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

All right, guys. So we're going to get started. I'm Will Nance. I cover payments here at Goldman, and we're delighted to have both Rene and John here from Bill.com. Happy to have a conversation, and thanks guys for being here.

Thank you, Will. Great to be here.

Eventually, I'll stop saying dot com.

Yes, that's okay.

Well, look, thanks for being here, both of you. I mean I wanted to kick it off with a higher-level question. BILL has pioneered the AP automation and B2B payment space. How has the market evolved over time and the first mover advantage that you've built?

Yes, it's a great question. When I step back and think about it, pioneers actually set the path that others follow. And so that's what we've been doing. We've been building and defining this category, helping businesses understand the importance of their operations and automating their financial operations that run their business. And before us, businesses were kind of stuck with the old way, which is paper. And so we've now kind of changed the game. So as the category becomes more known and more aware, there's opportunities for us to bring more customers into the fold. I would say that just stepping back again, thinking about the market adoption overall, there are these different periods of any adoption cycle. And so if you go back to Geoffrey Moore's Crossing the Chasm, you've got the visionary, the early adopters, the chasm, then you got the early majority and the late majority and then the laggards. And we're in this period right now, which I would say is kind of crossing that chasm. More people know about us, more partners we've talked, and we'll talk more about some of the partnership deals that we have. But this opportunity to kind of really bring more businesses into the fold is something that I think is important. And the way we stay ahead is that we continue to define and lead. There's -- one of the things about being a leader is that you're never satisfied. You're always trying to extend and expand the capabilities for your customers, for your employees, for your investors. This is something that drives and motivates everybody at BILL. Like we're very focused on making sure that we change the way business gets done. It's way too much time is spent in the back office with manual processes. And so what we've done is built a platform from day 1 to really change all of the financial operations into an automated solution, and we're unique in our capabilities that we've built to be able to do that across an ecosystem. So I think the way we continue to stay ahead and to lead is to just do that is to lead, is not to follow anybody.

Makes sense. Maybe we could talk to macro. I mean the degree of macro impact, I think, particularly in TPV, took some people off guard, and I think particularly because it happened after a period of such robust growth and recovery after the pandemic. I mean, where are we now in the normalization of macro trends in the business?

Yes. It's interesting when you think about the economy over the last few years, there's been a number of firsts, right? We had COVID then we had supply chain disruption and then we had over stimulus, and then we have threat of recession, which seems to be going on for a year now, right? And so all of this means that businesses, especially small businesses, are kind of holding. They're in a holding pattern. And the way I think about this and one thing I love about economics is not just micro or macro, there's also a micro. And micro is what I love about small businesses. They are resilient. They figure out how to actually drive their business every day with the tools they have, the resources they have and the customers they have. And so from our perspective, what we've seen is that businesses are just kind of in a holding pattern. And the TPV has kind of pulled that out. I think a year ago, we saw businesses pulling back, but now I would say it's more of a holding pattern. I don't know, John, if you have anything else you'd want to add?

Yes, we're definitely past the elevated spend levels that we experienced for a couple of years during the pandemic businesses have adjusted. We actually saw that in our data all the way back to June of '22. It's kind of when we started to see the contraction trends beginning. The last couple of quarters have actually held up better than we expected from a spend perspective, but there's still ongoing signs of choppiness and contraction going on. It's not a reversion yet to all out expansion mode. So we've seen things like lower TPV per transaction with international payments that tells us a little bit about the changing habits of inventory purchases and services from U.S. -- our U.S. SMB customers buying internationally. We've seen a contraction pretty consistent across the board in real estate and facilities and physical infrastructure, which could be a sign that small businesses are also reevaluating how they're going to do business physically. So we're expecting the current conditions to persist for a while under the assumption that we're in a higher rate environment for a longer period of time. But I think the setup is good just given the way our platform is used and how sticky it is for customers, such that as the macro situation resolves itself and businesses get back to expansion mode.

Maybe a longer-term question on TPV per customer. Because of the variability in that metric over the past year, I think there's been some question about just what the longer-term trend in TPV per customer should look like. What are the building blocks for kind of out-year types of TPV per customer trends?

Well, I think there's 3 main variables. One is the average size of our customer base. Obviously, we have a very large customer base, and there's lots of diversity in geography, industry and size. We've seen a slight increase in the average TPV per customer over time, partially driven by the mid-market segment of our customers. The second variable is our share of wallet of business spent. And this is actually where the biggest opportunity is for us to move the needle. We have a lot more control over that. And then the third thing that we just talked about is our business is expanding or contracting their overall spend level. So even in an environment where spend might be coming down for a business overall, we can be growing TPV per customer to the extent that we do things like introduce more payment types, have more choices, create more opportunities for buyers and suppliers to connect with less friction. We have seen, over the years, a very strong correlation between the number of choices and the number of transactions and the amount of TPV per customer that we help them with, and we expect that those kinds of things will continue. The other thing that's in our control is as our product strategy, the integration of all of our solutions is coming together in a unified platform, we think that's going to unlock some of the share of wallet that we don't currently have, whether that's card-based payments or other stored transactions that could come into the platform given the benefits of all in one place, ease of reconciliation and those sorts of things. So there's a lot of moving parts here. And then I'd say just thinking about the like the financial impact and the growth algorithm, a lot also has to do with just monetization. So at any given level of TPV, we have a significant opportunity to continue to expand monetization to drive growth.

Got it. When you talk about the customer base, I mean, you've always said it's very diverse. It's 1% of GDP, you're kind of a replication of the breakdown of SMBs throughout the country. Are there any larger industry verticals that are kind of most significant? Or is there any concentration of power users within the different industries that kind of make up a large percentage of the business?

There really aren't. And just when I think about everything that we do, it comes from a place of the fact that I just love SMBs. I grew up in and around them. I saw the diversity that they provided in the workplace, in the community. I saw the passion, the perseverance. And I'm just very committed to their success, and that's everybody at BILL. So that's why I started the company, but always have that commitment. And so if you're committed to that category, you're not going to go after one vertical. You're going to say, no, we need to be here for SMBs. We need to build a solution with intentionality that actually goes across the entire spectrum of SMBs. And now we have 460,000 businesses across the globe that use our platform to manage their financial operations to actually reinvent the way they do business in the back office. And that's something that gives us all tremendous confidence and satisfaction about how we move for it because if you had a vertical, then you would have concentration risk. And we don't. We have opportunity in front of us. That's what the pioneer things about. Our ability to kind of lead that path means we're doing that for all the SMBs out there, and we're not going to stop until we're done.

That makes sense. So in terms of net adds on the business, I want to talk a little bit about go-to-market. You guys have been talking about, I think, since earlier this year, investments in the go-to-market in ways that you're trying to kind of refine that. That's come at the same time that macro has kind of weighed on the level of quarterly net adds in the business. Could you talk a little bit more about those investments? And what gives you confidence around the reacceleration or the benefits of those investments that you've talked about?

Yes. We've been adjusting our go-to-market activities and tactics to the current environment. In fact, over the last couple of quarters, we've seen increasing net new adds coming off of a December quarter that was weak, as you noted. That was sort of a trough. And I think was the first real indicator that it's not just the spend patterns of small businesses that are being adjusted in its macro environment. It's also willingness and timing of adopting solutions given other distractions that might be going on. Our investments in the area are really around targeting. It's how do we make sure that we're putting dollars behind prospects that are more prone to adopt now versus later. And so we're making adjustments. And we're seeing those in very short order already start to produce positive results. The pandemic like that whole timing was a huge awareness changer for small businesses. That's still there. Everybody is aware of the need to do something different and to improve their tech infrastructure. So we feel really good about like the ecosystem that we've developed, our network, our unique go-to-market capabilities that will allow us even in an environment where small businesses might be distracted to improve our net new adds. Obviously, with the goal over time, as Rene has said before, serving millions of businesses, we're well positioned to accelerate net new adds. Once we get past kind of the choppiness of this current macro environment.

Got it. So maybe switching gears to the FI channel. This has gotten a lot of attention over the last 18 months. Customer acquisition accelerated significantly. And I think after the -- the BofA agreement in the SMB business really took off. It's roughly 5% of revenues today, roughly 30% of the customer base. So I mean what should investors be looking for to see revenues in this channel inflect? And how close are we to that?

I think it's really important for investors to understand why the FI channel is important. So I'll step back a little bit on that. And when I came up with the idea and we started building the company, I knew that SMBs to creating categories and require that we go to places where they trusted the business that they did business with. And so that was accountants and financial institutions. And so financial institutions have tremendous scale, right? And that's kind of obvious. But at the core of their value proposition is trust. We trust financial decisions with the money that's in our back pocket, but the money that we use to trade. All the things that we trust and money is such an important part of life, that trust is something that is not easily transferred. And so for us, we've been in this channel. We built a platform from day 1, knowing that FIs are going to be a part of this. In fact, sometimes the way I think about it is we have 3 platforms. We have a platform for the SMB. We have a platform for accountants. We have a platform for banks. All of them have tools and capabilities that allow them to serve their customers and their businesses better. And so when we built this for financial institutions, we knew it was going to take time. We knew it was going to take time to earn that trust to actually create that relationship that they would be willing and comfortable saying, "You know what, I trust you to actually bring the entire book of business that I have on that platform." And so that's what we're seeing with the opportunity with BofA is that we've built that trust. We've earned that trust and now we have an opportunity to really expand that relationship. And so FIs have always been first about creating the awareness in the market. This is a financial product. If you think about financial products that we use every day, credit cards, ATMs, consumer bill pay, those were all invented by fintech. We didn't call it fintech back 30 years ago, but they were embedded by software companies that came out and banks ended up trusting them and they brought those products to market. That's the phase we're right now. This is an important part of that evolution of the market is that we've got this opportunity with financial institutions to continue earning their trust to bring more products to help their SMBs have a different experience. And so from our perspective, it's like, first, we got the awareness. Now we're starting to get the customers. And what we're starting to see is multiple solutions, multiple partners, banks, FIs are using the ad valorem products. Now not using all of ad valorem products. But again, the reason I talked about trust is, this trust thing keeps going in any partnership. It takes time to build that. They need to see the product to market, which is why our direct product is really helpful for them. They could see how it's used. We can show them data and that allows us to get the ad valorem capabilities. So first, it's about awareness, then it's about customer adoption, then it's about ad valorem capabilities, which will drive the economics up.

Got it. Maybe you can talk about some of the indirect benefits. How do we think about the network effects on the supplier side that all of these customers that are coming into the FI channel bring to the table? And are there benefits that you can kind of talk about on the direct and accounting side that comes directly from that customer acquisition?

Yes. Our mission day 1 has been to make it simple to connect in new business. The connect part is all about the supplier-buyer relationship. And having a tool, a platform that is agnostic around your banking institution, around your accounting solution, around how you create invoices, that's something that we've built. That's 5.8 million members on the network that are using us to pay and get paid. That ability for us to be able to have a platform that allows suppliers to choose, and we shared the stat, I think, maybe several quarters ago, 30% of the transaction revenue in the business comes from suppliers and the choice of the transaction type that they want to get paid. Did they want to be paid in FX? Do they want to be paid very a virtual card to want to have an instant transfer. These are all things that we've worked on to develop. And what we've -- and one of the things that I love about working with financial institutions is they understand that networks actually are good for business. And so all of our deals allow us to continue to market and serve the network members however is best to serve them. And so this opportunity with any of the banks, any of the partners we have, any of the accounting firms to actually extend that network is something that creates value for all the customers, right? So if you bring it back, 5.8 million is a lot more than 1 million when we -- I don't know if that was the number when we went public, but it was 1 million, obviously, in the past. And that actually tells you that there's more value for the customers that join today. When a customer signs up today, there's more connectivity. There's more solutions. They don't have to be bothered by interacting with their supplier on things like this, they can interact with supplier on things that are super important to them about what's the next thing to do with that supplier. So yes, the network is super important. The banks are very supportive and something that we're excited about.

Got it. So maybe we can hit on BofA here. You highlighted a significantly expanded relationship with BofA this quarter to go after the back book of their SMBs. There's a bit of noise associated with bringing forward some of the revenue associated with the ongoing relationship. Maybe could you help us understand why that trade sort of made sense? And what's different about this partnership?

Well, it really -- if you go back to my opening statement about how much all of us at BILL really care deeply about SMBs and that we're in it to solve their problems. And part of the challenge of defining and being a pioneer, defining a category, leading a movement, all these things that we're doing is that you have to get awareness out there. And so this is what I talked about with financial institutions in general is the opportunity to have customers know that there's a better way. Why is it that 70% to 80% of the business still use checks as their primary form of payment. It's because they don't know there's a better way. We need the word out there. That -- some of that comes from customers, which we have great opportunities there. Some of it comes from the network, but we also need market power that comes with financial institutions in this case. And so this opportunity that we are working on with Bank of America now is something we've been working towards since day 1. Yes, since day 1, and just as a reminder, the company is 17 years old, we've been persistent. We've been resilient. We've never let go of our belief that there's this opportunity to actually serve the broad market with a better solution. And so we've built a platform that served banks separately, then served account separately, then serve the SMB directly. And that is what's enabled us. So we've been building towards this. And so the trade-off for me was a no-brainer, because now we have a bank that has millions of customers across, millions of SMBs across the country. That says, you know what, we have a new digital platform that we're using for all of our customers, and we want BILL to be a part of it. So let's first start with the new businesses coming on to the Bank of America platform. That has gone well. And now they're saying, "Great. This is so meaningful, so impactful for customers." We're going to change how we do this for all of the SMBs that we serve. And that's going to take time. It's not something that's going to be overnight, but that commitment from them to actually say, this is how we're going to go forward, that's going to change the market. You could step back and look at really other products -- any of the products a name, but just take Bill Pay as an example. Consumer Bill Pay was a product that many banks use, and then actually it was Bank of America that said, "You know what, we're going to make this part of the default experience for every consumer that we have." That changed the game. So you have to find these opportunities. And we look for them all the time, we make sure that we have a platform that serves the needs, and that's what actually gives us the opportunity to actually have this opportunity with BofA.

And I would just add from a financial perspective, you mentioned the 5% of revenue. the FI channel represents for us today. That's obviously just a point in time. It's not what we're building towards like we envision a day where we're a few billion dollars in revenue and whether it's FIs or our broader embedded strategy is a much more material part of what we're doing. The specific circumstance with BofA was one that we structured a contract around the new businesses coming to the bank and the success with that segment is what led to broadening the aperture here to the installed base. So it's really -- we look at it as bringing forward the opportunity, Rene mentioned the continuum of awareness, adoption and the monetization. So we're bringing forward this adoption cycle. And we think that's going to be a significant future growth driver for the business in addition to the indirect benefits to the conversation earlier about the network. You look at the scale of the small business space and the potential for significantly increasing the growth of our network at the same time. So I think this is a great example of how we play to win and we also create positive outcomes for partners, and this feels like it's a good setup.

Got it. Makes a lot of sense. We'll probably spend the rest of the 15 minutes on the FI channel, but I want to maybe switch gears, talk about the accounting channel, another area where you've invested heavily. The multichannel strategy has been a key differentiator since day 1. How much more room is there to drive results out of the accounting channel? And how difficult would it be for a competitor to replicate this channel?

There's a tremendous amount of room. And I think just accountants, again, are another entity that business is trust. And trust is such an important part of anything that involves money, but you have to make sure you get that right. And so I think about the partnership with CPA.com. We're the exclusive provider for CPA.com for Bill Pay, spend and expense. And CPA.com for those that don't know, it's the distribution arm of the FCPA. So every CPA in the country is a member and has access and is served by CPA.com. When I was doing the deal with them in 2008, again, like we've been at this for a long time. And I think it's important to understand that this is something that does not happen overnight. This is something that you have to be persistent, you have to make it happen. When I was doing the deal, we were walking through the halls of the FCPA with the Chairman of the FCPA, and they pointed out this plaque that was 100 years old, and it was a partnership that they had done 100 years ago with an insurance provider. They think in terms of decades. We think in terms of decades. This is so important, the accountants. They know the relationship they have with their clients is terms of decades. And so that's something that we focus on as having a platform that enables them to serve their clients in unique ways to manage their staff in unique ways. We have capabilities that nobody else has. And that's kind of, to your point on the competitive advantage we have, we designed this additional platform on top of the SMB platform to serve accountants with tools and capabilities, so that they and we do this together with CPA.com led this transformation around client advisory services. And the reason that's so important is that accounts are concerned and are well aware that AI will disintermediate them. Everything that AI is able to do, fill out your tax return, all those things, it's going to change the way accounts do business. And so we, in 2008, together, said, "Hey, let's go help accountants actually have a strategic capability to advise clients with the tools and data that we are going to be able to pull together." So we're using the cloud to be able to give them a unique asset and how they serve their clients. That's why our practice in the CPA world is growing so fast. It's why there's 7,000 on the platform. It's why when we looked at 40,000 CPA firms across the country and 100,000 bookkeeping firms, the potential is tremendous. And inside of all the 7,000 we have, we know just from our own data that we're just getting started. There's so many more clients that those 7,000 serve. So we feel really good about the platform. We feel really good about where we're at and the opportunity that's in front of us.

Makes a lot of sense. Maybe we could talk through the platform harmonization that you guys have been talking about recently. I think you're talking about completing that process in the fall, which would put a unified platform for Divvy and BILL. Could you talk a bit about what goes into motion once that process is complete?

Yes. I mean, people have heard this quote, but Leonardo da Vinci said that simplicity is the ultimate sophistication, right? It's so hard to get complex things simple. And this is what we've been doing and what we've been working on, in particular, in financial operations. But when we acquired Divvy, it then became the mission, how do we create that complexity of these 2 different activities you do, managing your card spend, managing your AP spend and pulled into one. And so this fall, we are going to be launching and releasing 1 platform that enables that to happen in 1 place. And we're super excited about it because we've had early conversations with customers. Some are using the early versions of it. And what we hear is that it's so much easier to manage their business. They save more time. They have more opportunities to be thoughtful about their business. And so -- all of this really gets back to how do we enable SMBs to be more effective leaders, more effective business women, and it comes back to technologies and platforms. And this is something that we're excited about. And now that we have the platform, we can then also focus on how we go to market, which we haven't done as much. We've done, we've got a good cross-section of customers using both but the ability for us to go to market saying, rethink all of your financial operations, think about your insights that you need across, thinking about the controls you need across all your spend and expense and payables. Think about all of this coming together in 1 platform. That's something that we haven't been able to go to market with yet and we will this fall.

That's something cash flow. Makes sense. Sounds exciting. Beyond AP and expense management, you've been talking more about business analytics. You recently acquired Finmark to further this goal. How do you view the opportunity here? And how do the problems that you saw for customers differ than those on the core platform?

Yes, the original name of the company was CashView, and that was because my focus in running my first startup pace cycle, online payroll company, my focus was -- I needed some way to manage cash flow, not manage the accounting, that I understood, but I needed some way to manage the cash flow. And so we definitely view that the intrinsic data, the value of the data that we have across AP and spend creates a different opportunity for insights. And so that's why we bought Finmark. It was the opportunity to bring those insights back in to get us back to kind of the original mission of the company was to really help you manage your cash flow, right? And this ability to have insights and focus is something that we think is unique because of the ability to consolidate all the data in one place, and that's the capabilities that Finmark has been able to build.

Got it. I think the increases in take rates have been very consistent from year to year in the past, and you've always focused on providing customers choice rather than pushing one payment method over another. Customers consistently choose every year to leverage higher monetization payment methods, though. So how do you think about the pace of adoption here? And do you see this as a slow grind? Do we hit an inflection point at some point?

As you said, our emphasis has always been on providing as many choices as possible. But with the overarching goal of driving digital payment adoption, trying to eliminate checks from the system. And I think we've been very successful at doing that. The other thing that tells us we're going in the right direction here is the very high repeat transaction rate that we have. So about 80% of the transactions between buyer and supplier on our platform are repeat transactions, meaning the same parties have done a transaction in the prior 90 days. And -- that speaks to the stickiness of the platform. It speaks to we're not introducing friction. We're actually making it easier between buyer and supplier to do business. . And then if you look at our composition of payments today, the vast majority is still ACH and check. It's only 13% ad valorem payments as of the end of the last fiscal year, which means there is a long way to go to continue to drive adoption. And at the same time, our network, the way we offer choice, the way we're now working directly with suppliers to treat them as customers, even though there might not be a subscriber is paying dividends in the form of increasing FX penetration on international payments and default selection of things like real-time payments or instant transfer by smaller suppliers and things like that. So the other component is continually innovating with payments and offering more choices. We're doing that with things like working capital, which is very early. It's in I'd say, a controlled beta phase right now, but that's part of our mission. And over time, we expect to significantly expand our monetization rate maybe in this current macro environment with some uncertainty, it's slightly less linear on a quarter-to-quarter basis. But stepping back, we have a very long growth runway ahead just by simply driving adoption of the right payment types across buyers and suppliers.

And you mentioned invoice financing being in that controlled beta. I mean how large could this be over time?

We think there's a significant opportunity to create value for suppliers. If you think about suppliers not needing to apply for credit but being offer credit so they can choose when they want that. We're in the early days, like John said, of the beta process where we see repeat usage, which is great, not every invoice and just to help folks understand, right? It's not 3 to 5 days, it's 15 to 30 days. And that's a significant impact on your cash flow if you don't have to wait for the business to pay you, because the invoice has already been submitted. And so we see opportunities there. And as we continue to learn from the beta process, we'll connect with partners and create the capabilities to be able to roll this out more broadly, but we think it's going to be significant.

Got it. You said on the call, Intuit has decided to compete rather than partner. Could you talk a little bit about how the competitive landscape is evolving? And then John, maybe remind us on the impacts of any that referral partnership?

Yes. I think this is a large greenfield opportunity. We have 1% of GDP. It's significant. There's obviously 99 percentage points still to go. There's a lot of opportunity out there. And so -- when we think about the market as a whole, sometimes the analogy I think about is the payroll category, right? And so ADP kind of defined that in the late 40s or in 50s. ADP, 70 years later, is still kind of the leader in that space by a long shot. Others are in the space, and they're just kind of been following that leadership all along. And so from our perspective, we have to continue to lead. We have to make sure that when we think about competition, that we're not actually thinking about what they're doing. We're actually competing with ourselves. We're the ones that have pioneered. We've ones that have defined and led this category. And when you think about how you compete with yourself, it's the best way to ensure that you're going to win. And the example that I oftentimes use with the team is, if anybody is familiar with running the Miracle Mile in 1954, it was [indiscernible] before. Roger Bannister had broke a 4-minute mile. John Landy, broke it after him. Bannister was 359.4. Bannister was 358 flat. They got together in Vancouver, they had this race. It was this big thing everybody was excited about and people thought Landy would win. On the last turn, Landy looks over his left to see where Bannister is, Bannister passed him on is right. You do not look at competition when you're in the race. You focus on what you're going to do to and you focus on what you're capable of. We know all the things that we're doing. We know how we're leading. And so from my perspective, like the fact that more people are coming into the market, that's great awareness. Same as what we talked about with BofA same as the 7,000 accounts. We have to build awareness in this category. The fact that others are following, that's actually a sign that we actually are leading. So all this to me is just the market unfolding and something that we feel like it's our opportunity to continue to enhance and extend the leadership position that we have.

From a financial perspective, frankly, the relationship with Intuit really didn't move the needle for either company. So there wasn't any significant financial contribution. We started about 6 years ago with an embedded bill pay product called Simple Bill Pay, attracted about 12,000 customers, and that represented less than 1% of revenue in fiscal 2023. We actually expect the majority -- a vast majority of those customers to churn over the next couple of quarters, maybe some of the larger ones end up using the BILL platform directly. So we think it actually makes sense the path we're on now. And at some level for BILL, it's even liberating to be able to set a course to serve a broad set of needs for SMBs beyond just the core AP and AR and spending expense things we've been doing recently. So all in all, not a huge financial implication from the relationship.

Makes sense. In the last couple of minutes, I think maybe we can hit on profitability levels as rates has increased has been kind of broad-based, increasing focus on profitability. BILL delivered over $150 million of free cash flow last year. How are you balancing investing in the growth of the business versus expanding margins in the near term?

Yes. It is definitely a balancing act. Fiscal '23, I think, showed significant progress for the company. We not only grew revenue rapidly. We achieved an 18% non-GAAP net income margin, as you mentioned, generated positive free cash flow. And probably most importantly, we were non-GAAP profitable on an ex float basis. And that demonstrates improvements in operating leverage and efficiency. Expenses have grown less than revenue over the last 5 quarters. And these are important, I think, steps along the way to the company maturing over time and getting to a point where optimizing profitability becomes a primary goal. I think in the -- in the near term, fiscal '24, our estimates kind of reflect the balancing act that we're going through. So drive growth, increase profitability, but at the same time, invest for multiyear growth. So a lot of product initiatives and things like that, that won't pay dividends in '24, but will beyond. And that has everything to do with the large market opportunity that we're going out there, as Rene said, it's still early in its evolution. So we think that balancing act over the near term makes sense and then we'll grow into higher levels of profitability and obviously optimizing that over time.

Got it, and then just lastly, just to close out on capital allocation, the company has been fairly acquisitive over the last several years. I think you also have small repurchase authorization. What are your capital allocation priorities as you look out over the next 12 to 18 months?

Yes. I mean, first and foremost, we're playing to win. This category, we defined it. We see so much opportunity for SMBs. And we're going to do what we need to do, whether that's build, buy or partner, we'll do it. I'd like to build. So you've seen us build a platform. I like to partner. You can look at the partnerships we have and the fact that partners keep coming back to us. I mean that's something that I think tells us our ability to do that. And we are good at buying. We bought some strong companies that have really added to the capabilities of the business. So we will continue to invest thoughtfully, but assertively. We're not going to wait. We're going to make sure that we continue to expand the definition of the category and serve customers. And so it's going to be along the build by partner. And it's something -- the good thing is that both John and I are accountants, so we're pretty thoughtful about how we spend money.

Anything in particular that might make sense from an M&A perspective, whether it's capabilities or geographies?

I think we're always going to look to enhance the core platform and so there are things that could actually enhance the existing products that we have. There's things that can enhance ecosystem. There are things that could enhance the product itself by adding human capital management or working capital capabilities, payroll procurement. These are all things that we've talked about. We look at all of that. A lot of it is a question of timing and the opportunity to partner versus build buy. And those are all things that we look at. So it's -- financial operations is a mess for businesses and we're going to solve that pain point for.

Great. Well, I think we're out of time. But everyone, please join me in thanking BILL for the time today.

Thank you, Will.