction that there's really a great opportunity to provide expansion there. Again, you know, we were pleased with, you know, 40%, you know, volume growth overall, 37% growth in the quarter. You know, really see that as validation to the model and excited about that long-term opportunity. Yeah, maybe adding a little bit more color to, you know, what Joel said is, we also expect that, you know, the percentage of monetized payments, both, you know, either transaction volume to continue to grow over time, as well as we institute new, you know, payment modalities into the market as well. One that we're currently under development, for example, is our cross-border capabilities. We have several, you know, a number of other, you know, payment modalities that we expect to incorporate, you know, with customers in the coming year. I think, you know, all those different strategies combined with just our core, you know, virtual card and AvidPay Direct acceptance methods, continues to drive, you know, ongoing supplier growth. Got it. All right. That's helpful. When we think about the verticals, you mentioned earlier the eight verticals, and then obviously this deal recently getting you more into the media supplier side as well. I'm just curious, I mean, you know, I think a barrier to entry for you guys has continued to be the differentiated connectivity into some of the industry vertical solutions. You touched on this earlier, it's going well. You know, can you just expand on that for a minute? 'Cause I think we get a question a lot about competition and this, like, how much of a barrier has that been for you and touching- Yeah. on these integrations, for a minute? Thanks again, guys. Yeah. Great question, Darrin. I think, you know, when we think of, you know, kind of the different, you know, sections of the overall market, the middle market's just. It's hard. We like that dynamic. Yeah, AvidXchange is really kind of purpose-built for the middle market. You know, what does that mean? It starts with the feature set of our software. It's really designed to support the, you know, the business rules of the middle market, you know, companies that we serve, their multiple party, you know, complex invoice and payment approval structures, coding structures, support for, you know, multiple general ledgers and cost, job cost systems, which are all kind of characteristics of, you know, middle market companies. The second component is all the different accounting systems that support each of the different verticals. Today, you know, we support over 210 different accounting system or ERP integrations across the verticals that we serve. The third is really the payment network itself is really purpose-built to support all the suppliers of the middle market. You know, 700,000 suppliers and, you know, it grows each week. You know, what I would say the last one is really our go-to-market strategies related to you know we have direct sales teams that are focused in each of the different industry verticals that work directly with you know the CFOs of these prospects and you know taking them through a very deliberate sales process that is typically characteristics of you know CFOs within middle market companies. Whether it be our kind of products you know the integrations that support them or our go-to-market strategies, they're really all geared around you know middle market companies. That's, we believe, that has created a big moat for us as you know most of the new competition, at least that we've seen, has not been in the middle market. It's been, you know, typically in small business. Right. That's what I thought. All right. Thanks, guys. Thanks, sir. Our next question comes from Timothy Chiodo with Credit Suisse. Great, excellent. Thanks for taking the question. I wanted to dig into the outbound supplier recruitment team. We get this question often from investors, and I just thought it would be helpful to shed some more light on it during this call. When the outbound supplier recruitment team is speaking with the suppliers and offering them the various payment methods, clearly there's a ton of check and paper-based forms of payment to eat into. When the offering is virtual card versus the enhanced ACH, realize there's different systems that have card integrations, there's transaction sizes, there are different verticals. Maybe you could just dig into the value proposition of each virtual card versus the enhanced ACH and when and why and why not various suppliers might choose one or the other. Yeah. Really good question and, you know, it's pretty intuitive, because, you know, there's some art and there's some science related to it. I would say, you know, first of all, we today support seven different types of payment or modalities, as we call them, that are really geared towards, you know, the different supplier preferences within the business rules. Many of the suppliers actually have, you know, business rules that they'll take, you know, one type of payment modality under a certain circumstance. For example, like maybe if it's under $1,500 as an example, they'll take a virtual card transaction, but if it's over $1,500, they'll, you know, request a different type of payment modality as part of their business rules. For both of you know kind of our main two kind of monetized payments, virtual card and AvidPay Direct, one of the key components of it is the data. The data you know is really critical in terms of how they reconcile that transaction. In terms of the preference in which you know why a supplier may select one or the other, today it is typically not based on price. It's based on where the supplier has automated their internal process. If they're, for example, kinda have a large retail focus, they typically have spent you know significant amount of both you know time and dollars automating their you know their card-based acceptance with their accounting and with their billing systems. They typically want to maximize volume through that business process because the most expensive transaction that a supplier has is one that requires manual, you know, intervention or manual exception handling. If they have an automated process that they've invested in, they typically wanna maximize volume. That typically is the number one decision factor that we see that, you know, suppliers have. Excellent. That's a really helpful context. We really appreciate that. My quick follow-up is around the cost of goods sold item, and we've touched on this in the past, but we often talk about sort of the double whammy that you have, meaning as you eat into that check volume and turn it into more monetizable forms of payment, be either virtual card or enhanced ACH, you also get to reduce the COGS from the check production, mailing, et cetera. Maybe you could just talk a little bit about that opportunity and what that might mean in terms of the gross margin opportunity. In other words. Yeah. How much of that COGS is really from check processing? Sorry about that, Joel. Yeah, no, Tim, good question, and thanks for teeing that up. I think that is one of the, you know, the huge opportunities for us. You know, we talk about the opportunity, the revenue opportunity that we have in shifting, you know, payments from check to electronic, but it does have that kind of double whammy effect. What we have an opportunity to do is actually take that check cost, and again, on a, you know, transaction basis, that's, you know, Mike talked about, you know, roughly the 40% that's electronic. The other 60% would be, you know, checks that we're fulfilling for our buyers as they pay their suppliers. As we shift to electronic, we take, you know, whatever, a dollar plus and turn that, you know, we have the opportunity to turn that into pennies. You know, an important opportunity for us, obviously, year three is on a revenue perspective, but also adds to the gross margin lift that we get over time. You know, that sort of supports the confidence we have in our long-term gross margin targets in the, you know, mid- to high 70s%. Great question. Thank you. Yeah. Also, just to add what Joel said, it does really good things in terms of our yield as well, because, you know, certainly, on the payment network side, taking a paper check, which is a zero revenue transaction and adding a revenue component to it, does really good things in terms of that yield expansion. Excellent. Thank you, Michael and Joel, and congratulations again. Hey, thanks, Tim. Our next question comes from Brad Sills with Bank of America Securities. Oh, great. Hey, guys. Thanks for taking the question. Congratulations on the IPO and a nice quarter here out of the gate. I wanted to ask about AvidPay Direct. It's a relatively newer offering relative to VCC. What efforts are underway to kind of drive penetration of that into the installed base? Yeah. It's a really good question, and the reason, you know, maybe provide a little bit of history on why it was created originally back a number of years ago. It is our most recent, you know, kind of new payment modality. The reason why it was created is because we had suppliers coming to us and said they wanted the same data capabilities that we were offering with our card-based virtual card-based offerings. For, you know, one, you know, reason or another, they didn't accept card. Either they didn't have a merchant account or they only, you know, accepted it under, you know, certain limited number of scenarios. They wanted access to the data. We settled through ACH, but we wrapped that data layer around the transaction and sent it to them. We've now seen you know of our you know roughly 40% of transactions that we're able to monetize. AvidPay Direct now is you know grown to be you know contribute about 20% of that number. We expect that to continue to you know to grow nicely as well. I think you know as it relates to you know our sales force related to it, we're really indifferent in terms of you know the different payment modality that a supplier needs. You know, the supplier has the choice on whether they wanna receive a card-based transaction or an AvidPay Direct transaction. Got it. Thanks so much, Mike. One more, if I may please. Just, I understand that Core Associates and BankTEL are a couple of acquisitions of software-only, you know, assets. What efforts are you doing there to kinda convert those customers to transaction and kinda where are you with that effort? Yeah. To provide, you know, a little bit of context, one of the, you know, parts of our playbook related to acquisitions that we really like is to find software providers in different vertical markets that have deep domain knowledge of that vertical and have maybe a nuanced solution related to the unique business process of that vertical market. We can, you know, kinda combine the AvidPay network with their software offering and provide a really compelling value proposition to that, you know, to that customer. That's playing out really nicely, and I think we are very pleased with, you know, kind of that conversion process. In both our, you know, you know, the ones that you referenced, Core Associates within construction and with BankTEL within the financial services vertical, you know, we are, I'd say, you know, the team is very pleased with that conversion process. Thanks so much. Again, if you have a question, please press star and one. Our next question comes from Bryan Keane with Deutsche Bank. Hey, guys. Thanks for taking my questions. I got two. I guess first, Mike, now with FastPay closed, just interested in your thoughts on the acquisition pipeline. Are there a lot of opportunities out there? Thinking about international expansion, will that be somewhere where you probably need to make an acquisition to get started? Yeah. So two kinda questions there, both related to kinda acquisitions. The first one's just, you know, an acquisition pipeline. So, you know, our corporate development team, you know, is, you know, active tracking, you know, lots of companies across the different verticals. What, you know, typically, you know, we like creating, you know, kinda long-term relationships with these, you know, the principals of these companies. I think, you know, Core Associates and BankTEL are great examples of that, where we had a multiyear relationship with these companies, actually as a partner with them, you know, prior to the acquisition. That, you know, really, you know, demonstrated a great working relationship across our teams as well as a trust building, you know, between the two companies. We like that dynamic. I think we've seen, you know, with companies that are out being sold, you know, that are being represented by banks, things of that nature, it's a more challenging process just because it's more competitive. Certainly we see some of the pricing pressure, you know, in those type of scenarios. So we like developing kinda long-term, you know, kind of relationships with a big pipeline. The second question about international, what I would say is that we have a multi-prong strategy. Kind of step one is by incorporating our new and kinda cross-border payment capability, which we expect to roll out over the course of 2022. The second component then is really to evolve the Canadian market. We have stood up two of our largest customers within the Canadian market currently, and we expect to continue to expand that. Then the third would be you know kind of what I'd say you know overseas expansion typically focused. We believe it's gonna be within the European market. I think we you know will be opportunistic related to do we jump-start that process through an M&A effort. I think we would be you know opportunistic you know in evaluating those type of opportunities as they make themselves available. We do have a great set of existing channel partners that have been asking us to support them, you know, internationally for, you know, a number of years. We're gonna be very focused on, you know, our international expansion via, you know, working closely with our existing partners to support them, you know, internationally with Europe as the main focus in a very similar way as we support them here in the U.S. market. Got it. That's helpful. Joel, just wanna ask on payment volume. It was up 40%. You know, we were modeling 23%. Is that all explainable by inflation, you think? I mean, that's a pretty big jump versus our expectations. Does it stay elevated at these kinda levels up 40%, and do you expect that inflation to kind of persist? Yeah. I mean, there's a number of factors, Bryan. I wouldn't point to inflation as the sole driver. We think that had an impact. We also, you know, to a lesser extent, had a little bit of FastPay volume in there. Again, you know, sort of pleased with that level of volume growth and just kind of feel like that gives us some tailwinds going into the next quarter and next year. Great. Congrats on the great start. Thanks, Bryan. Great. Thanks, Bryan. Our final question today comes from Brent Bracelin with Piper Sandler. Good afternoon. Many questions have been asked and answered, Mike. Maybe I'll just drill down into cross-border. You flagged cross-border as a new payment type coming for 2022. Can you help frame the opportunity here? Obviously, the fee- Yeah. Per transaction fees are pretty compelling, but what portion of PPV volumes do you think are cross-border international for you today? Is it 10%, 20% of the volumes? Any color there, just given the opportunity, and you flagged that a couple times in the comments, would be super helpful. Yeah. That's a really good question related to, you know, kinda cross-border. What I would say today is if you think of the eight different, kind of vertical markets that we're in, they aren't, you know, typically markets that lend themselves to cross-border, you know, being like, you know, real estate, HOA, you know, healthcare facilities. They're very geographically centered, you know, industries here in the U.S. But where we do see it is in the horizontal market, and, you know, working with some of our, you know, key partners, you know, such as NetSuite, Sage Intacct, Microsoft Dynamics, and even, you know, QuickBooks Enterprise. We're seeing kind of a growing, interest in customers, you know, doing cross-border transactions. We're still in the early days and evaluating, you know, kind of that opportunity. We think it's gonna relate, you know, in the future, more towards our continued kind of horizontal expansion as well as some of the new verticals that we're targeting. Got it. Helpful color. Last one here for Joel. You surprised us on the gross margin. I think it's above 60% for the second straight quarter in a row here. Was that check mix kinda going down? Were there other factors that contribute to the nice beat here on gross margins? Just trying to, you know, understand the durability of that number there, given you got now two straight quarters here of 60%+ gross margin. Thanks. Yeah, great question. Yeah, so, you know, we're proud of the 61% we turned in for the quarter. You know, 450 basis points better year- over- year gives us confidence, again, like I said before, on our long-term targets of over the next several years getting to 75%+. I'd really point to kind of a mix of factors, including continuing to be focused on, you know, our own operational efficiency, you know, increasing, you know, obviously that revenue yield contribution and again, the power of the flywheel and gear three in particular, and then gear four as we add data just gives us more opportunities to expand that margin. Great question, and, you know, we're excited about continuing to see that expand over time. Helpful color. Great to see the momentum of the business. Thanks. Thanks a lot, Brent. Thank you, Brent. This concludes our question and answer session. I'd like to turn the call back over to Mike Praeger for some closing remarks. I wanna thank everyone for joining us on today's call. We really appreciate your participation, great questions, and of course, your ongoing support of AvidXchange. With that, operator, you may now end the call. The conference has now concluded.