Good afternoon. Thank you for attending the Bill.com's Fourth Quarter Fiscal Year 2022 Earnings Conference Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Karen Sansot with Bill.com. Thank you. You may proceed.

Thank you, operator. Welcome to Bill.com's fiscal fourth quarter and full year 2022 earnings conference call. We issued our earnings 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 is Rene Lacerte, Chairman, CEO, and Founder of Bill.com; and John Rettig, Executive Vice President and CFO. Before we begin, please remember that during the course of this call, we may make forward-looking statements about the operations and future results of Bill.com 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 a discussion of the risk factors associated with our forward-looking statements, 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 report on Form 10-Q filed with the SEC and available on the Investor Relations section of our website. 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. The non-revenue financial figures discussed today are non-GAAP, unless stated that the measure is a GAAP number. Please refer to today's press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures. At times during this call, we will discuss organic or standalone results, which exclude Divvy and Invoice2go, which we acquired on June 1, 2021 and September 1, 2021, respectively, to help listeners understand our organic performance. Now, I'll turn the call over to Rene. Rene?

Thank you, Karen. Good afternoon, everyone. Thank you for joining us today and I hope your summer is going well. Fiscal 2022 was a transformative year for Bill.com. We significantly expanded our platform solution and extended our reach serving customers ranging from sole proprietors to mid-market companies. We entered new strategic partnerships and began building a global customer base, serving customers in more than 150 countries. We are well-positioned to capitalize on the tremendous market opportunity in front of us. In fiscal 2022, 400,000 businesses used our solutions to automate their financial operations, get paid faster and better manage their cash flow, more than 3x the number of businesses that used us in the prior fiscal year. We managed more than $225 billion in payments and our network grew to 4.7 million members that have originated or received an electronic payment through our platform. Our growth was driven by our organic initiatives, as well as the strategic acquisitions of Divvy and Invoice2go. For the full fiscal year, we significantly exceeded our financial expectations. Total revenue was $642 million, an increase of 169% year-over-year. Bill.com’s organic core revenue grew 77% year-over-year and revenue from our spend and expense management solution increased more than 160% from a year ago. In addition to top line growth, we expanded our non-GAAP gross margin to 84%, up 7 percentage points year-over-year. Our non-GAAP net loss of $24 million for the year was 70% lower than our estimate at the start of the fiscal year, as a result of our disciplined approach to growth and solid execution. The momentum that we created in fiscal 2022 positions us to be profitable on a non-GAAP basis in fiscal 2023. This is a testament to the value our platform provides and the efficiency of our go-to-market ecosystem. We experienced…

Thanks, Rene. Today, I'll provide an overview of our fiscal fourth quarter 2022 financial results and discuss our outlook for the fiscal first quarter and full fiscal year 2023. As a reminder, today's discussion includes non-GAAP financial measures. Please refer to the tables in our earnings press release for a reconciliation from non-GAAP to the most directly comparable GAAP financial measure. We delivered strong Q4 financial results with revenue, non-GAAP gross margin and non-GAAP net loss per share, all significantly exceeding our expectations. Total revenue for Q4 was 200 million, reflecting 156% year-over-year growth and 20% sequential growth. Core revenue, which includes subscription and transaction fees, increased 151% year-over-year. Organic core revenue grew 71% year-over-year. [Total revenue] [ph] was 5.4 million during the quarter, reflecting recent Fed funds rate increases. Non-GAAP gross margin was 84.2% for the quarter, well above our estimated range, driven by the payment mix and transaction cost optimization strategies we've employed. Non-GAAP net loss per share was $0.03 showing our strong revenue and gross margin performance and our vigilant approach to managing operating expenses. In fiscal 2022, we delivered non-GAAP gross margin and non-GAAP net margin improvements, while also making significant investments in our platform, go to market ecosystem, and the integration of our two acquisitions. We continue to operate an efficient business model with strong customer acquisition and retention, expanding net dollar based revenue retention, and a short customer acquisition cost payback period. And so, here when I discuss our outlook, we're pleased to show the progress of our scaling and the strength of our business as we plan to become non-GAAP profitable in fiscal 2023. Now turning to an update on our key metrics. As this is our year-end earnings call, I'll provide additional disclosures on certain metrics beyond our regular quarterly updates. We…

[Operator Instructions] The first question is from the line of Bryan Keane with Deutsche Bank. You may proceed.

Hi, guys. Congrats on the quarter and outlook. I'll ask my two questions upfront. You talked a little bit about seeing some softness in spend, especially in advertising. Is there a way to break out maybe discretionary spend of clients versus non-discretionary spend or maybe a breakout of clients by services? And then secondly, now that we are turning non-GAAP profitable for the year, has there been any thought about any long-term margin trajectory that we should think about for adjusted margin or for EBITDA margins? Thanks.

Thank you, Bryan. This is always, kind of the nuance of the macroenvironment, something always hard to read, but what we would say is that we have a broad base of customers. And the broad base of customers is across SMBs all the way to mid-market companies. And what we called out in particular was the TPV growth moderating at the end of the quarter through the beginning of this quarter. And it really is around larger customers. And so, when we think about discretionary spend, that's – it's, kind of nuance in the business environment because they have so many business activities that they do on a daily basis. And so, I would say for us, we see the growth continuing to grow strong and going forward from there.

Maybe I'll take the long-term margin question, Bryan. We haven't explicitly laid out longer term targets yet. We're very happy with the progress we've made scaling the business and nearing a billion dollars in revenue and expecting non-GAAP profitability this year. And with that momentum, we're expecting a lot of good news ahead. We'll roll out longer-term targets in the not too distant future, but haven't done so yet.

Great. Thanks for taking the questions.

Thank you.

Thank you. The next question is from the line of Brad Sills with Bank of America. You may proceed.

Great. Hey, thanks, guys, and congratulations on a real nice end of the year and outlook here. I'll ask the macro question in a slightly different way. Obviously, you've been very specific on the impact there on TPV. Outside of advertising, are there any other categories you're noticing some softening and what gives you the rationale, I guess for assuming that that doesn't change in the near-term?

Yes. Hey, Brad. Good to hear your voice. We saw healthy demand throughout the quarter year-over-year, the customer growth was 30%. We've had great TPV growth across the quarter. The core bill of TPV growth was 10% quarter-to-quarter, the Divvy TPV growth was stronger than that. And so, when we look at the overall macro environment, we really do see a number of tailwinds that are supporting the business and those tailwinds really get to things we've talked about before. So, the first that we kind of talked about would have been the pandemic and the desire and need for remote capabilities and the ability to have the financial back office in your back pocket, which we've delivered for our customers. The other thing we've talked about is just the pure need for digital transformation that businesses have. The desire to be able to be anywhere and manage their business. And the third one, which is, kind of new and this kind of macro environment that we're in, is that in inflationary times, the only deflationary impact that you're going to have on your business is to take advantage of software and create more efficiencies across your financial operations. And so, we've been built from day one to really serve our SMB customers with the ability to be more efficient to really drive more technology usage and more engagement across their customers and their employees and their vendors. And that's something that we feel good about. So, from a high level macro perspective, really we just wanted to call out that we did see the larger customer, the TPV spend starting to moderate from a growth rate perspective.

Thanks for that, Rene. One more if I may, please. With the combination of the growth you're seeing in the network and the progress you've made integrating Invoice2go, should we expect that channel to, kind of that flywheel effect to start to really take hold of your receivables customers, bringing in more payables customers? Are we at that point now or we might see momentum there? Thank you so much.

Thank you, Brad. We have been – I think with the Q3 call, we talked about out in the February, March timeframe. We fully integrated the company's across one organizational structure to drive a unified platform. It's one of the priorities – key priorities for the year is to really continue to develop that unified platform. So, customers have one common dashboard to manage all of their financial operations. And so, we are in the, I would say, the beginning stages of building that. And throughout the fiscal year, we'll make more progress and update you as that happens.

Great to hear. Thanks, Rene.

Thank you, Brad.

Thank you. The next question is from the line of Darrin Peller with Wolfe Research. You may proceed.

Hey, thanks, guys, and great job on these results. Let me just try to understand a little bit more. When we think of the guidance and the outlook, there's – given how many moving parts there are in the business, there's obviously a ton of assumptions that could swing the output and guidance. So, I really love to hear what kind of assumptions you made around some of the main variables. Bill.com versus perhaps Divvy, maybe you can help us understand how the Divvy cross-sell with Bill is going, and if you made any assumptions of progress around that also? And I guess I’ll stop there. We can probably go on and on, maybe Invoice2go, but just any more color on the inputs would be great?

Sure. Thanks, Darrin. Good question. And you're right, there are a lot of moving parts. One of the benefits that we have of the very large customer base and our scale is that we do have a lot of visibility into spend patterns and activities and repeat behaviors. We talked about earlier in the call, the repeat transaction rates continued to be very, very high. So that visibility is helpful as we pin down our assumptions. We have – the main variable, I'd say that we're focused on is the spend patterns amongst customers across both the Bill and the Divvy spending businesses. And we're assuming that some of the softness or moderation as we call that in the last couple of months continues throughout the year given the external environment. And with Divvy, it's a slightly larger customer base, they have good visibility as well. And it's not – I would point out that like Bill, the Divvy spend management solution is a tool to manage spend. It's not just a card and so it's integrated into the way companies operate and regardless of the absolute spend number, it creates high visibility for us. So, we feel good about that. We have made progress in FY 2022, probably faster than we would have anticipated with some of the cross-sell activities. I think we had about 2,000 Bill.com customers who adopted the Divvy spend management solution. And so that's good momentum going into FY 2023. And as we focus on integrating the platforms even tighter, we think that will help with our additional efforts in cross-selling Bill and Divvy customers in both directions.

That's really helpful, John. Thanks. I mean, if I can just quickly fit in a mechanical question, the new adds in the quarter, I just wasn't sure if I heard how much of that was FI versus the core Bill adds this time around?

Yes, we had 11,200 in the quarter. It's our second highest net new adds ever. Last quarter was 11.6. We had about 5,000 net new adds in the, what I would describe, the Bill core business, excluding the FI channel, so excluding all of the ads from the FI channel. And as we, sort of look out over FY 2023, we think that 4,000 to 5,000 range for Bill, excluding the financial institution contribution is probably a good placeholder.

Okay, very good. Thanks guys.

Thank you.

Thank you. The next question is from the line of Josh Beck with KeyBanc. You may proceed.

Thank you for taking the question. Yes, I wanted to, kind of also layer on some of the macro impact. So, one of the comments we made was certainly improvement in the payback period and Rene had made some comments about really Bill deflationary and obviously that's very critical to SMBs right now. So, when you look at the payback that you're seeing in the recent months, has it held steady? Are there any notable changes, kind of with respect to that variable?

Yes. Thank you, Josh. As you know, we have a very broad distribution channel ecosystem that we've tapped into that allows us to reach SMBs where they are, whether it's directly or through the businesses and partners they trust most, whether it's an accountant or a financial institution, and that actually does help our ability to drive that payback number the way we've talked about it. The opportunity that we continue to see is the combination of that ecosystem with our ability to, kind of drive better usage of our payment products that really drive value for our customers, which end up increasing our net dollar based retention numbers. All of that goes together to really help improve our ability attract and bring more customers onto the platform. So, no specific trends right now. It's just – it's everything we've been building for years has been working for us.

Okay. That's very helpful. And then maybe follow-up on really the adoption of cross border and virtual, certainly, the stats there were very helpful. And when we think about the pace of that adoption curve up, so we have a pretty good sense of how that's trended from last year to this year. How should we think about that shape moving forward? Are there factors that could steepen that adoption curve, level it out? Any framework just to think about the pace of adoption in future years?

Yes. Thank you for that. I would say from the very beginning, we've had a strategy to invest in our proprietary payment platform so that we could create better customer experiences for our customers and for their suppliers. And that's been the backbone of how we've been able to drive virtual card international payments, FX transactions within the international payments is in transfer all the things that we've done. And as we look at the success that we've had, growing virtual card from 2.2% to 2.7% in TPV, international payments from [4.1% to 4.5%] [ph], really happy that we're able to grow the FX rate from 25% to 32%. All that's because of this proprietary payment platform that we've been building over the years and we'll continue to build. We know this is a multiyear effort to drive adoption in the original commitments that we've made around the penetration that we expect. It just takes time and we're happy with where we're at and we'll continue to do the work that we need to drive that adoption.

Excellent. Thanks for that.

Thanks, Josh.

Thank you. The next question is from the line of Andrew Bauch with SMBC Nikko. You may proceed.

Hey, guys. Thanks for taking my question and another nice set of results here. Wanted to touch on the remaining performance obligations. This is the one that we get question from investors fairly often trying to understand on how that revenue comes on and I appreciate the color that you provided in the prepared remarks, but it remained fairly steady at this 150 million level over the last couple of years. And just so, what are you kind of thinking about with regards to that bucket within two years as far as what's, kind of layered in fiscal 2023 and you mentioned the minimums, I guess, are we – could we anticipate that you're going to have a lot of those customers hit those minimums in the next several quarters?

Thanks for the question, Andrew. So, the RPO number of 150 million approximately reflects the minimum contractual commitments. So, the way to think about that is the floor, not the ceiling. To the extent that over a multi-year period of time, we work with our financial institution partners to drive better adoption than initially targeted than we have revenue upside in both subscription and transaction fees. I think our disclosures spell out both the total RPO and the expectation for how much revenue will earn from that over the next two years. We haven't provided more granular disclosure than that, but the RPO number moves in two ways as we signed new financial institutions, those minimums get added to the RPO, and then obviously as we earn revenue in the near term that comes out of the RPO balance. It's been pretty stable over as you said, last 18 months or so. And so, it's a fairly steady revenue stream that's contractually guaranteed and not subject to any significant movement quarter-to-quarter.

Got it. It’s helpful. And then as we think about the progression of margins throughout this year. Obviously, you're starting at a lower point in the first quarter and obviously the business has a ton of operating leverage in it. And so, I guess where the guide is implying, it's like you're exiting the year in, kind of this mid-single-digit range or high-single-digits, is that the way we should be thinking about like the sequential steps in the margins throughout the year? Are there any one off variables we need to consider?

Well, there is – first of all, obviously, we've laid out the first quarter and the full-year. We haven't given the quarterly details, there is some seasonality in the business, particularly as it relates to payment volumes, we've talked about the third quarter or the March quarter, being a little bit softer payment volume than the December quarter. That does in some way influence the margins, but stepping back and looking at how we're starting the year and the full-year, we're obviously comfortable with the ranges that we provided and that reflect our best estimates at this point about how the business will evolve.

Got it. Congrats on another nice set of results.

Thank you.

Thank you. The next question is from the line of Brent Bracelin with Piper Sandler. You may proceed.

Good afternoon. The magnitude of upside here in Q4 and midpoint guide of another 50% growth here suggests that automating finance operations is clearly resonating with SMBs, what stood out to me was the second straight quarter of 11,000 net new core ads, we're seeing other SMB companies see a slowdown on the macro. Could you just double-click down on visibility into adding new customers? What's resonating here? What's giving you confidence in your ability to continue to, kind of land new customers in this challenging environment?

Hey, Brent. Great to hear your voice. We have been building this platform for 16 years now to really drive adoption amongst SMBs of all industries and all really sizes from the smallest to the mid-market companies, across multiple partners and ecosystems. And so, the success that we have is, our ability is to continue to drive partnerships during the fiscal year. We obviously announced the partnership with Bank of America to serve their SMBs that were new to the bank. We also announced the partnership with CPA.com to be their [future provider] [ph] across bill payment and expense management, spend management. And so, these types of partnerships in combination with the 6,000 accounts that are on the platform today, definitely give us visibility into what's happening for them. I would say the tailwinds I mentioned, the need to be able to manage work remotely, the need to be able to really drive efficiency in an inflationary environment that need to be able to have the technical tools to be able to run your financial operations from anywhere. These are all tailwinds that are helping drive demand and awareness and you combine that with the increased capabilities of innovation we've done on the payment front. So, all of that continues to create that healthy demand. So, we feel good about the demand and we have plenty more to go do and it's a massive market in front of us and we're going to keep working hard to serve as many SMBs as we can.

Super helpful color there. And then John, just wanted to ask on Divvy specifically, it looks like the volumes there jumped meaningfully on a sequential basis more than doubling from last quarter, what drove that? Is there some additional cross-sell benefits? Was that all just kind of Divvy adoption increasing? What drove the acceleration there? And how should we think about the momentum you're seeing in Divvy going into next year?

Yes. Thanks, Brent. You're right. The momentum is quite strong with Divvy. As we mentioned before, the average customer or spending business that the Divvy spend management solution is serving is slightly larger than Bill. And they've done a really good job at offering both the platform and spend solutions that help large customers automate their spend capabilities and have visibility and control. And they're seeing the result of those efforts come through in increased spend from businesses. So, we feel really good about the progress that's being made there. And then I'd say that the Bill contribution, so Bill customers who've adopted the Divvy spend management solution, it's still relatively small versus the base Divvy spending businesses. So, we're really excited about the continued opportunity we have in fiscal 2023 and beyond to continue to drive that cross-sell adoption.

Helpful color. Great to see. Thank you.

Thank you. The next question is from the line of Samad Samana with Jefferies. You may proceed.

Hi. Good evening. Thanks for taking my questions. John, maybe one to start with you on the guidance. In terms of the assumptions, from a high level, what are you thinking for core Bill.com revenue versus Divvy? I know in the past you've given that and just I figure on the fiscal year maybe we could see what the assumptions are for fiscal 2023, especially as Divvy, kind of fully ends up wrapping around the [Visa comps] [ph]?

Yes. Thanks, Samad. So, in terms of core revenue growth, so the combination of our subscription and transaction fees, excluding float, for Divvy direction, I can tell you were planning for above 50% year-over-year growth. And for organic Bill, excluding Divvy, we're planning for above 40% organic growth. Beyond that, obviously, our formal guidance is around the combined businesses as we're operating them now, but hopefully that additional color helps.

Very helpful. And then, Rene, I wanted to ask you a question. There's – I think you guys have really been helpful about [explaining] [ph] the macro. I would say that some of your smaller competitors, I think, have had different sets of struggles, yet you guys are doing great, right? In terms of net adds, the KPIs are strong, even if TPV volume slowed later in the quarter, you're still doing well in terms of attracting more customers to Bill. I'm curious if there's something you can do to be opportunistic and accelerate that while some of your competitors may be struggling whether if they're private or with their own business decisions and maybe what you're seeing and if there's something you can do to capitalize on that?

Yes. Thanks, Samad. Pursuing and serving the SMB markets, tricky business. The SMBs are hard to reach and hard to find. That's why we have the ecosystem we have. Our investment philosophy since day one has been grounded in our long-term aspirations to be a profitable company that serves millions of SMBs. And so, from that perspective, I think the focus and attention that we've had around execution and rigor over the years is what's paying off. And that's what's able to create the opportunities that we have with the SMB market, whether it's in our direct channel, our partner channel, or our account channel. So, I think it really comes back to just being committed and really being focused and executing in a way that we are able to create solutions that resonate that delight customers and really make a difference.

Great. Congrats on all the success guys.

Thank you.

Thank you. The next question is from the line of Tien-tsin Huang with JP Morgan. You may proceed.

Hey, great to be on the call here, impressive results. I had to jump off for a second, but I wanted to ask, I think you covered some of this, but just thinking about the growth drivers in fiscal 2023 and how it's going to be different than what we saw last year across volume growth, client growth, pricing, for example, I heard the commentary on volume in July and August, sounds like client growth you're assuming will be relatively consistent. What about some of the other big drivers that might be uniquely different this coming year versus last year?

Thank you, Tien. So, I think the – when we look at this, it is – it's all about, kind of driving the continued operational execution rigor that we've had. And so, the success we've had with virtual card with international payments, there's a lot more opportunity there. We continue to have a multi-year strategy and execution plan around that and we will continue to do that. I think on the customer acquisition, we've talked about the ecosystem we have. So, it's all of these things and the levers working together that create the results that we had today and the results that we've had really since being public. So, I think the long-term opportunity and how we see that translate into this year is to continue executing at the level that we're executing.

Understood. So, thinking about the profitability here and what you're showing, is there anything you're doing differently just thinking about maybe expenses, some things that you're pushing out? What's non-negotiable? What are you still focusing on? For example, I would imagine merging the Divvy and the Bill.com [tech stacks] [ph] are still high priority. So, just trying to understand what may be changed or what may be is being deferred versus prioritize on the investing side? Thank you.

Sure. Great question. I guess to start with a multi-year view from an invest strategy standpoint, we're obviously investing to drive results this year, but we're always thinking out several years given the large market opportunity that we're pursuing. As Rene mentioned earlier on the call, our number one priorities in driving tighter integration and a great user experience across all the solutions to help customers automate their financial operations. We're investing in the platform. Our go to market capabilities, as well as our partner ecosystem, which is important in driving awareness of our solutions. We also have for a long time invested in our own proprietary payment capabilities. In fact, we were one of the first companies to have payments integrated with the SaaS platform. And those strategic choices frankly many years ago also positions us today to benefit from this rising interest rate environment and generate pretty significant float revenue on the funds that we manage through our technology. And so, that's one of the tailwinds that we have in addition to being fairly early in our journey of expanding monetization on payments. We've made great progress. We're north of $6 per transaction in terms of monetization and we feel like we have a long way to go.

Good stuff. Thank you all.

Thank you.

Thank you. The next question is from the line of Matt Stotler from William Blair. You may proceed.

Hey there. Thank you for taking the questions. Maybe just to start, one on maybe as it relates to gross margin, I mean, you talked about better transaction economics being a factor there. I would love to just, kind of dig into some more color on this dynamic. What kind of leverage has provided so far? And then any further levers here or leverage that could impact gross margin going forward from better economics in the transaction front?

Sure. Thanks, Matt. We've indicated that we expect to be above the range that we've talked about recently, which is that 79% to 81%. We're expecting to be a bit above that in part because some of the variable priced products that we're seeing good adoption from customers and suppliers have not only higher revenue per transaction profile, but much higher margins than some of the fixed price products like an ACH or a check payment. So, we have good mix happening there. We've also had a couple of initiatives to optimize our transaction costs, so the fulfillment costs associated with delivering payment transactions. That's contributed to margin expansion as well. And then as I mentioned a moment ago, the tailwinds associated with rapidly rising float revenue is a positive for margins at the end of the day also.

Right, got you. That's very helpful. And then maybe just a follow-up on the financial institution channel, obviously, some very strong relationships there, very positive commentary and, kind of data points in terms of customer adds and new relationships, but as you kind of pointed out a few questions ago, it's been kind of around $150 million in terms of RPO, pretty consistently. And so, I mean should we be thinking about this as kind of a stable, kind of dollar contributor to revenue going forward and the expectation being we should continue to see it, kind of compress as a percentage of revenue or is there a point in time when you kind of get to a point of critical mass where you expect that you would see financial institution partners start to actually expand and be accretive in terms of revenue growth?

Sure. I think in the short-term, it's fair to look at our RPO. It's sort of a stable number. We're going to obviously earn revenue against that over the next couple of years and that likely leads to a slightly declining percentage of revenue, given the rapid growth in some of our payment revenues outside of the financial institution channel, but long-term, we're actually very bullish in working with our financial institution partners and think there's a big opportunity such that the channel can be a larger component of our overall business as we think out intermediate and longer-term and that has to do with the potential to drive adoption of some of our additional products inside the white label solution that our banks are using, the opportunity to partner with new banks who are not currently working with us and so forth. So, in the short-term, I say directionally it's probably a slightly lower percentage, but intermediate to longer-term, we think it's a really big opportunity.

Got it. Thanks again.

You bet.

Thank you. The next question is from the line of Scott Berg with Needham. You may proceed.

Hi, everyone. This is Michael Rackers, and I'm on for Scott Berg today. Thanks for taking my question and congrats on the quarter. You touched on it a bit earlier, but I'm curious on, kind of what the core bill sales motion looks like today versus maybe a year ago? Have you made any notable adjustments based on the macro or the strong demand environment you're seeing? And then how should we think about this moving forward? Thank you.

Thank you, Michael. The core go to market motion has not changed. We continue to enhance the go to market approach. One of the areas that we've enhanced it is, we've had – larger businesses have more interest, so we've continued to build the sales team that works with those customers. And I would say that we continue to see these other tailwinds I've talked about, driving more awareness and more demand across the ecosystem. And so, the work kept [indiscernible] kind of really making sure that we're responding to customers and delivering what they need for them to be successful and to be delighted. So, no changes really in the go to market motion.

Great. Thank you.

Thank you.

Thank you. The next question is from the line of Ken Suchoski with Autonomous Research. You may proceed.

Hey, Rene and John. Good afternoon and thanks for taking the questions. Really nice job here and appreciate a lot of the incremental data points, excluding the FI channel. So, thank you for that. I wanted to ask about the traction you're seeing with some of the new payment products because the virtual card and cross border penetration figures came in a little bit lower than we were expecting? So, of the new payment types instant transfer, enhanced ACH, pay by card, which payment methods across these three are seeing the most traction and which ones drove the upside on take rate in the quarter? And I guess what's the appetite on your end to get those into the market quickly and have them start contributing more in TPV?

Yes. Hey, Ken. Good to hear your voice. We've always been building a platform to really deliver delight and success for customers. And one of the things that they need is multiple ways to pay and get paid. And it's been part of our – our mission statement obviously is to make it simple for business to connecting and do businesses. And so, I think what we are seeing is continued adoption of ad valorem payment products across the platform. So, if you were to add up all the ad valorem capabilities that we have now, it's just at 10% of the overall TPV. We know there's a lot more opportunity going forward and it's going to be on some of the products that you mentioned is in transfer, it's going to be on potentially balance. It's going to be on all the different things that we've rolled out in the last few years international, virtual card, and others yet to come. So, part of the focus that I have is to continue to really drive and develop the team to be able to go to where we think we can get to the multiple billions and profitable company. And I think part of that is going to be to really drive [indiscernible] across the team.

Okay, great. And then just a quick follow-up. I wanted to ask about some of the price increases that were recently put in place. I believe those changes that were made in the direct channel, are you guys planning on introducing similar increases into the accounting firm channel? And I guess, when should we expect those higher prices to flow through your results?

Thanks, Ken. At this point, we have announced to customers, the direct channel price increases effective actually this month in August. We notified them, I think a couple of months ago. We haven't made any other announcements to customers in other channels or anything like that at this point. We would expect by the, probably the third fiscal quarter to – by the end of that quarter, any price actions that we're taking in the year would be fully reflected in our model. We have made some assumptions about slightly higher subscription prices throughout the year, but at this point, it's just the direct channel that we have informed customers of.

Okay. All right. Thanks a lot. Appreciate it.

Thank you.

Thank you. The next question is from the line of Nik Cremo with Credit Suisse. You may proceed.

Thanks for taking my question and congrats on the strong results. I just wanted to touch on Divvy really quick. At what point in FY 2023 do you expect to complete the unified platform experience? And when should we start to see benefits from the CPA partnership expansion?

Thank you, Nik. We have started that integration, obviously, I think last fall, we announced that we had connected a separate integration and then we pulled teams together in February and that work started. We will share more as that happens, but we are working as fast as we can to make that integration. We think it's going to be important for customers and from a go to market approach to be able to have one unified approach. And we definitely hear that from the customers that we talk with. So, feel good about that. And then I'm not sure, is there another question there, sorry.

Just one we could see benefits from the CPA partnership expansion?

Great. Yes. So the CPA.com expansion of the partnership, the teams are working on that today. Obviously, the unified platform will help that approach as well, but we're making good progress on to go to market muscle that we need to develop there and it's something that we will continue to make progress on throughout the year.

Thanks. And if I could just squeeze in a quick follow-up. I just wanted to see if we can get an update on the payments monetization efforts for Invoice2go and that could look like in 2023?

Yes. Thanks, Nick. So, we're in the very early stages of transitioning from Invoice2go’s outsourced payment provider to a combination of Bill and other third parties. And I'd say, it's very early and not contributing materially to our results yet. We'll have more updates on that as we progress throughout the fiscal year.

Great. Thank you.

Sure.

Thank you. We have time for one more question. The question is from the line of Jeff Cantwell with Wells Fargo. You may proceed.

Hey, thanks. Congrats on the result and thanks for squeezing me in. I wanted to ask you a longer-term question about your operating expenses? And the key question is, how are you thinking, what is your updated thinking on rightsizing [that space] [ph] relative to your revenue? And just to give you some context on this, if we go back a couple of years, I seem to remember there was a period where you were being very thoughtful on the R&D lines and the sales and marketing lines in order to scale the business. And so, it's interesting to me at this point to see profitability being reached in fiscal year 2023 and clearly the revenue, the revenue piece of it is there. So, I just wanted to get your updated thoughts on longer-term operating expenses and what your thoughts are on flexibility in R&D and sales and marketing to the extent that you're able to kind of share that with us? Thank you.

Thanks for the question, Jeff. We're obviously as I think I mentioned before really happy with the progress we've made scaling the business with moving in FY 2023 to non-GAAP profitability while delivering very strong growth and strong margins. And we think it's still early in the evolution of the market that we're going after. There's tens of millions of businesses globally who could benefit from our solutions and I think we're going to continue to take a disciplined approach to investing to build out our product form to serve customers while leveraging very efficient unit economics in acquiring, retaining, and growing our relationship with customers over time.

Okay, great. And just to follow-up on the net adds number, I think what you were saying was you got about 5,000 from core Bill.com and the remainder were from the FI channel. Is that correct? I just want to make sure I got that correct. And then what was the commentary for this year as far as Bill.com versus FI? Thanks.

Yes, that's correct. [11.2000] [ph] net new adds in the quarter, of which approximately 5,000 were core organic bill, excluding the financial institution channel, and our expectation throughout fiscal 2023 is that we'd be in that 4,000 to 5,000 net new ad per quarter range, again excluding the financial institution channel, the total net new ads would obviously be higher than that.

Okay. Thank you, everybody. Just wanted to say thanks for joining us today. Bill.com delivered another great quarter. We're excited about the large opportunity we had with digitally transform millions of SMBs. Thanks again for joining.

That concludes today's conference call. Thank you for your participation and enjoy the rest of your day.