Hello, everyone, and thank you very much for joining the BILL first quarter full year 2024 earnings conference call. We'll be getting underway shortly, so we thank you very much for your patience. During the presentation, if you'd like to register a question, please press star followed by one on your telephone keypad. Please stand by. We'll be getting underway shortly. Good afternoon, and welcome to BILL's first quarter fiscal 2024 earnings conference call. Joining us today for today's call are BILL's CEO, René Lacerte, CFO and President, John Rettig, and VP of Investor Relations, Karen Sansot. With that, I would like to turn the call over to Karen Sansot for introductory remarks. Karen? Thank you, operator. Welcome to BILL's fiscal first quarter 2024 earnings conference call. We issued our press release a short time ago and furnished the related Form 8-K to the SEC. The press release can be found on the Investor Relations section of our website at investor.bill.com. With me on the call today are René Lacerte, Chairman, CEO, and Founder of BILL, and John Rettig, President and CFO. Before we begin, please remember that during the course of this call, we may make forward-looking statements about the future operations and results of BILL that involve many assumptions, risks, and uncertainties. If any of these risks or uncertainties develop, or if any of the assumptions prove incorrect, actual results could differ materially from those expressed or implied by our forward-looking statements. For additional discussion, please refer to the text in the company's press release issued today and to our periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. We disclaim any obligation to update any forward-looking statements. On today's call, we will refer to both GAAP and non-GAAP financial measures. Please refer to today's press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures. Note that at times during this call, we will discuss BILL's standalone results, which exclude our BILL Spend & Expense Management, formerly called Divvy, Invoice2go accounts receivable, and Finmark Financial Planning Solutions. Now, I'll turn the call over to René. René? Thank you, Karen. Good afternoon, everyone. Thank you for joining us today. During the quarter, BILL delivered strong, profitable growth and continued to redefine the category with the launch of our integrated financial operations platform. Revenue in Q1 exceeded $300 million for the first time and grew 33% year-over-year. Non-GAAP net income was also strong at a 21% margin. While our performance exceeded our outlook and strong customer adoption continued, we started to see more intense macro pressure on our business related to spend late in the quarter, and that has continued through October. As a result of higher interest rates and tighter credit markets, capital and cash have become less affordable and available for SMBs. Some of our larger businesses have scaled back their spend, while both customers and their suppliers became more selective with their payment choices. Business behaviors changed rapidly in this respect. This has impacted our fiscal year outlook, which John will talk about more in a few minutes. We are taking actions to adjust to this new environment and are confident in our ability to navigate the short-term macro challenges while continuing to invest behind the long-term opportunity at hand. SMBs are often forgotten when things are most challenging for them. Serving SMBs is our North Star, and we will not forget them as we work to create more value for them and their suppliers in this market. We know these headwinds are only temporary and that our long-term focus on innovation, combined with the strength of our business model, will help millions of businesses transform their financial operations while building an exceptional business. I'm confident in our ability to execute, given our history of responding to the dynamic environments in the past, and we will continue to get stronger. We have built a category to help SMBs automate their financial operations so they can better manage their business and cash flow. Today, more than 470,000 businesses use our solutions and transact more than $280 billion in annualized payment volume. SMBs trust and rely on BILL to be their central hub of financial operations. BILL's platform also serves and empowers an ecosystem of thousands of accountants, leading financial institutions, and millions of network members. As we continue to innovate and develop the SMB financial operations category, we see the value customers receive from our offerings and are working hard to bring more SMBs into the future with game-changing solutions.... This quarter, we rolled out our unified platform to customers. We have now integrated our portfolio solutions into one platform for SMBs. We believe this will begin to unlock both the opportunity to serve many more businesses and meet more of their needs. Our integrated financial operations platform empowers SMBs to manage accounts payable, accounts receivable, and Spend and Expense management all in one place. Businesses now have access to a cohesive experience across desktop and mobile that is unified, easy to use, and consistent across solutions. With integrated and intelligent workflow and consolidated insight, the new platform breaks down operational silos and increases visibility and control. A great example of the value of our integrated platform provides for SMBs is Renewal MD, a medical group practice specializing in reconstructive and cosmetic surgery. Scott Reagan, CEO, said, and I quote, "BILL has transformed our AP process. The integrated platform gives us even better control. All of our full-time employees have a BILL Spend and Expense card. We now have visibility on who is spending and what they are buying. It's the best thing we've ever done. The amount of hours we now save by having everything in one place, I can just click, pay, and sync, is unbelievable." End quote. This integrated experience helps businesses, large or small, and will continue to further position BILL as the essential and central financial operations platform for SMBs. In addition to our integrated platform initiative, we also rolled out an enhanced BILL Accounting Console, a centralized home base for accounting professionals to simplify workflows and serve their clients more efficiently. Based on the learning from our 7,000 accounting partners, the new console enables firms to prioritize tasks across the client base, manage their clients, and assign staff support. It also allows accountants to easily add and select the right products across AP, AR, and spend and expense on behalf of their clients. Many of our accounting partners have started to leverage the new console to provide greater value to their clients. We are excited to see these new capabilities in action and to continue helping accounting firms reinvent their practice while strengthening their client advisory services. The Bonadio Group, a top 50 accounting firm, is a great example of how accounting firms use our platform to create more value for their customers and more efficiently run their practices. Thomas Tortora, Director of Accounting Implementation, said, and I quote, "Our professional services team at the Bonadio Group has found tremendous value in the unified platform created by BILL, seamlessly integrating access to both BILL Spend and Expense and the BILL AP and AR platforms. This solution has streamlined our workflow, making it easier than ever for our team to interact with the platform. With this unified approach, we've gained greater efficiency, improved collaboration, and gained a more comprehensive view of our clients' financial operations, ultimately enabling us to better serve our clients and achieve our business goals." In addition to delivering best-in-class solutions for accountants, our white label solutions are deeply integrated in the experience of many of the largest banks in the US. Through this embedded approach, we are now making more of our payment capabilities available inside of the nation's leading financial institutions. Today, I'm happy to share that we've reached an agreement with our newest partner, Regions Bank, which is one of the 10 largest SMB banks in the US. Regions Bank will power a new digital AP and AR solution for its commercial segment customers and will leverage a host of our payment modalities such as virtual card, Pay By Card, and international payments. This is a great example of BILL bringing more and more of our payment solutions to the broad financial institutions market. BILL's collaborative approach with all of our bank partners, combined with our platform expertise, has enabled us to efficiently reach and better serve SMBs. Together with partners, we are executing to help millions of SMBs use our platform to automate their operations and transact trillions of dollars of B2B payments. As the business continues to grow and we move from one phase of the company to the next, I've asked John to take on more responsibility for the day-to-day operations as President and CFO. I've worked with John for over nine years, and his understanding of our business is exceptional. I look forward to seeing his impact as we continue to scale and grow the company. In closing, we are excited about the launch of our integrated financial operations platform and its potential to provide significant value for SMBs and partners. We continue to drive meaningful innovation to lead SMBs into a simpler world. We aim to be at every touch point where SMBs want to do business, whether that's at their banks, with their accounts, or in the future, within their payroll, commerce, marketplace, or other software systems. Our objective is to be the essential operation software for businesses and partners to thrive. All of us at BILL are energized by this potential. We want to thank our customers and partners who are on this journey with us to help SMBs change the way they do business. Now, I'll turn the call over to John. Thanks, René. Before discussing our updated outlook and what we are seeing in the business climate, I will provide an overview of our fiscal first quarter results. In a challenging economic environment that is creating uncertainty for small businesses, we delivered strong financial results. Total revenue for Q1 was $305 million, up 33% year-over-year. Non-GAAP gross margin was 86.1%. Non-GAAP net income was $64 million, or 21% of revenue, and increased approximately 280% year-over-year. Core revenue, which includes subscription and transaction revenue, was $265 million, representing growth of 24% year-over-year. Subscription revenue was $62 million, up 7% year-over-year. As previously discussed, subscription revenue growth was impacted by the restructuring of an agreement with a financial institution partner. The Q1 increase in subscription revenue was driven mainly by our expanding customer base and a price increase implemented in our BILL standalone direct and accounting channels over the course of fiscal 2023... Transaction revenue increased to $203 million, up 30% year-over-year, driven by payment volume growth and adoption of ad valorem payments, including our Spend and Expense corporate card, as well as our AP and AR payment solutions. Total payment volume, or TPV, for BILL consolidated, which also includes card processing volume, was $70 billion, reflecting 8% year-over-year growth. BILL standalone transaction revenue totaled $95 million, reflecting growth of 25% year-over-year. Total payment volume for BILL standalone was $66 billion and increased 7% year-over-year. TPV growth continued to be muted as SMBs carefully controlled their spend. For example, TPV per BILL standalone customer, excluding the FI channel, declined 4% year-over-year and 1% quarter-over-quarter. BILL Spend and Expense transaction revenue, which was formerly called Divvy, totaled $106 million, reflecting growth of 36% year-over-year. Card payment volume totaled $4 billion and increased 35% year-over-year. Interchange fees were approximately 262 basis points, consistent with prior periods. While card payment volume growth was strong overall, it was slightly lower than we anticipated due to downward adjustments to credit line limits we made during the quarter as we continued to mitigate increasing credit exposure created by macro conditions. In addition, we observed businesses decreasing transaction sizes, which led to an 11% decline in average payment size per transaction on a year-over-year basis in the quarter. Turning to customers, net customer adds remained strong during the quarter. BILL standalone customers increased 22% year-over-year. Net new adds for the quarter were 9,300, including 4,700 net adds in the direct and accountant channels and 4,600 in the FI channel. This excludes attrition related to the sunset of Intuit's Simple Bill Pay solution, which totaled approximately 1,000 in Q1. The number of BILL Spend and Expense spending businesses increased 35% year-over-year, and net new adds for the quarter were 1,600. This was slightly lower than prior quarters as we moved to the BILL brand from Divvy, which involved a pause to some of our customer acquisition initiatives. Float revenue was $40 million, an increase of 160% year-over-year. Our yield on FBO funds was 484 basis points in the quarter. Float revenue was $40 million, an increase of 160% year-over-year. Our yield on FBO funds was 484 basis points in the quarter. Float revenue is an important part of our business model that serves as a counterweight to macro headwinds and enables us to continue investing in long-term opportunities through economic cycles. Now turning to a discussion of our Q1 profitability performance. Non-GAAP gross margin was 86.1%, above our target range due to favorable float revenue. As discussed previously, within the next few quarters, we expect our non-GAAP gross margin to moderate to the low-to-mid-80s% as our payment mix matures and float revenue tailwinds subside. Non-GAAP operating expenses were $229 million. R&D increased $3 million from Q4 as we continue investing in our platform's workflow and payment capabilities. Sales and marketing increased $1 million from Q4, primarily due to increased go-to-market expenses from our cross-sell efforts. Rewards expenses, which are included in sales and marketing, represented 49% of Spend and Expense card revenue. G&A expenses increased by $10 million from last quarter, due in large part to non-recurring consulting fees. Non-GAAP operating income was $33 million, or 11% of revenue, an increase of more than 260% year-over-year. Non-GAAP net income was $64 million, or 21% of revenue, up approximately 280% year-over-year. Non-GAAP net income per diluted share was $0.54, compared to $0.14 a year ago. Free cash flow grew 4x year-over-year to $48 million, or 16% of revenue. To sum up the quarter, we delivered strong growth and expanded our Non-GAAP profitability and free cash flow while continuing to support SMBs during a challenging economic cycle. With our durable business model and strong balance sheet, we are well-positioned to navigate the challenging macro environment and support our small business customers while continuing to invest in opportunities to expand our platform depth and market reach. Now turning to our outlook. As previously discussed over the last several quarters, the external economic environment has created challenges for SMBs, and this has resulted in declining B2B spending trends. Beginning in late fiscal Q1 and continuing into Q2, we have seen further tightening by our customers and suppliers. With higher interest rates, tighter credit conditions, and cost increases for businesses, SMBs are focused on finding ways to lower expenses. This is most pronounced with larger SMBs and mid-market companies. In addition, larger suppliers in our network have started to increasingly choose lower-cost payment methods, sometimes at the expense of payment speed. We expect that this trend will continue as economic conditions influence businesses, and this could have a negative impact on overall transaction monetization in the near term. Taking these trends into account, for Q2, we expect BILL standalone total payment volume to be flat year-over-year, and for Spend and Expense card payment volume to increase approximately 20%-25% from last year. For fiscal 2024, we expect BILL standalone total payment volume to increase approximately 5% year-over-year, and for Spend and Expense card payment volume to increase approximately 20%-25% year-over-year. While the economic environment has led many small businesses to take longer to prioritize digital initiatives, customer acquisition has remained strong in recent quarters. Over the next couple of quarters, we expect BILL standalone net adds to be approximately 4,000 per quarter, excluding the FI channel and the sunset of the Intuit Simple Bill Pay solution. Now, turning to our financial outlook. For fiscal Q2, we expect total revenue to be in the range of $293 million-$303 million, which reflects 13%-17% year-over-year growth. We expect float revenue to be $38 million in Q2, which assumes our yield on FBO funds will be approximately 460 basis points. On the bottom line, for Q2, we expect to report non-GAAP net income in the range of $42 million-$52 million, and non-GAAP net income per diluted share in the range of $0.35-$0.44, based on a share count of 118.8 million diluted weighted average shares outstanding. For Q2, we expect other income, net of other expenses, or OIE, to be $26 million. We expect stock-based compensation expenses to be approximately $68 million in Q2, and we expect capital expenditures of approximately $8 million-$10 million. Moving on to full year guidance. Given the factors I discussed earlier regarding economic environment and changing customer and supplier behavior, we have adjusted our full year total revenue outlook to reflect incremental payment volume and monetization headwinds. We will continue to be vigilant with operating expenses. For fiscal 2024, we expect total revenue to be in the range of $1.205 billion-$1.245 billion, which represents approximately 14%-18% year-over-year growth. We expect float revenue to be approximately $145 million in fiscal 2024, which assumes a yield on FBO funds of approximately 455 basis points for the year. We expect to report non-GAAP net income for fiscal year 2024 in the range of $195 million-$235 million. We expect non-GAAP net income per diluted share to be $1.64-$1.97, based on a share count of 119 million diluted weighted average shares outstanding. In addition, for fiscal 2024, we expect other income, net of other expenses, to be approximately $96 million. We expect stock-based compensation expenses of approximately $275 million for fiscal 2024. We expect capital expenditures to be approximately $35 million-$40 million for the full year. In closing, we are operating in an environment of increasing economic choppiness, and small businesses are under increasing pressure to adjust to the current realities. We set out to build for the SMB market because they have historically been the most underserved, and our commitment to the success of SMBs is unwavering. Our diversified business model, which includes subscription, transaction, and float revenue, and our strong balance sheet, helps BILL mitigate macro headwinds and enables us to continue investing in our platform and ecosystem while delivering balanced growth and profitability. We are carefully navigating through this economic cycle, and when macro conditions improve, we will be well-positioned to benefit from its tailwinds. We created this category, and we are much closer to the beginning than a mature market. We believe we are the best-positioned company to become the de facto solution for SMBs to automate their financial operations. Operator, we are now ready to take questions. Thank you. We'll now enter our Q&A session. If you'd like to ask a question, please press star followed by one on your telephone keypad, and if you change your mind and would like to revoke your question, you can do this by pressing star followed by two. When preparing to ask your question, please ensure that your device is unmuted locally. Our first question today comes from Brian Keane at Deutsche Bank. Brian, your line is open. Please go ahead. Hi, guys. Good afternoon, and thanks for taking the question. I guess mine is, is just thinking about how much of the lower guide is macro-driven versus anything structural at all or competitive. What are you seeing on the competitive landscape? Anything that's changing kind of your go-forward outlook based on that versus just pure macro? Thank you, Brian, for the question. This definitely is impacted by the macro. What we have seen and we've talked about the difficult environment that SMBs have been in over the last, you know, probably four to six quarters, and how they've been managing discretionary spend. And what we saw, you know, late in the quarter and continue to see, you know, into October, is that the discretionary spend of large businesses is getting more scrutiny today. And I— You know, from your perspective, the question around kind of structural or competitive, we do not see any impact from competition. What we see instead is that the market opportunity continues to increase. The opportunity in front of us with solving the businesses' needs around financial operations and having a hub, a central hub, is something that we continue to see increase, whether that's in our ecosystem or just the market at large. And so we think, you know, from that perspective, this is, you know, definitely more impacted by macro than anything else. And it's the challenge of, when you end up, you know, supporting businesses and all the payments that they have, then you see their health actually comes through to your health sometimes, and that's kind of the challenge we have here, and that's the way we see it. But John, any color you'd like to add? Sure. I would just add, Brian, that we see some really good trends associated with customer retention, customer engagement, other related measures that tell us the platform is continuing to deliver value for customers. But we are sensitive to a couple of things. One is the overall spend environment that small businesses are operating in, and we've talked for a number of quarters now about that environment being very soft. We continued to see signs of that in the most recent quarter, and our forward estimates assume that we're going to see a soft spend environment going forward. There are some pockets of strength around travel and entertainment, as an example, and some areas of weakness around advertising, on card spend, and, you know, facilities and office rents and things like that around core AP spend. So... In total, it feels like this is influenced significantly by the macro environment, which to us feels more cyclical than structural or related to competition or things of that nature. And we're obviously, you know, gearing up to adapt to the current situation and do as much as we can to optimize results within the envelope of the spend environment and customer and supplier behaviors that we're seeing today. Got it. And just as a quick follow-up, I, I know last year we cut, you know, numbers and, and you turned out to be a little bit ahead. This year, you're, you're cutting numbers. I guess, just on visibility, you know, now, given, given some of the macro headwinds, do you, do you have any sense of if there's, you know, you know, another shoe to drop in volumes? Or do you feel like, you know, you've cut the numbers enough here, and this should be to the bone of, of where businesses spend? Thank you. Thanks, Brian. It's obviously a dynamic environment, and we've seen some evolving behaviors from both customers and suppliers, particularly large suppliers in our network, who are starting to exert more influence over payment type choices and things like that. All things considered, we've taken these variables into consideration as we updated our estimates for the rest of the year, and we think it reflects the environment that we're operating in, plus the assumption that there's some continuation of headwinds associated with both payment volume and adoption of certain payment types. So we've tried to take into account, as best we can, all the variables that we're seeing. Thanks for taking the questions. Thank you. Thank you. Our next question today comes from Brad Sills from Bank of America. Brad, your line is open. Please proceed with your question. Okay, thank you so much. Maybe just another question on kind of what you guys saw here on the macro. You know, it sounds like you saw this late in the quarter, and you're expecting a sustained softness. You know, it's reflected in your guidance. Could you just comment on when you started to see this? Were there certain categories that you started to see the deceleration? You called out mid-market, mid-sized firms versus small businesses, small business holding, and then any commentary on just categories and how they're behaving. Sure. Thanks, Brad. I mean, at first, I just step back and say we saw strong adoption across the platform, so we're happy about that. We were able to obviously get the integrated platform together with the Spend and Expense and AP on the platform. We've started seeing adoption there. And so, you know, overall, from the spend perspective, what we saw was in the very tail end of the quarter, that larger businesses were having more scrutiny, if you will, over how, you know, over their total spend and over their payment choices that they have. I think, you know, John can probably provide a little bit more color on, you know, exactly how that translated, but it was late in the quarter and, you know, we do expect that scrutiny to continue given the current macro environment. Yeah, we, we've seen a couple of emerging trends. The first is around just payment composition and the choices that both buyers and suppliers are making as it relates to payment types. A couple of examples there. On international payments, we've seen an increase in U.S. dollar transactions versus FX transactions, and we think that has everything to do with the business that our customers and their suppliers are doing, and the impact of overall macro and cost pressures that may exist on their businesses. At the same time, on our Vendor Direct product, virtual card payments, we've seen more sensitivity on the part of large suppliers to acceptance costs, and that's led to some opt-outs for larger dollar virtual card payments and things of that nature. The second component that we mentioned earlier on the call was just around the credit environment and how we've become increasingly proactive in managing credit lines for our Spend and Expense card program, to make sure that we're not taking on significant incremental credit risk associated with that product. That has the effect of creating somewhat of a headwind on card spend associated with our Spend and Expense product, but we think that's the right trade-off in this environment. Great. Great. Thanks for that color, John and René. And just one more, if I may, on the launch of the integrated platform here. What are you most excited about? You know, is the Divvy integration largely complete? Do you expect that cross-sell opportunity to start to take hold from here? Thank you. Thanks, Brad. Yeah, so we, you know, launched that during the quarter. The teams are just kind of, you know, getting up and running on the cross-sell opportunity, but the initial traction is good. It's, it's kind of what we were hoping for and expecting that there would be, you know, customers that obviously wanted to do both, and that they would be able to put more of their spend and more of their, their, you know, wallet, so to speak, on our platform. The customer quotes we included from Bonadio Group and RenewalMD were both integrated customers that are using the platform the ways we intend. The other thing that is super, you know, exciting for us when we think about having the integrated platform is the ability for us to, over time, you know, push... Push more payment products and that drive more share of wallet across the customer base. And so an example of, you know, things that we're gonna be able to do is being able to help customers be involved in connecting with their suppliers to Pay By Card. So we already have a Pay By Card product, but if you think about the Spend and Expense card, where the rebates are coming back to the BILL customer, having a more consistent approach for the customer to be able to manage all of their spend in one place, and to be able to participate in any of the rewards that might happen from those Pay By Card transactions, we think that will also help drive supplier adoption of card payments. So just an example of how having one platform really matters, and something, you know, that when I step back and think about the health of the business, like, we've been building this category, defined this category over the last 17 years, and that doesn't happen overnight because you build a platform that actually has the capabilities, and then you expand the capabilities, and you enhance the experiences for your customers. And so what I'm excited about when it comes to the integrated platform experience is that we're starting to pull the enhanced capabilities that we got with the Divvy acquisition, and we're pulling that into the overall experience that we market and sell to our customers, that we serve for our accounts, and eventually, obviously, make available for our financial institution partners. That is the thing that actually, when I step back and really think about the importance of this application, is gonna be for us to continue to be the financial hub for the SMB and having more payment choices available for the SMB, having them participate. That's gonna drive adoption, something that we're super excited about. Thanks, Rene. Thank you, Brad. Thank you. Our next question comes from Taylor McGinnis from UBS. Taylor, your line is open. Please go ahead. Yeah, hi. Thanks so much for asking my question or answering my question. So your TPV guide implies down 3% sequentially. So can you maybe talk about how that compares to what you've seen so far at the start of the quarter in October? And if the guide assumes things can get worse, I'm just trying to understand the assumptions there. And then as a follow-up, it looks like the TPV guide for the second half of the year appears unchanged and assumes an acceleration quarter-over-quarter, which is greater than we saw last year. So can you just talk through some of the puts and takes there as well? Thank you. Sure. Thanks for the question, Taylor. On the TPV estimates going forward, we are looking at quarter-over-quarter down low single digits, as you suggested, and I think that reflects some of the trends that we've experienced across the business over the last several quarters. We haven't seen any significant you know, deterioration or changes, but there have been frankly, some pockets of strength around the core TPV for BILL. On the card payment volume, we're looking at kinda flat quarter-over-quarter, up 20-25% year-over-year, something in that range. So we think that we're still doing a good job at increasing our penetration of customers and increasing our share of wallet. That's one of the components that leads to stronger TPV performance, even in a lower spend environment. And so that's something that we're seeing good, good success with. We're assuming we'll be able to continue doing that, you know, throughout the year. And we feel pretty good about the stability of the spend environment that we're operating in right now versus some of the other moving parts of the business that we talked about earlier. Thanks so much for answering my question. Thank you. Thank you. Our next question today comes from Darren Peller from Wolfe Research. Darren, your line is open. Please go ahead. Hey, guys. Thanks. I mean, I have to go back to the questions on cyclical versus structural, because, you know, the market is acting like something with your stock down the magnitude it is after market right now. It's acting like something that's more than cyclical, and reality is the KPIs don't look like it's more than cyclical. So again, I mean, if we look at the KPIs, you have customer adds that look pretty strong. You had take rate expansion that was strong this quarter sequentially, your volume beat. But I guess you're suggesting that the trends you're seeing is all about the spend trends, that's really indicating your guide for the next quarter. Is there any other inputs on the KPIs that is informing the guidance that we should keep in mind, or is it really just spend and maybe the side effect of, you know, ad valorem payments? Thanks for the, the question, Darren. I think you have the moving parts, identified, appropriately. We are in a muted spend environment. We do feel, good about our ability to, drive awareness, reach customers, and sign up new customers. That continues to go well. We see positive trends there, notwithstanding the macro environment. And in light of the softer spend environment, we're also seeing more friction be introduced into the system between buyers and suppliers and more of a desire to lower the cost of acceptance. That is obviously something that we factored into our estimates for, certainly for the rest of the year as it relates to our ability to continue to drive incremental adoption on some of our ad valorem products. It's certainly not all. We continue to make great progress with products like Pay By Card or real-time payments and instant transfer and things like that. Those happen to be small relative to our overall payment volume, though, so they don't move the needle across the whole business versus some of the, I'd say, increasing headwinds that we're seeing with things like our Vendor Direct product or FX that I mentioned earlier. So we think that these are these changes in behavior and how customers and suppliers have maybe new initiatives to optimize their payment flows and costs. It feels transitory, like cyclical in nature. It's not a change in Yeah retention, necessarily of spend or things like that. So I, I think, we, we feel pretty good about our ability to evolve through this particular, period. Yeah, I would just add that, you know, businesses have been in this holding pattern, just wait and see, for well over a year now. And I think as, you know, as rates remain high, that's gonna continue to drive, you know, more action, that's really macro-related. And so, you know, when we look at the underlying fundamentals of the business, we see so much opportunity to continue to do more and to drive more success across the business for our customers and for the business. And, you know, there are many things we can do to continue to drive and leverage payment choices that we haven't done historically. And so this is, you know, we will, you know, are adjusting and pulling in the roadmaps that we have for some of these things, but it is definitely a macro environment. Okay. Just very quickly, any changes in your plans for this year, given what we see now in terms of the spend trends by your customers, in terms of your investment slash, you know, profitability expectations or anything of the sort? Thanks again, guys. Yeah, thank you, Darren. You know, our DNA is to really manage the business for both profitability and growth. It's how I've built the business over the years. It's how John and I think about it, it's how the teams think about it. And we're committed to the profitability path that we're on. We believe the opportunity with the portfolio of products we have to continue to make progress on both is there because of the strength of the business that we've built. So, we, you know, we will manage the expenses that we need to in order to drive the goals that we've set. Thanks, guys. Appreciate it. Thank you. Thank you. Our next question comes from Tien-Tsin Huang from J.P. Morgan. Please go ahead. Your line is open. Hi, thanks. Thanks so much. And, John, congrats on the new president title. On the outlook, maybe can you elaborate how much of the guidance revision is tied to the weakness on spend that we've been talking a lot about, versus the adverse selection of the of the payment choices? And does it make sense to maybe talk about the penetration of some of the ad valorem products so that we better understand the impact? Yeah, good, great question. Thanks for, for that. I'd say if you step back and look at our overall estimates for, for the year, the majority of the adjustment that, that we've made is actually related to the Spend and Expense product, which has mostly to do with slightly lower spend per, per ticket, per transaction by customers. That's directly related to macro. And then indirectly, proactive adjustments that we're making to line sizes and things like that, in an attempt to mitigate any increased exposure as a result of, of worsening credit conditions in our customer base. The, the average size customer, as you know, for our Spend and Expense product, is much larger, mid-market type, customers, versus the core, the core BILL product. In the quarter, this last quarter, we did see increased penetration across all of our products, better usage, although we saw lower actual volume growth on some of our higher monetizing products like virtual cards and FX, as I mentioned. Some of these trends are directly related to the choices that larger suppliers or customers are making, and those are the trends that we're expecting to persist throughout the year. We do have levers at our disposal, including with the launch of our unified platform, many more opportunities to drive customer behavior and create awareness and things like that, as we think about a more modular approach to pricing and packaging that we think we can make progress with this fiscal year. So those are, you know, some of the puts and takes that we've considered. Okay. Then quickly on my sell - on the Spend and Expense side, the ability to dial up and down the credit standards, when did that change for you? It sounds like maybe you might get a little bit tighter on the credit side before reversing then. I just want to make sure I understood the timing of that. Thank you for the question. Yeah. Thank you for the question. Yeah, thanks for the clarifying question. We've actually been making adjustments and doing more frequent reviews of our customers' financial position and, you know, more frequently engaging with them over the course of the last year. So this didn't just start in the last quarter. However, we have made some more significant, more aggressive adjustments to line sizes so that we minimize our exposure. Previously, we talked about doing things like reducing open to buy, where if a customer is using, you know, $50,000 a month consistently and they have a line of $100,000, we'll reduce the line to $50,000 and things like that. So we've been, I think, evolving some of these adjustments over the last year, but we've been more aggressive with them over the last quarter or so, and we expect for the remainder of the fiscal year to be a little bit tighter, if you will, on the credit limits, because we're really managing to avoid credit losses. Makes sense. Thank you, John. Thank you. Thank you. Our next question comes from William Nance, from Goldman Sachs. William, your line is open. Please go ahead. Hey, guys, appreciate you taking the question. I was wondering if you could spend a little bit more time on some of the supplier behavior changes that you guys have noted. And you know, I guess, how does that how do we kind of square that with the historical guidance you guys have had on take rate? Like, should we expect take rate to be kind of flattish in this environment? And maybe, you know, just more, a more rich discussion on what is the kind of mechanism for some of these suppliers to change their payment preferences. It sounds like it's concentrated among larger suppliers, but, you know, is this something that can reverse at some point in time? Or, you know, have they found a cheaper way to do it, and this is how they're going to accept payments from now on? Maybe you could just talk about, like, the stickiness of some of the headwinds to take rate. Thank you, Ryan. It's, you know, it's when we think about how the suppliers are addressing, there's a long tail suppliers. There's small suppliers, there's large suppliers. By the way, suppliers are both on the international side as well as the virtual card side, and the opportunities to serve them are different. So, when we look at the impact that we're seeing today, there are opportunities for us to address, and like I said, pull in the roadmap to drive more payment choice as across the portfolio. And so, the first thing we're gonna do is focus on pulling in that roadmap, and then we'll continue to, you know, create operating leverage using the strong payment economics we have to drive adoption. And then we'll obviously leverage the integrated platform to drive adoption of payment products. So lots of opportunities to kind of continue to drive, you know, the penetration of our payment products. Specifically on, you know, the specific question of, you know, suppliers, you know, potentially opting out, I'll let John take that one. Yeah, so to that point about can the trends that we've seen, you know, recently, you know, reverse or revert to where we're back to a more linear increase in adoption, we think that's absolutely the case. So we've seen, you know, numerous areas where product improvements can really help us drive adoption. Those are becoming more important in this macro environment than they were, say, a year ago or two years ago, when adoption was increasing rapidly. An example would be, we have a number of transactions for virtual cards that go unprocessed or even rejected. And part of the reason for that is not actually cost, it's that we're not passing rich enough data in some instances to drive automated reconciliation. And so when René mentioned accelerating some of the product improvements, we're gonna make enhancements to remove as much friction as possible from... And that was just one example from our ad hoc, you know, payment suite, to make it easier for suppliers to adopt payments. We also have the ability, just within the unified platform, and I mentioned pricing and packaging earlier, we can look at the whole relationship that we have with suppliers now, offer them more tools and capabilities, and increase the value proposition that we're delivering for them. If that involves incentives, if that involves payment speed, other product enhancements, we're gonna be leaning into all of that. And we think within this fiscal year, we'll start to see a change in increasing volumes on some of these payment products. Got it. That's super helpful. And then just maybe a question, maybe you could just put some numbers around sort of the exposure to more cyclical payment volume streams. It sounds like, you know, you guys have called out, you know, T&E as a strong, kind of a stronger area of spend, digital advertising, weaker, things like lease and rent, weaker. So just maybe if you could put some numbers around kind of like the overall size and any other categories you would call out as we kind of try to separate out, like, more versus less cyclical streams of payment volume. Yeah. I mean, we haven't provided specific percentages or things on spend categories other than to say, just like with, you know, we serve customers across all industries, we have a pretty diversified base of expenses across customers as well, because we generally have, call it, 70 or 80 or more percent share of wallet, so we're seeing all types of spend. In the case of T&E, that's one I called out specifically around card spend, that's still small relative to the total base of spend, which was $4 billion in the last quarter for our Spend and Expense product. But it's large enough that, like, that movement, we're seeing strength there. It stands out because most other categories are flat to slightly down. Now, even T&E is still down on a per transaction basis, so the card spend per transaction. And I'd say the same is true with, you know, the example on the AP automation side with lease payments and rent, and everything that is facilities related. That's like, you know, low single digits% of a company's overall spend on average, but we are seeing aggressive reductions in that category as companies rethink small businesses rethink their physical footprint in this environment. Got it. Super helpful. Appreciate all the color, guys. Thank you. Thank you. Thank you. Our next question comes from Andrew Schmidt from Citigroup. Andrew, your line is open. Please go ahead. Hey, René. Hey, John. Thanks for taking my questions. I, I just want to dig back into the SMB health topic, and it sounds like retention, characteristics, engagement are still pretty strong, but are you seeing any changes around involuntary attrition, maybe on the smaller side of the business spectrum, more, more, businesses going out of business, things like that? Would love to dig a little bit more into that front, just on the SMB health. Thanks a lot, guys. Yeah. Thank you, Andrew. We are definitely seeing strong demand across the platform. You know, 4,700 core net adds this quarter, you know, continues obviously good success in our financial institution category. So lots of opportunity to drive adoption, and when, I think John referenced from a retention perspective, we're in a good spot. It's nothing has changed from that perspective. It really is about businesses tightening their belt, and like we said, it's the larger businesses that have the most ability to tighten their belt, and that's where we're seeing the spend, you know, the Spend and Expense capabilities from the Divvy acquisition. Those tended to be larger businesses to begin with. And so that's kind of where we see the impact, is kind of the larger businesses and the SMBs as a whole. I mean, they're adopting the platform, they're using the platform, the engagement is high. Everything that we are doing to make their lives easier comes through. That's what we hear from our customers and why we include them in, in the call. This is something that, you know, we believe there's an opportunity to continue to grow and expand and reach more businesses, because of that, those types of adoption trends. Got it. Thank you very much, René. And then, with the completion of the unified platform, I'm sure that frees up a lot of internal, bandwidth, resources, things like that. Could you talk about how you redeploy those resources, whether it's additional product philosophy, go-to-market? You know, anything around that front would be helpful. Thank you. Yeah, another great question. A lot of, you know, what we're focused on is how do we continue to iterate faster and expand the portfolio of the payment products we have, enhance the customer experiences that we have? So with the integration of the platform into one, there's now one unified experience across mobile and desktop that we did not have before. Now, that's not out for all customers, but it is rolling out to all customers, you know, on the mobile experience, for example, over the next few quarters here. So lots of opportunity to kind of enhance and iterate faster, because like you said, it was a heavy lift. I was super happy that we got it done ahead of schedule. Originally, we had said we'd get it done by the end of calendar 2024. We got it done, you know, earlier than that. The teams are working efficiently and effectively, and we are excited about the opportunities to continue to enhance. You know, the number of ideas we have is high, so we'll be doing that for customers as we roll forward here. Thank you very much, René. Thank you. Thank you. Our next question comes from Keith Weiss from Morgan Stanley. Keith, your line is open. Please proceed with your question. Excellent. Thank you guys for taking the question. And maybe a little bit of a different focus. Last quarter, we talked a lot about the changing relationship with one of the major FI channel partners. How should we think about sort of... And it got a lot of investors excited because it went from a kind of transactional ability to get to the new customers, to a base equation of where you could go after the entire customer base. How should we think about the timeframe of that, where that could have a positive impact on kind of new customer adds? Like, what are the kind of milestones or the roadway, if you will, that we should be thinking about in terms of getting that sort of going in a good way? Yeah. Thank you, Keith. You know, we are actively working with our partner to, you know, enhance the capabilities so that we can roll this out to all of their customers. It's something that we're, you know, actively doing. We will give you an update on the timing of that for that particular partner when we have one later this fiscal year. But I would just really kind of, you know, when I think about it, I step back and I think about the ecosystem developing. Like, this does not happen overnight, but we have, you know, created this category and this opportunity for SMBs to have one financial hub for all of their financial operations. That's unique, and we're seeing it in the ecosystem. It's not just the partners we've announced and the partners we're working on, but it's what we're seeing in the pipeline. It's what we're seeing, you know, from, you know, just in general, what we hear from accountants. Like, people are getting pretty excited about the opportunity to have one place to manage all these financial operations, and the platform to do that is built. It's something that's not easy to build. It's something that has taken us, you know, time. But having the integrated platform integrated in a way that we can actually now add these different payment products on, making that available to our partners, to our accountants, those are all things that I think about the ecosystem being super important. So it's not just one partner, it's really all the opportunities we see in front of us. Excellent. Thank you, guys. Thank you. Thank you. Our next question comes from Kenneth Suchoski from Autonomous. Kenneth, your line is open. Please go ahead. Hey, good afternoon, guys. Thanks for taking the question. I just wanted to better understand the assumptions in the guidance. Are you extrapolating the October trends, I guess, both what you're seeing on TPV and payment type selection, or are you assuming it gets worse in November and December, and then sort of stabilizes from there? Thanks for the question, Ken. So we've taken a look at the trends from late in the first quarter. Those have continued into the second quarter. Our assumption is that those trends persist through the quarter. We begin to see some stabilization in Q3 and throughout the rest of the fiscal year. It's really, as I mentioned, overall, pretty stable spend environment, but some moving parts around payment type composition, and that's the thing that we've tried to capture in our assumptions for the rest of the year, that there's some adjustment that's happening now. We'll get ahead of that in the second quarter and start to drive incremental, you know, adoption to overcome or mitigate some of those, you know, behavioral changes. So it's not something that we expect to, for example, deteriorate throughout the year or anything like that, but we are assuming the trends we've seen early in the December quarter and late in the first quarter continue this calendar year. Okay. John, just on that point, I mean, what transaction take rate is being assumed in the guidance for the rest of the year? Is it, you know, is it just- ... stable quarter over quarter, or is it, is it declining? And I guess, is there an opportunity to offer some other, you know, solutions like Working Capital or Pay By Card in this type of environment, to sort of offset some of those headwinds? Yeah. So our assumption for, for the second quarter is for our monetization to be down slightly, and then, grow in the second half of the year, such that we exit the fourth quarter above where we, where we were in the first quarter. And to your-- the second part of your question about other products, that, that's 100% true. So we think, we, we have highlighted, you know, FX transactions and virtual card payments just as examples, 'cause those have been large drivers of growth historically. But we have some really good trends happening with some of the newer products, including Pay By Card and, and Working Capital, that, that we think can be, significant, drivers of monetization expansion. And not only, you know, later this year, but, but in years ahead. So we've talked in prior quarters about this portfolio approach that we take with ad valorem payments, and we expect some of these newer payment products to be able to at least partially mitigate some of the trends that we've seen recently. Okay. All right, great. Thanks so much, John, René. Thank you. Thanks again. Thank you very much. Our next question comes from Brent Bracelin, from Piper Sandler. Brent, your line is open. Please go ahead. Thank you. Good afternoon. I guess, René, for you, we're seeing a number of stress fractures in the SMB sector emerge, I think SoFi in October, Paycom, ZoomInfo in the last week. Can you quantify how much of the spend slowed in October versus September? And are you now seeing these SMBs start to cut non-discretionary spend? Yeah. Thanks, Brent, for the question. There are, you know... The best way for us to probably talk about it is that, you know, a large business is gonna have a dedicated finance professional, whose job is to look for, how do you manage expenses down when you have a wait-and-see economy, a holding pattern? And so that's why we keep talking about this, the larger businesses, of which our Spend and Expense platform has more larger businesses than the core BILL platform, and why we are seeing more of the impact for the rest of the year from that segment of our business. And so when we look at the overall small business, portfolio that we have, you know, we're very fortunate because we have customers of all sizes. And, you know, most of the businesses are managing their spend, which is why John has said, and we've said, that the spend is generally stable. There's some downward pressure, but it's generally stable. It's this, you know, managing the expense side, that's kind of maybe new for us, as well as the larger businesses also managing, you know, where they have some additional discretionary. So, you know, I guess the step back is, you know, we have a large portfolio of customers, lots of opportunity within them, and this is more, you know, the macro is impacting today, the larger businesses more than the rest of the portfolio. Super helpful color there. Then just one quick follow-up for John. The implied guide for the second half does still look like you're looking for 10% overall growth. Does that assume increasing wallet in a soft landing, or are you actually baking in a hard landing into those 10% growth rate? Thanks. Yeah, we have a long track record of increasing our penetration with customers. Helping, you know, small businesses automate more of their processes with all the payment products that we have, our whole portfolio, that allows them to bring more payments onto the platform. We're assuming that those trends continue, but that the overall payment volume and the payment volume per customer is very muted down slightly, as we talked about in the second quarter, mid-single digits on a year-over-year basis on a TPV per customer. So we're not trying to predict or forecast the overall sort of macro economic impact here, other than projecting forward the behaviors that we've seen from our customers in this environment, which, as we said, have shifted a little bit. So we're assuming those shifts will continue, and we'll be able to partially, you know, offset or mitigate some of those through continued progress with share of wallet and some of the product improvements and experience improvements that René mentioned earlier. Got it. Thanks. Thank you. Thank you. Thank you very much. Our next question comes from Samad Samana from Jefferies. Samad, your line is open. Please proceed. Hi, good evening. Thanks for taking my questions. So maybe, John, just thinking through the, the commentary on, ad valorem and, and payment type selection, I know you addressed the, the type of both where, what payments are going towards in terms of end spend, and then talking about payment type. But maybe if we could actually triangulate, if we think about the, the ad valorem transactions themselves, right? So you gave 3.2% of the mix in the fourth quarter was from virtual card, and 1.7% was from cross-border and, and local currency. What's the concentration there look like, right? So if I isolate it to that 3.2%, how concentrated is that amongst a certain number of suppliers? Because if I annualize that, that's like $8 billion. Is it a handful of suppliers that are accepting that in terms of virtual card? Is it hundreds of suppliers? I'm just trying to get at the level of concentration within that spend. ... Yeah, thanks for the question, Samad. So I'd say on, you know, on cross-border payments, it's very diversified across a large number of suppliers without a significant concentration. On the virtual card or Vendor Direct side of things, it's thousands and tens of thousands of suppliers, not tens or hundreds. With that said, we do have large suppliers who are, you know, think of examples like national providers, whether it's utilities or telecoms or things like that, which are used by many customers of BILL. So there's a many to one relationship. But if we step back and look at the overall spend profile for any of our payment products, but that in particular, we don't feel like there's any sort of outsized, you know, concentration or anything like that of a very small number of suppliers. Got you. Then maybe asking the question on the spend side. So if I think about the type of payments that are made using ACH versus the type of payment that a customer may choose to make virtual card in, I guess what I'm wondering is, are the payments that are typically selected for ad valorem more discretionary versus maybe something that is more recurring if it's ACH? Once again, just trying to understand if there's different concentrations at the specific higher fee level. Yeah. That's a great clarifying question. I'd say there might be a higher percentage of discretionary spend that flows through our Spend and Expense card program, because that involves individual cards, some of which are physical cards, not all virtual, and therefore more sensitive to things like T&E, which we mentioned before, that's been strong. On the virtual card program, the Vendor Direct side, AP automation for BILL, we don't see significant differences between, say, an ACH payment that might be set up for a one-off transaction or even one that's an auto charge or an auto debit to a bank account versus a virtual card payment that's delivered to a supplier. In some cases, it's the supplier who's driving, "Here's how I want to get paid," and their buyer takes that action. In other cases, it's the buyer. I don't think there's big differences other than, you know, transaction size, where most suppliers do have limits and various other, you know, variables that they want to manage when deciding whether to take a card payment. Great. Appreciate the clarity. Thanks for letting me squeeze you in. Thanks, Samad. Thank you. Those are all the questions we have time for today, so I'd now like to turn the call back to René for any final remarks. Thank you, everyone, for joining us today. We've built a great business over the years because of our constant focus on automating the financial operations for SMBs. We look forward to serving them and thank you again for joining us. That concludes today's conference call, everybody. Thank you very much for joining. You may now disconnect your lines.