BILL Holdings, Inc. (BILL) Earnings Call Transcript & Summary

Okay. I think we'll get started with the next session. I'm Bryan Keane. I cover payments [ processes ] and IT services here at Deutsche Bank, and we're excited to have BILL and John Rettig, who's the EVP and CFO of the company. And we got a laundry list of questions here to go through. So John, really, really thankful for you coming here.

Thanks for having me.

So I guess I wanted to start a little bit high level here. Just thinking about B2B payments is one of the hottest subsectors in payments that we cover. How would you describe the TAM and BILL's future growth rates?

Yes, it's a good place to start. Obviously, the market is huge by almost any measure. But just as important, it's early in its evolution. So we're not talking about an established market that is going through a replacement or upgrade cycle or we're talking about a market that is still really forming. And if you think about the number of potential businesses that could be impacted, it's in the millions. There's 6 million businesses in the U.S. with employees. There's another 20 million, 25 million that are sole proprietors. And then there's obviously an even much bigger global opportunity, just looking at the U.S. market to start. And the majority of these businesses still use some form of manual legacy paper-based system in their financial back office even if they're doing some things digitally like online bill pay or other electronic payment methods. And so that's the exciting part of the market. And the reality is we've created an easy way for small businesses who are less sophisticated, have fewer people involved in these things to go digital. And by doing that, we've really created a category here that I think we have a pretty big lead on, and there's obviously lots of people following. And our starting point for -- to your point about future growth is really, we have significant scale, even though the market is just evolving now, 400,000 customers, nearing $300 billion in payment volume, a network of 5 million users. So all of which I think can combine to as we get past the current macro environment, lead to durable growth over the course of the next decade.

Yes. And I was going to ask you, I'm always trying to figure out what's the normalized growth rate for this business. Can you just maybe talk about some of the variables, the puts and takes that go into that?

Yes. At the highest level, I would really look at 3 variables. One is subscribers or customers, and that speaks to the market penetration opportunity and our aspiration over time to serve millions of businesses. Two, would be total payment volume or the transaction value that businesses are conducting. And then the third is the monetization expansion opportunity given where we're starting from, which I can cover in a second. First, as it relates to just subscribers and penetrating the market, we're obviously in a little bit of a choppy environment right now given the economic cycle that we're in. But when we look past that, we think there's a really great opportunity to continue our penetration into the market. It has a lot to do with the distribution ecosystem that we've built across going to businesses directly through referrals from our network, accountants, financial institutions and whatnot. So we're excited about that, how our ecosystem can reach SMBs. Related to payment volume, that's probably the biggest headwind that we see in the very short-term, and that's associated with businesses a little bit being in contraction mode on spend versus crazy expansion mode during the couple of pandemic years. But over time, even as the economy returns to growth mode for small businesses, we would expect to grow at a rate higher than that because we're on an ongoing basis, increasing our share of wallet of the payment activities of businesses. It's not just the dollars, it's the number of processes that we help them automate and how they leverage our platform to increasingly run their business. So the more solutions that we offer enables us to have a higher share of payment volume. I think over time, we're also doing things that will create more of a money ecosystem within the BILL network. And that's things like BILL Balance, which is a digital wallet product that we've seen a lot of traction with lately. In the future, it could be things like more banking-as-a-service capabilities to where it's not just a point solution, it's a full ecosystem for B2B money movement. And then the last piece that I mentioned upfront is just monetization, where I think we have a really good track record of expanding in particular, transaction monetization, increasing ARPUs and over the last 4 years, I think we've had virtually every quarter, we've increased revenue per transaction. And all of that comes at a time when we still have just 14 or 15 basis points of transaction monetization and a long way to go from there. So I think those are the big 3 variable subscribers, payment volume and monetization that create the growth runway for us.

Got it. Fiscal year just ended and you guys reported a couple of weeks ago. So as we think about heading into this fiscal year '24, maybe you could just talk about some of the things you're most excited about right now.

Well, it's probably anchored on our priorities for '24 that we've outlined. The first of which is an extension of fiscal '23. Actually, it's rolling out and driving adoption of our enhanced platform, which is the culmination of a couple of years of work to bring all of the solutions, both organic and the ones we've acquired through a few acquisitions together into one seamless experience for customers. So accounts receivable, spend and expense. Obviously, our AP solution, as well as the early efforts around planning and analysis and insights from our Finmark acquisition. So bringing those to market, we're launching later in the fall. We'll obviously have go-to-market capabilities wrapped around the product launch and ultimately drive adoption of all of our products across the customer base. So that's the biggest and, I think, the most critical priority for the year, and we see lots of opportunities across all of the discrete customer bases who are using our solutions to attach to many more modules and become users of all of our functionality over time. The second is expanding our ecosystem. I mentioned the distribution advantages that we have earlier and we want to not only do more with accountants, which is a sort of anchor part of our distribution strategy, and enable them to better serve their customers through enhancements to our platform and a unified or integrated approach to dashboards and working with their clients, but also working with financial institutions and bank partners in bringing more of our solution set to those customers. And that to the banks and to their end customers, which we think is a really interesting opportunity. We've seen a lot of traction, obviously, with JPMorgan in that regard over the years. We recently extended our agreement there, which I think is an indicator of the value that we're creating in. With each phase of the relationship, we have more and more opportunities to bring our solutions into the white label solution. And then obviously, we've had a lot of traction with Bank of America recently on the small business side. The third and by no means final, but certainly, a high-level priority is around driving adoption of digital payments and in particular, increasing the penetration of ad valorem payments across our customer base. So these are things like real-time payments and instant transfer, maybe working capital solutions, virtual cards, international payments, things like that.

Got it. Got it. With the launch of the unified platform anticipated this year, what are some of the things you're looking forward to be able to do that you weren't able to do there before? And is there a material cross-sell beyond that 7,200 that are both BILL and Divvy customers today?

Yes. The promise that we've been building towards is a platform solution that allows SMBs to manage all of their financial operations in one place with one experience, not with having a disparate set of tools that maybe don't even integrate and there's manual activities to connect them and create an understanding of what's happening in business. So the goal really is around visibility and insights from the platform by having everything in one place, including the FP&A tools that I mentioned. In addition to that, we're rolling out more tools for accountants to be able to add on board and get their clients up to speed on the solution set, where, as I mentioned, launching the next iteration of this experience in the fall, and we will definitely have cross-sell and upsell go-to-market capabilities attached to that. With the starting point really being, a digital solution, right? In product messaging and marketing, e-mail campaigns and where appropriate, sales assisted -- inside sales-assisted activities to drive adoption. Of the 7 -- approximately 7,000 joint customers between spend and expense and our AP solution with BILL, about 5,000 of those represented or represent BILL customers who adopted spend and expense, and that's up from about 1,000 when we did the transaction. So that's good progress. We believe, given customers are opting in and choosing to adopt a product, even though a separate experience was required to use it, and we think there's going to be a lot more interest in particular on the part of accountants as we bring the solutions together and there's one unified experience. So we would expect to continue that organic momentum that we've seen over the last couple of years and accelerate that perhaps in the second half of fiscal '24 as the product is generally available.

Got it. I want to ask about Finmark in that acquisition and the potential cross-sell there between BILL and Divvy and Invoice2go.

Finmark is a great solution for lightweight financial planning, analysis, budgeting, dashboards, reporting and things like that. BILL is very -- because of our start with AP, accounts payable and financial automations there, then AR now spend and expense. There's a lot of interaction in connection to the accounting systems. We complement the accounting systems and our main third-party data source for those solutions is a data that passes back and forth in the accounting system. Finmark is broader than that. It connects via APIs to any system that a small business uses. So think e-commerce, CRM, payroll, in order to consolidate all of the financial activities of a business, and in a self-service way, create insights and reports and dashboards that allow business owners, accountants, other people who are involved in helping make decisions for the business, have a much better understanding of the status of the business from a cash flow perspective, be able to be more proactive and preemptive in making decisions. So the -- we're really excited about the Finmark tool and we'll be bringing that to the unified platform over the course of fiscal '24 as well.

Got it. So whenever you have a great secular growth rate, you're going to see more and more competitors. Can you just maybe help us think through some of the barriers to entry for competitors when they want to just say, okay, great, we see B2B is growing fast. We want to do that too. What are some of the things that make it maybe a little more challenging just to enter this space that easily?

Yes. I mean the presence of competition, I think, is glaring endorsement of the size of the market opportunity. It's not just about BILL, it's about small businesses and how they've been underserved for a long time as it relates to cloud solutions as many providers have invested in the enterprise segment. And so we're obviously believers in that, and we've been investing for over a decade to serve small businesses. I think besides actual capabilities that are on the ground today being used every day by small businesses. I mean we have a huge lead as it relates to the product, that's in things like workflow and collaboration and payment capabilities. We've amassed significant subject matter expertise in things involving risk management and regulatory and compliance. We are both a software company that has built a platform and we're a payments company that has built first-party proprietary capabilities. And then you layer that on top of the scale that we have, not just with the customer base and payment volume, but where we're starting from as this market is developing. It feels like scale is an important differentiator as you think about continuing to penetrate the market as the market evolves.

Thinking about the competitive landscape, obviously, the announcement that BILL's marketing agreement ended with Intuit, which I know was less than 1% of revenue. But just thinking about Intuit's competitive position to offer B2B payments. Why would customers necessarily stay with BILL that might be using QuickBooks?

Yes. Looking back at the relationship that we had historically, I think the net of it is that from an economic perspective, it wasn't material to either company. And so we're pursuing similar but different paths to creating value for small businesses. And as we've said for a long time, it's not just about the payment for BILL and how small businesses use our platform. The payment is kind of the last mile. It's a very last thing they do, not the very first thing they do. In fact, we have virtually no customers who just uses for payments. There's some other element, whether it's document management, our AI capabilities to extract data from documents and invoices and contracts and things like that, to predictive workflows and analytics around approvals and so on and so forth. So we're very much anchored to providing a solution that the financial operations can run on as opposed to like a payment capability that is in addition to an accounting operation or a function like that. Now there's going to be some overlap for sure, in the payment part, we think there's obviously a big market opportunity and probably a little bit of a difference in the core customer size and opportunity versus what we're pursuing versus Intuit.

And then how do you guys expect the -- I think it's 12,000 Intuit-connected clients from a relationship. Do you expect all them to churn off? Or will there be a handful or 1,000, I don't know what the number is, that will stick with BILL maybe because of their larger size?

It's certainly possible. We would expect the vast majority of that number, that 12,000, to migrate to the homegrown solution from them. It's less than 1% of revenue for us. And I mean, the more important part is that the average size of those particular customers is probably a little bit below the sweet spot for BILL and how we think about where we can create the most value. I think the ARPU on a per customer basis is something like 1/4 or 1/5 of the average BILL SMB ARPU. That's not the only measure that's important to us, but it's an indicator of how much value we can create for a small business.

Got it. The macro is obviously a concern for investors, and you've been talking about the slowdown in B2B spending since the latter part of 2022. Can you just talk about what you're seeing in spending volumes and how that's trended versus your expectations?

Yes. I mean we've seen some stabilization in spend, meaning the sharp declines that existed, say, late last calendar year and maybe the early parts of 2023, I think those are past us. But it feels like with all the data that we have access to, small businesses are still in contraction mode as opposed to expansion mode. Now that's not true across the board, every spend category, every vertical, every size customer, for sure. There are some green shoots, but we're expecting this trend to persist throughout fiscal '24. Obviously, there's lots of external factors influencing that like interest rates and access to credit and other things, even the labor market at some level. So we've seen slight declines in TPV per customer on a year-over-year basis. We obviously grew quarter to quarter in the fourth quarter of fiscal '23, which I think was a positive surprise and kind of points a little bit to the stability that I mentioned. But from a category perspective, we're seeing some spend areas that were in consistent decline for over a year, start to revert to growth. Advertising would be an example of that where for many quarters in a row across our entire customer base, they were pulling back. That's in slide expansion mode now. But we've seen some other categories that are now declining at a more significant rate, real estate and facilities and physical infrastructure office infrastructure and things like that is one example that seems to be pretty pervasive across the customer base.

Do you think there's -- if we get into a more of a recession that people have been calling out for a while, do you think there's another -- like another step down? Or is this just in volumes potential? And just trying to figure out how the BILL model would hold up for a more serious recession? Or is it one of these things where kind of SMB is cut to levels -- they've already kind of done their cutting and there's not really a lot of other volumes they can cut out because it's day-to-day business that they're paying?

Yes, it's hard to say with precision, obviously. We do see larger businesses, so kind of our mid-market segment, which would be customers with more than 100 employees. They seem to be scaling back a little bit more aggressively than the average smaller business from 10 to 99 employees. And that may simply be due to the fact that they have more discretionary spend with which to proactively manage depending upon the economic cycle that they're in. But it's true that the majority of spend for our SMB customers over many years, is comprised of repeat transactions. So doing business with the same suppliers month in and month out on a quarterly basis, an 80% repeat transaction rate, with now some fluctuation in the dollar amount associated with those transactions. But how close we are to a bottom, if you will, and spend regardless of the economic activity versus a reversion to growth? I think it's hard to predict that with precision.

Got it. The biggest questions coming out of the earnings call were some of the changes to BofA. So I wanted to ask a couple of clarifications. I guess, first, you saw an impact in net customer adds and subscription revenues in the fourth quarter from the sunsetting of the prior [indiscernible] relationship. So just to be clear, you converted 700 clients for the BILL platform. Where did the other 5,300 clients go? And what's the impact that we should think about the P&L of the gain of 700 and the loss of 5,300?

Yes. So this is related to the commercial business segment of BofA, which is a relationship -- a contract we have for more than a decade, I think. And there were 6,000 customers. So our historical FI channel customers who report included 6,000 customers for this segment. They sunsetted the product to streamline their operations and offerings and 700 as we reported last quarter, moved over to work with BILL directly. I'd say the early indicators on the 700 are that those from a -- those customers from a revenue perspective will be more valuable to BILL than the cohort of 6,000 that we were working with through the bank. And that adjustment is kind of a onetime thing. So we've taken the 6,000 out of the base. And so we feel pretty good about the continuity for the highest volume customers that were in that 600, which they liked our product. They knew our product, even though it was white labeled through the bank. They opted to continue to use the solution because it's a part of how they run their business. And that's the proof point that we often look for to determine how important we are to a small business, so we feel great about that.

And then what's the right number to think about for net FI relationship adds on a quarterly basis? Should it go back to the historical levels now that we've kind of gone through this commercial [indiscernible] relationship?

Well, I think there was a couple of additional moving parts in the last quarter. Obviously, the largest was the 6,000 adjustment, but there was also some lower seasonal marketing campaigns from a couple of our FIs. They were also -- there's also some residual impact to the SVP situation and First Republic where we saw some small business customers actually move away from those banks to other providers, and that resulted in some net attrition on a couple of relationships. So I think we'll revert to a higher level of FI [ adds ] on a consistent basis than perhaps we showed in the fourth fiscal quarter of '23, given some of those adjustments that I mentioned. But as we talked about before, the bank partners that we have are really the ones who drive the adoption cycle and the marketing and the -- if there's a sales program on commercial customers, they drive the timing of that. We're -- we can influence. We certainly collaborate and partner with them on tactics and things like that, but we're in less direct control of the rate of adds -- but I think it's probably north of where we were in the fourth quarter, but we're not providing specifics on our expectations there.

Okay. The other big thing when you consider [indiscernible] as a renegotiated contract, and we understand it gives you a much larger revenue opportunity in fiscal year '24 and beyond, given the full base of Bank of America's SMBs that you can work with now. But maybe you can get into a little color on how the deal works today versus the prior one, and we're thinking about the economics, how they worked difference before than after.

Yes. The main takeaway to start with is we think the shift in focus from just the new small businesses to Bank of America, which is the segment we've been serving since we launched to the installed base as well. So any small business customer at Bank of America, who has a need to do online BILL pay, AR, invoicing, receivables, whatever the particular product is. That's where we're headed. So I think it stems from the success we had serving with the bank -- the small businesses that were new. And now we're redirecting efforts from optimizing attach rate, usage, retention of that segment to the back book, if you will, the installed base. And it's our expectation that the end result of this is a much bigger contractual opportunity. It's the arrangement that we had with BofA. Actually, and it applies to all of our FI deals -- was centered around a certain number of customers and adoption and transaction levels. And for the small business segment, that was based on the new businesses to the bank. We're obviously working towards significantly expanding that over the course of the next year. So that should create a much bigger opportunity. And there are some milestones that we have to get through from product enhancements. It's not an overnight thing. There won't be this massive switching customers 1 day. It doesn't work like that. It will be -- we hope a migration over time, over a few phases, working closely with the bank. So it's not as much about an economic change or things like that. It's about a significantly larger segment of installed customers to potentially serve versus just the new customers to the bank.

Are there any changes in revenue recognition in fiscal year '24 and beyond and how the contract originally was proposed?

Essentially, what we've done is push out some of the subscription revenue that we had planned for in fiscal '24, because that was associated with the new customers to the bank and the adoption we're going to drive there. And what we want to do is redirect efforts to this installed base. So the effect of that is 8 to 10 points of additional subscription revenue in '24, if we would have retained that structure in '24. And we've moved that out to future years. And our expectation is that over time, we receive a multiple of that coming back based on the sheer size of the installed base that we'll be serving.

And do you get that 8 to 10 right away in fiscal year '25 and then you get beyond that? Or is it hard to pinpoint exactly where you get that [indiscernible]?

Precise timing is more difficult. I'd say we start to not only earn that back, but build the trajectory to significantly exceed the '24 number that moved, we start that process in '25.

Got it. What percentage of the overall Bank of America's SMB base, do you think you can convert now that you have a much larger opportunity?

I can't speak to specific Bank of America numbers. And I think there's lots of public figures out there about -- they have a approximately 4 million small businesses that work with the bank and some significant percentage of those are active online. They use an existing product. The opportunity is to potentially be the new product that those existing users will then engage with. And over time, as we get closer to, say, the actual market launch and migration events and milestones associated with this shift, we'll have more to say about the actual numbers associated with the market opportunity and what that might translate into in terms of economics for BILL in that small business segment.

Got it. And then just kind of the last question I had on -- thinking about this is just the FI channel and the contractual minimums. Can you just give us the general outline of those minimums and how the revenue recognition works for the minimums and how it breaks the different breakpoints and transaction points?

Yes, we generally enter into 5-year agreements. We established minimums based on an agreed-upon target penetration rate of the customer base. Those minimums typically increase for the first 2 or 3 years to give our partners time to drive adoption. The minimums are not the goal. Like we're not -- we don't do these deals to invest behind the partnerships, create white label relationships. We have had great success at being a leader in embedded solutions for others, in this case, the banks, but we don't do it for the minimums. We do it for the opportunity to significantly exceed the minimums over time. We view it as a floor for revenue, not a ceiling. And this shift with BofA is really the first sort of, I think, public example of that where we're working towards value from the relationship that's much larger than the minimums would indicate. So we have a handful of banks that have been very successful at driving adoption and penetration of the customer base and they're well beyond minimums. We have numerous banks that are still operating at minimums and we'll scale that over time. One of the levers that we're working towards is in increasing the number of products that are available and exposed inside the white label platform with the banks that will lead to a monetization expansion opportunity for BILL and also potentially an incremental revenue opportunity over and above minimums.

Okay. I want to move to kind of core net organic adds. I think this last quarter was the best, I think, we've seen in almost 1.5 years in the fourth quarter. And then you guided organic quarterly adds, if I think about 4,000, which is slightly below the 4,000 to 5,000. And then obviously, the fourth quarter numbers. So anything to call out in this slight slowdown in this 4,000 kind of going forward for net organic adds?

Well, I think we saw some macro-induced shifts in buying behavior surface in the fourth calendar quarter, the December quarter. We've expanded net adds 2 quarters in a row since then. And we said at the time that we felt like this is a little bit more in our control than say, the spend patterns of a business, making sure we're targeting the right types of customers who have a higher propensity to adopt now versus later and things like that. And then the fourth quarter also included the migration of the 700 BofA commercial customers, so that improved the direct [ and ] account numbers. But ultimately, we believe that the macro environment is going to result in sideways sort of operating cadence for small businesses and a distraction factor that could result in fewer customers moving now. It's not about awareness, everybody is aware of the need to do something different, but it's about moving now. So we've built that assumption, just like we have with TPV trends for the year into our assumptions, around that 4,000 a quarter. We would expect that there's no lasting structural obstacles or barriers to performing well above that rate. But I think we want to wait until we see clear signs of increasing adoption and speed of adoption and things like that before we consider the coast clear on accelerating net new adds.

We're continuing to see the ad valorem product adoption, gain traction, I think it reached 13% of non-FI channel TPV of last quarter. Can you just talk about how you guys are driving that continued adoption and maybe some of the levers that you can lean on to further accelerate adoption among clients?

Yes. We're happy with the progress on the ad valorem adoption. We're driven by trying to get small businesses to use electronic payments. That's our first goal. We don't wake up everyday thinking about what is the highest monetizing payment we can get somebody to use. It's a portfolio approach. Obviously, the 13% includes the Divvy spend and expense solution. We would expect to be multiples of that over the course of a number of years. Another way to think about the 13% is that we have 87% of our TPV is monetized at something really close to [ Xero ]. Therein lies the embedded opportunity over time to the extent that we're doing smart things with our algorithms to match suppliers and buyers and the right payment method. We're moving money fast. We're creating opportunities for awareness and adoption. That's how we ultimately drive the numbers higher. I also mentioned a couple of changes to the platform around treating our ecosystem is also a place where money can reside over periods of time. There's things like BILL Balance and digital wallets, which we use to drive instant payments most of which are free in the network. That obviously for BILL, in this interest-driven environment provides an indirect monetization opportunity through float revenue. We don't do things to optimize float revenue, but to the extent that money stays in the system longer, it does provide an incremental opportunity. So I think we're well positioned to be able to drive choice for SMBs and suppliers. And that over time is what's going to lead to an expansion of that ad valorem adoption rate.

Can you talk a little bit about some of the new payment modalities, including Instant Transfer, which is starting to grow a little bit and see some traction? And then obviously, you're rolling out the working capital product, maybe what that also means to BILL?

Yes. Instant Transfer is a great product primarily for smaller suppliers. We think over time, that could expand to suppliers of all sizes. It could also be something that's super interesting on the payor side. So moving money faster. I mean that's the general trend is that there's a need, a demand in the market for moving money quickly and getting transactions cleared with certainty, with ease of reconciliation. And that's where I think we have lots of tools, whether that's virtual card payments or Instant Transfer or BILL Balance or BILL Banking and Service Payments, all of those things are additive and support that need in the market. And then we think helping with cash flow solutions through things like working capital and invoice financing and whatnot is an ideal way to create incremental value for small businesses, leveraging the huge advantage that we have around our data assets and understanding the deep relationships between buyers and suppliers.

We're almost out of time, but I want to try to do 3 quick ones here, just kind of fly through it. One, just thinking about the organic volume take rate expansion. Just trying to think about how we should use that. Is it 0.5 to 0.6 basis points is a good starting point? And maybe how does that number move around as we model that out going forward?

I think that's the right starting point. It's our historical average. We've obviously performed well above that in some cases and some quarters are below that. We view this more as an annual expansion opportunity than quarter-to-quarter because there are moving parts. It's going to vary quarter to quarter. And then I'd say that starting point is subject to any impacts from the macro environment. So do we see more demand for faster payments that increases the monetization opportunity? Do we see headwinds around international payments because there's less FX and purchasing behavior or more price sensitivity? So we do believe the macro could lead to or translate to some puts and takes on that. We haven't seen it in a material way yet, but it's something that we're monitoring.

Float has obviously been a big part of the growth and then has helped profitability. But I don't think it's obviously the only thing helping profitability in the business. So can adjusted operating margins still expand if we get into this rate cut environment where float revenues would be hit?

Yes. We're -- I mean, we're going to take advantage of the interest rate environment and the float revenue that we have. That's going to help us invest in the business over the longer term. We're doing a lot of things that have nothing to do with fiscal '24. There are platform capabilities and other features and functionality that we were rolling out in years ahead, and we think that's the right thing to do. We were breakeven, just profitable on an ex float basis, operating income ex float in fiscal '23, our estimates for '24 are for the same. And we view the opportunity to expand ex float margins over the long term as something we're committed to. Now, how fast we do that, I think it really has to do with getting through this short-term macro environment and seeing what holds there. We have predicted in terms of our float estimates for the year, a decline in the Fed funds rate. I know that's different than consensus at the moment, but we don't want to operate in a way that we're reliant upon higher interest rates to deliver improvements in non-GAAP net income and then over a longer period of time, ex float margins.

And then the last one I want to ask is M&A. You guys have been successful in adding some solid tuck-ins. What's your appetite to add M&A in today's environment?

It's really grounded in our product priorities, how we -- the opportunities we see to add more value for small businesses. We take a build, partner, buy, look at everything. And we do think there's opportunities we're well positioned from a capital standpoint and an internal capability standpoint to potentially accelerate time to market for certain products through M&A. So we'll keep looking. We're obviously not in a rush to do that. We want to do things that are additive to our strategy and our business over the longer term.

Got it. With that, we're out of time. Thanks so much. Thanks for being here, John.