Good morning. My name is Marcella and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings Third Quarter 2020 Financial Results Conference Call. All lines have been on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the call over to Josh Yankovich, Investor Relations. Sir, you may begin.

Thank you operator. Good morning everyone, and thank you for joining us for the third quarter 2020 conference call. With me on the call today is, Matt Flake, our CEO and Jennifer Harris, our CFO. This call contains forward-looking statements that are subject to significant risks and uncertainties, including future operating and financial performance of Q2 Holdings. Actual results may differ materially from those contemplated by these forward-looking statements and we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included in our periodic reports filed with the SEC, included in our most recent quarterly report on Form 10-Q and subsequent filings and the press release distributed yesterday afternoon regarding the financial results we will discuss today. Forward-looking statements that we make on this call are based on assumptions only as of the date discussed. Investors should not assume that these statements will remain operative at a later time and we undertake no obligation to update any such forward-looking statements discussed in this call. Also, unless otherwise stated, all financial measures discussed on this call will be on a non-GAAP basis. A discussion of why we use non-GAAP financial measures and a reconciliation of the non-GAAP measures to the most comparable GAAP measures is included in our press release, which may be found on the Investor Relations section of our website and in our Form 8-K filed with the SEC yesterday afternoon. Let me now turn the call over to Matt.

Thanks, Josh and thanks everyone for joining the call today. Today I plan to provide a recap of our third quarter performance, followed by an update on our outlook for the fourth quarter and beyond. In the third quarter, we generated non-GAAP revenue of $104.8 million, up 31% year-over-year. We also added approximately 800,000 users in the quarter bringing up to 17.1 million total registered users, a 21% increase year-over-year. Overall, I was pleased with the performance of the business in the third quarter. We continue to see a large number of users added to the platform through a combination of new customer installs and sustained organic user growth. As I’ve stated on previous call, our delivery team has been performing at an extremely high level in this remote environment. This them continued in the third quarter where we had a record number of new digital banking customers go live on the platform. On the sales side, performance in the quarter was consistent with the themes we discussed on our last earnings call. Net new activity was slower than normal as financial institutions continued dealing with the many distractions brought on by COVID. Nevertheless, our net new sales team turned in a solid performance that included some banner wins. Also, our cross-sale and renewal teams had another strong quarter, helped offset some of the slowdown on the net new side. And finally, I believe that our overall financial performance for the quarter serves as a great reminder of the underlying strength of our business model. Despite the unprecedented times in which we find ourselves, we continue to sustain high levels of revenue growth, while steadily improving the profitability of the business. And as such, I remain optimistic about our performance in 2021 and beyond. Now, I’d like to provide a…

Thanks, Matt. We are pleased to deliver third quarter results that exceeded the high-end of our guidance for both non-GAAP revenue and adjusted EBITDA. I will begin by reviewing our results for the third quarter before finishing with updated guidance for the fourth quarter and full year of 2020. Total non-GAAP revenue for the third quarter was 104.8 million, an increase of 31% year-over-year and up 6% from the previous quarter. Both the year-over-year and sequential increases in revenues were largely attributable to new customer go-lives. As Matt mentioned, we continued to add a strong number of digital banking users to the platform through a combination of organic growth and a record number of new customer go-lives during the quarter. While we did see several implementation projects slip during the first and second quarters, many of those projects were completed during the third quarter and the slippage that we saw during the third quarter was minimal. Given that we have had strong delivery execution with respect to the deals signed in 2019, we have already installed more new digital banking customers to the platform during the first nine months of this year than we did in the entire year of 2019. As a result, we expect to end the year with both strong year-over-year growth in registered users, as well as the number of customers live on our digital banking platform. The year-over-year revenue increase also benefited from the revenue contribution of PrecisionLender, which we acquired in the fourth quarter of 2019. Transaction revenue represented 14% of total revenue for the quarter, down from 15% in the prior year period and consistent with the previous quarter. Transaction revenue continues to grow in absolute dollars while remaining relatively consistent as a percentage of total revenue. The year-over-year decrease that we have…

Thanks, Jennifer. We will miss you. But keep in mind we still have you until April. So, for now, let’s get back to work and while there is only one Jennifer Harris, I know that our employees, customers and shareholders will all be excited to work with David Mehok. We found David through an exhaustive search. He is a great experienced leader and an addition to our team and we’ll look forward to getting him properly introduced in the coming weeks. Now, before I hand the call over to the operator, I will conclude with a quick update on customer sentiment, and our business outlook for the quarters ahead. Over the past eight months or so, we’ve been fortunate to spend a lot of time with our customers. In general, what we are hearing is that financial institutions are in a much stronger position than most would have predicted in March. The swift action of the government, the stress testing that became a requirement as a result of the 2008 crisis in the digital investment many have made over the past several years have helped our target financial institutions remain solvent and mitigate fallout related to COVID. And while the last few quarters have understandably slow at some financial institutions decision-making, I continue to hear that digital transformation is no longer a choice. It’s an imperative. As such, we anticipate gradual improvement in a net new buying environment into the fourth quarter and 2021. Finally, over the long-term, I believe our mission-driven culture, our strong track record of delivery and customer success and the breadth of our innovative product portfolio put us in a highly differentiated position to grow with financial institutions, all finance and fintech companies across the globe. Thanks. And with that, I’ll turn the call over to the operator for questions.

Your first question comes from Sterling Auty from J.P. Morgan. Your line is open.

Yes. Thank you. Let me start with Jennifer, congratulations on the eight year tenure and thank you for your consistent transparency, your levelheadedness and financial leadership of the company and enjoy a wonderful retirement. The college application process is more nerve-racking than earnings. So, good luck with that.

Thank you, Sterling. I appreciate the kind words.

And then, on to the business, so, for my one question, Matt, if we had to rewind and go to this exact call in November of 2016, and think about the comments that you made post the election at that point, how would you kind of compare and contrast granted, we don’t have certainty on what the outcome is going to be with the President and in Congress. But with what we do know, can you kind of layer that on to the sentiment that you just gave about the coming quarters? And just kind of characterize what you feel the impact on buying patterns might look like?

Yes, Sterling. So, we talking too much of politics of it, I mean, 2016 was probably a little more shocking than what we saw here and it was a – what would I call it a – there were probably greater concerns around the inevitability of some of the changes in treasury and the rules that were going to come down. And I think that, in this environment, just the clarity of – well, we don’t have any clarity, but what we think is going to happen, it’s just – it’s really been over the last 30 days, I would say, Sterling, that the engagement levels have really begun to pickup over the next couple quarters. Until the timing of these decisions is really what is going to be interesting and I think. And I think just the fact the election is over and hopefully in the next week or so, we’ll have more clarity on what the House, Senate and the executive branch are going to look like. But I would say that, just having it passed us is going to be a tailwind for us and we still have the macro uncertainties around COVID and these other things, which are very different than what we had in 2016. But everything is trending in a better direction from the pipeline perspective, which is really what I think you are getting at. And I don’t know that we are going to pull a bunch in at the end of the year. I feel much better about the fourth quarter than I did about in the third quarter. But I feel much better about the first half of 2021 than I did in the middle of the third quarter. It’s just – there are just so much more engagement right now over the last 30 days and we are seeing people trying to get some decisions done and that’s across the board in North America at least as far as the lending side of the business, the BaaS side of the business and the platform side of the business.

That makes sense. Thank you.

Thanks, Sterling.

Tom Roderick from Stifel. Your line is open.

Great. Hey, Matt. Hey, Jennifer. Thanks for taking my questions. Jennifer, I’ll start with you, as well. Congratulations on your retirement. It’s been a heck of a run and I think I’d speak for a lot of us that have been seven months, eight months now in quarantine a desire to spend more time with your family. I speak to a great family. So, congratulations on that and hope you enjoy a little bit of downtime with your future.

Thanks, Tom.

So, Jennifer, I am going to start with, I am not imagining that you are in a huge rush to give us a whole lot of guidance on 2021, when you are handing your reigns off to a new CFO. But it is a reminder that the timing of some of these new deals and implementations that get booked impact the way they sort of flowed through to the revenue, particularly with implementations. So, with respect to some of your comments and Matt’s comments on what you saw in the third quarter and the pace of the pipeline for the fourth quarter and also as you lap PrecisionLender, can you just give us a sense as to, how we ought to be thinking about the mid-term or secular growth rate of the company as we clear through Q4 hearing good move into next year. And then, some comments around the impact of what was booked here and what you are thinking get booked in the fourth quarter, how that flows into the 2021 revenue numbers? Just high level qualitative would be really, really helpful directionally. Thanks.

Sure, Tom. Obviously, as you mentioned, next year’s revenue growth rate depends on a number of factors and one of those being how long we see the depressed buying environment, how quickly things come back and we begin to execute and close new deals in the next 60 days post-election, as well as the first half of 2021 and then the mix of those deals. Our actual growth rate will also be dependent on the bookings mix between net new and cross, as well as our cloud-based businesses that are faster to revenue. So, based on all of those factors, I do agree it’s a bit premature to provide 2021 guidance. But based on what I know today and the visibility that I have into the existing pipeline and what I think is going to happen over the next 60 to 90 days, I certainly wouldn’t expect our year-over-year growth rate next year to be any lower than 20% at this point. And how much above 20% it can go, it really depends on the mix of the deals signed in the next 60 to 90 days as well as the first half of 2021 to the extent it continues to remain around the digital products that are cloud-based and faster to revenue or cross-sales, then we can expand that revenue growth rate. But to the extent we see some of the tier-1banks and credit unions on the digital banking side, or the large enterprise customers on the digital lending side, be a bigger part of that mix. Those are slower to revenue as you know. And so, those wouldn’t impact until the very end of 2021 and going into 2022. I hope that helps a bit.

That’s hugely helpful. That’s great. Thank you. And then, Matt, quick follow-on just with respect to, I think the tone of what you are seeing for business, last quarter was very obvious. You had some huge tier-1 wins. You were very clear that you can expect that in the third quarter given seasonality and the nature of who typically buys in the third quarter. But one thing that jumped out to me from your comments was, this thought there seen perhaps that the installed base seems to be leaning in a little, but the winning net new has been a little slower. We’ve seen that from a lot of software companies given the nature of selling remotely. Can you just talk a little bit more about that? Are you seeing a pipeline of net new opportunities that have been slow to develop, but you are building that pipeline or banks just not as eager to switch core systems at a time where it’s been all hands on decks for the last seven, eight months?

Yes, I think that, one of the things that’s been interesting, Tom is, just over the last probably 60 or 90 days, we’ve got several opportunities that started off as digital banking just evaluations and then we are beginning to talk about this roadmap to digital transformation, which moves not just your digital banking system, but how do you begin to transform your onboarding, how do you begin to transforming your lending process – your Digital Onboarding and your lending process. How are you connecting the two of those to use. data and so to some extent where we are elongating the sales process that in the long run we are going to get much better deals, much longer deals, more integration or more deeper relationships with the customers. But ultimately, it’s really about their – banks are really focused on several things right now, credit risk, known and unknown, cross-selling for non-interest income and then also trying to attract more profit through the interest income. There is a little bit of a holding pattern around when is the stimulus or is the stimulus going to come out? And do they need to be prepared for more government lending, whether it’s PPP or more Main Street, and then there is added with this remote work environment which puts pressure on the digital transformation side and then there is some things around LIBOR to SOFR, which is the benchmark rate step. It’s a little attracting to them. So they have a lot of stuff on their plate right now that makes it difficult to really sit down and focus on these opportunities. But I have been pleased with the amount of engagement we have and the deals we have. And I do – I painted a picture of it’s going to…

Outstanding. Thank you, guys. I appreciate it.

Thanks, Tom.

Thanks, Tom.

Brian Peterson from Raymond James. Your line is open.

Thanks for taking the question. And Jennifer, congratulations. It’s been more heck of a run. We will miss working with you, but congratulations. Chief Family Officer is one heck of a title. But Matt, just kind of – I appreciate all the color on the demand environment. I realize that you’ve built up a portfolio and you’ve got a lot of customer exposure here. I’d be curious as we stand today, what do you think kind of comes back first from a bookings perspective? And is there anything that that really gets you excited as we think about the pipeline over the next few quarters?

Well, I mean, I think, Brian, if you think about what I just walked through, the main thing we need to come back is the digital banking decision-making and that’s what we are starting to see more activity on the Banking-as-a-Service business, really hadn’t missed a beat. PrecisionLender, I think is going to come back sooner rather than later and in the lending side of the business, Cloud Lending stuff continues to innovate and with the Treasury Onboarding, PPP. Those are things that are in North America, at least going to come back. EMEA is just sit and wait game right now with a lockdown that’s going on over in Europe. And Asia has some pretty interesting opportunities. I don’t – I think there is a probably 2021, but there is pretty interesting opportunities in Asia for some of the PrecisionLender and Cloud Lending side of the business. But, the digital banking net new deals were really the slowdown as we talked about in Q3. But I see momentum picking up there. The sales team has done a great job of generating opportunities and I think they are going to see a pick up late this year and the first couple quarters next year.

Okay. That’s good to hear. And just maybe thinking through, like, I guess on the cost is really an emphasis on selling into the customer base. Can you help us kind of think through how the puts and takes of that would look on RPO? I think it’s a metric we are all focused on. But understanding if there is expansion, and how does that relate to contracts and just any moving parts and how to think about the selling back in the installed base, would that be the RPO over the next several quarters? Thank you.

Sure. I mean, as we continue to cross-sell into the existing customer base, it obviously increases the backlog because they are signing up for committed minimums or fee based on access, size of the bank for those new modules or cross-sells that they are taking. So, it definitely increases the backlog. And then, the timing of how it will roll out is dependent on the remaining contract term of the existing underlying contract is when we do those cross-sells, we make them go terminus with the existing master agreement.

Got it.

Now, at some times, as we’ve said previously, any time we go in and try to do a cross-sell, the relationship management team is also trying to extend to the customers’ contract. So, sometimes, it not only increases backlog by the amount of the net new cross-sell module or product. But also the incremental overall TCB of new term.

Great. Understood. Thanks, Jennifer.

Thanks, Brian.

Thanks, Brian.

Terry from Truist Securities. Your line is open.

I think they said, Terry in Truist. Yes. Can you all hear me?

Yes, Terry, I didn’t know you were one name analyst like Madonna or. So, welcome.

Maybe if you combine and maybe call me T Square, but. Yes, hey, Matt and Jennifer. I guess, Jennifer, you are still a named executive. So if you still want to take the time and have fun with our questions, our multi-part questions. We get you called next year, if you want to. So you just kind of think about that. My multi-part question here just relates to, first on Treasury Onboarding. It does seem like, really kind of perfect timing in terms of trying to improve or reduce the friction there and make that more digital. So I am curious, Matt, are those deals, could they be large relative to the rest of the products and are you replacing a home-grown tool? Or is it more of kind of a prior packaged tool? So, that’s the first part. And then, Jennifer, I was hoping you could talk a little bit how you are thinking about churn, kind of near-term versus maybe what you typically expect in that 5% range? Thank you.

Yes Terry, Treasury Onboarding it’s a large cross-sell for us as we begin selling it. And I think your point is accurate which is the timeliness of it is critical and just to simplify what Treasury Onboarding does is, one of the toughest things that a bank has to do is convince the business to convert to move to their new systems and nobody does it now, it’s a manual process. When they go out to their commercial customer to gather the information, the customer has to fill out the applications and that information comes back and the back-office at the bank has to manually enter that. What we’ve done is, automated that process and made it a fraction of the time to do that and it’s integrated into the digital banking system. So to be clear, the Cloud Lending development team built this product and it’s integrated into our digital banking platform. And so, it’s a very unique experience. It’s early and we are beginning to figure out the easiest way to install it and roll it out, but the fact that we are doing it with such a big bank right now and really cutting our Tees and getting it ready to go. It’s an exciting opportunity for us and the timeliness of it is, is to your point, it couldn’t be better right now to make it easier for a bank to onboard a new customer. And Jennifer, do you want to take a charge?

Yes. On churn, Terry, as we mentioned earlier in the year, as we started to see the impacts of COVID. We felt like we might be susceptible to some customer concessions or increases in churn based on the economic impacts that our customers were experiencing, particularly being mindful of the fintech and all five customers, particularly within the BaaS and the digital lending or leasing businesses who were reliant maybe on additional funding to sustain their operations. And then, as we discussed last quarter, during the second quarter we ran the Q2 CARES program where we gave folks near-term discounts on invoices and return for extensions of term. And so, when you take all of those things into account, I do expect that our churn is going to tick up slightly this year. And so, I think it will be a little bit above the 5% that what we’ve seen historically. However, I would say that our core digital banking churn will still be under 5% for the full year. The rest of that churn will come from those other lines of business as we’ve talked about. And remember also, we mentioned last – or last quarter with Q2 CARES that we’ll have some headwinds going into 2021 on churn, because those were one year contracts and unless we’re successful in getting those customers to convert to other Q2 products, the expiration that a PPP and loan forgiveness contracts will increase churn a bit next year. But I wouldn’t expect it to be significantly different that what we’ll see this year. And maybe on a more positive note, from a revenue retention perspective, I mentioned early in the year that we expect it to be similar to what we’ve been in the last couple of years about a 120% and given the continued execution that we’ve seen from our cross-sell team, I think that we will end this year seeing trailing twelve month revenue retention at about a 120%, so.

Okay. Thank you and congrats, Jennifer.

Thanks, Terry.

Thanks, Terry.

Andrew Schmidt from Citi. Your line is open.

Hey, Matt. Hey, Jennifer. Thanks for taking my questions.

Hey, Andrew.

And Jennifer, let me add my congratulations on your retirement.

Thank you.

A quick question on the BaaS business. I was wondering if you could talk about how the pipeline has developed since you rebranded that business and since the dissolution of the StoneCastle partnership, it was good to see the fintech win. Look forward to – I am hearing more about that, but just more details following – I think more freedom from a go to market perspective. Any comments around the pipeline will be helpful.

Yes. I mean, I think we are seeing – as I mentioned earlier, the BaaS business really didn’t miss a beat. The fintechs are out there really aggressively trying to push products out. We’ve talked about credit card money, but we are seeing more engagement in the Tier-1s and there is more use cases for us to go find with those debit card, credit cards. The CardSwap product becomes interesting for us. So, that business has been steady-eddie for us and we continue to see the pipe grow. And keep in mind, we always talk about all bookings are not the same and those bookings are a little harder to predict, but there is way more upside in them than the bookings on the platform side, because somebody signs up and they roll out a card program. And then it takes time to get that done, but we can’t capture that in a booking. So, feel really good about the BaaS business. The StoneCastle stuff, it was more about us looking at the future. They weren’t really holding us back as much as it’s just giving us more freedom and we are seeing some of those opportunities come to a fruition and the economics are going to be better for us over the long run. So, that was – as we said, that was an amicable split. Both of us are pleased with it and we are really excited about the opportunities that are going to come with us moving forward.

Got it. That makes sense. And just a follow-up on just a product question. On bill pay, it seems like there is an significant opportunity to just help the banks do bill pay – legacy bill pay. It seems like you have lot of many solutions out there can reduce friction. Wondering whether that might be on the roadmap at some point. I know you have some third-party partnerships and you also have Biller Direct, which you rolled out a few years ago. But just curious if that’s a strategic imperative for you?

Yes. I mean, I think if you think about the bill pay business, it’s kind of a drag on our growth. But it’s a big part of the digital banking experience. But what you are seeing is a reduction I the number of payments each individual makes. And some of that’s because of the gig economy that’s happening and if you look at the CardSwap product that we rolled out with the top five, ten bank in the world, what we are able to do is, it’s effectively making it easier for the financial institutions or the fintech to issue new cards to keep it top-of-the-wallet. It makes the switching cost less for them and less likely, because it automates the process in which you can get a new card and then update your subscriptions with your – whether it’s Apple, Spotify, Hulu, Netflix, it takes revenues up for the – transactional revenues up for the financial institution and so, bill pay is changing our Biller Direct product continues to gain some momentum. But it’s really about how do you solve the payment problems for the customers based on the new world that they are in. Because if you think about your – you use to have home phone bill and internet bill, and then your cellphone bill, those are – your cable bill, those will be consolidated into one or two bills now. And so, what we are trying to do is to match the payment processing with the way that the – with who the users are actually paying. So, I don’t see us getting into the actual settlement of the payments or putting the checks in the mail to pay people. But we doing things with technology to make it better for the financial institution, as well as the end-user to pay their bills.

Understood. Thanks, Matt. I appreciate the comments.

Thanks, Andrew.

Thanks, Andrew.

Peter Heckmann from D.A. Davidson.

Thanks for taking the question. It’s getting a little bit muddled with the increase in the breadth of your solutions set. But when you think about kind of average revenue per consumer digital banking user, where are you now, where do you think it could go based on adding additional functionality and continued adoption of mobile and other functionality. How big can that number get?

Yes. So, we used to talk about the number of SKUs that we had and as we were revamping for all the acquisitions that we’ve done, we felt like, instead of talking about the number of SKUs, it would be more appropriate to kind of describe our current product penetration as it relates to the 28 different product groupings that we disclosed in our Form 10-K. And today, on average, if you look at that, just in the digital banking customer space, so not – or excluding the hundreds of PrecisionLender and Cloud Lending customers that are not on the Q2 Banking platform, but those on the digital banking customer base have purchased approximately 25% of those solutions with some of our customers actually being as high as 50% penetration. So, we still have a lot of opportunity for expansion within all of our digital banking customers. And if they were hypothetically to take all of the solutions that we have that are applicable to their institution, it would roughly double our current subscription revenue just again in our digital banking customer base. And then, we have ample opportunity to expand and take our digital banking platform into those customers who are Centrix-only or PrecisionLender or Cloud Lending-only customers and that would grow it even more.

Got it. Got it. And which of those SKUs would you say that that you are most excited about over the next two years? Whether that’s something represents a proprietary technology for Q2? Or just is it kind of the right solution at the right time in terms of gaining penetration?

Yes. Pete, I mean, this is probably a little bit of reasons we buy it. The Treasury Onboarding certainly is exciting for us as we do that. But if you look on the call we talked about a third of the cross-sell was the Centrix products. Those products was fraud and the other things that are going on, I think we stopped $175 million worth of fraud this year with that product for our customers. So, obviously, that’s a big cross-sell for us. The corporate banking product is still a huge cross-sell for us to go penetrate a lot of the banks. We are seeing a lot of credit unions who are wanting to do corporate banking offerings and most of those don’t have those solutions right now. The CardSwap product, obviously, I think one of the things you’ll see with this is we’ll roll it out with a top-10 bank in the world. It will become a user experience and hope maybe they do an advertisement on it. Maybe people just begin to see that always tends to drive more cross-sell opportunity. So, we have a lot of different technology to go cross-sell. A lot of the data initiatives that we have, whether it’s on the PrecisionLender side or market insights, they help people understand what loans should be priced and what’s the right pricing for those. You know, there is a lot of opportunity for us on the cross-sell side, which is a great place for us to be in.

Great. I appreciate it.

Okay. Thanks, Pete. Have a great day.

Tim Willi from Wells Fargo. Your line is open.

Hey. Thanks and, good morning. And congratulations, Jennifer, keep on do what you did already you did here in a choice of time with the family. So, wish you well.

Thank you.

A quick question, two things, one is on pricing. I guess, I am just sort of curious, if you’ve seen any new changes around the pricing environments for any of the products I guess, you feel are critical to the pipeline and to revenue in general? Or whether it should have been pretty stable? Just any thoughts you might have there about what you are seeing?

I would say that, on our side of the business, some – in certain circumstances, we see some customers that need a little bit of help. But in general, as long as you are driving innovation, more products, new looks and feels, and all the different things. Pricing, what I’ve seen lot of pricing erosion, I will tell you this on the competitive side of the business on takeaways, we saw some discounting from some providers in the space and point solution providers that were very aggressive in the third quarter that we weren’t willing to chase. We’ll take the long road on that. But, we are holding our grant on pricing right now and then just trying to be disciplined with it in this environment.

Great. And then, the second question, just around margins. First, I just want to make sure I understand, so the gross margin in 3Q from 2Q was the absence of PPP, which I think you had all talked about last quarter. So not a surprise there. But then, really, just probably largely a function of the elevated installation activity, as opposed to anything around product mix or shed, is that the right way to think about what went on with the gross margin in this quarter? It’s just probably tied a little bit more at the core level to the install activity?

Yes. It really is and that install activity drives not only implementation cost, but remember we installed more customers this quarter than we ever have and as those customers get installed and rolled out of implementation, they roll into the customer support team. So we’ve added already more customers in the first nine months than we added all of last year. So, we had some accelerated investment and customer support to make sure we could continue, answering the phone and servicing our clients to the level that they expect.

Yes. Totally understand. Just I’ll make sure that I had that correct. And then the last one, just on margin, I guess, one of the things that we get asked a lot is people sort of didn’t aren’t used to the story is, the margin side of the business. I think people appreciate the top-line and the secular tailwind realizing to come back to where is the scale. I guess, when they are new to the story and so, any thoughts on sort of what the margin trajectory, I guess, maybe the scalability from this point? I mean, obviously, Precision and Cloud Lending, you are clear that these are investment opportunities and that obviously impacts, I guess, the margin equation. But if there is no other really large acquisitions in the immediate future out there, would the right way to think about things be that we should start to see that scale come through, whether it be at the growth or just down at the adjusted EBITDA margin?

Yes, I mean, I think that’s the right way and the one thing I would caution you on is, don’t get out over your skis in 2021. Remember, we had planned to make some fairly significant investments in PrecisionLender and with the impacts to the markets that they were serving EMEA and the large enterprise clients. We really held back from some of that investments this year which is part of the improvement you saw – seen in our adjusted EBITDA line. But I am very optimistic based on their pipeline, especially in North America. And you are going to us start making some of those investments now going into 2021. So, for 2021, I would say, on adjusted EBITDA margins, you would see somewhere between, call it a 150 and 200 basis points improvement and if you look back historically before the large acquisitions we were posting roughly 200 to 300 basis points of improvement. And I think, once we get through 2021, absent any other large acquisitions that we would have to invest in, we would return to those similar levels.

Awesome. Thank you very much for the time.

Thanks, Tim.

Your next question comes from the line of Robert Napoli from William Blair. Your line is open.

Thank you. And congratulations, Jennifer. You set a high bar. Really respect your decision. It’s going to be a hard job to leave. Lot of exciting things going on there.

Yes, it is. I feel like I am leaving one baby for two others, but thanks.

I do think to dig a little bit more into the Treasury Onboarding solution. And maybe what that the additional services that you are maybe looking to provide, Matt, to your bank business clients, like adding to the office of the CFO, are there other products and services that you are looking to add like anywhere in the invoicing or payments or that side, the accounts receivable side. Are there more investments that you want to add through the banks for the office of the CFO if you would?

Yes. Bob. Those are all places that we are definitely going to be looking at going at right now still early for Treasury Onboarding for us. I want to see that gain some more traction, the maturity of the product. But we are also looking at third-party products that we could potentially push through the system, as well. I think, one of the things that kind of gets evolved when people put user accounts out there, $17.2 million end-users, everybody thinks those are just retail customers, we have more than 1 million businesses on this platform. And those businesses need things like background checks, to your point account receivable technology. And banks could be places where they could offer those solutions and we could integrate those into our platform to make it easier. So, we don’t even necessarily have to build it as much as we could integrate it our APIs. So, there is a lot of different third-party CFO apps that we could be integrating or building on our own. So, the opportunity in our customer base, it’s not just the consumer side of the business. It’s a business side and there is a lot of opportunity to solve problems and integrate the technology where the CFO can do all these things from their mobile phone, the tablet, or the desktop and will be the central station that they log into when they get to work and spend their day look at it or when they are out and about using the technology to manage their cash flow.

Great. Thank you. Very helpful.

Thank you, Bob.

Joe Vruwink from Baird. Your line is open.

Great. Hi everyone. And my congrats to you Jennifer. I wanted to go back to the new sales environment and ask, whether you are seeing any different trends emerge depending on maybe the accounts size or type. I think there has been some commentary recently amongst the regional banks and that suggests maybe if you are a smaller institution that your preference maybe to stick with your incumbent vendor, if you are pursuing a greater investment in technology. But if you are maybe more in the Tier-1 level, there actually is, maybe a preference to rerun vendor assessments, maybe inject some new technology into the organization. Does that fit at all with what you are seeing? Or any sense of how that might trend in the 4Q of next year?

They way we’d look at it would be, it’s not as much the size of the entity, as much as it is the mindset of the ownership and the leadership of the financial institution. I was at a Board dinner two weeks ago with a billion-dollar financial institution that has an owner who is extremely aggressive and wants to use technology as a way to differentiate and compete. And they are looking at a transformation project that rolled our product out earlier this year and he has the mindset of Bank of America, Wall Street, Citi, whoever you want to think about that’s aggressive that’s out there trying to use technology as a way to compete. There certainly are smaller financial institutions that may have different or even larger institutions that have different economic situations where they need to – I won’t be discouraging, but they’ll take a lesser product, because of the cost associated with it. One of the things that’s critical on our pipeline analysis and we are working with prospects is to determine who that is first, because that’s not who we are going after. We are not a hamburger shop. We are a stake shop. And if we find that bank that wants to a digital transformation project, we are going to go in. We are going to file our K. We are going to win the deal. We are going be patient. We are going to cross-sell all the products we’ve talked about. And so, yes, that may trend toward smaller financial institutions. But I am more than happy to partner with a $500 million bank or a $200 million credit union if they want to use technology as a way to compete and differentiate and not as a shield. So, for us, I don’t – I think the trends are more about the ownership and where the financial institution is and do they want to be around for a long time, because, if you think back of the history of this company, we have added more end-users to the platform through M&A than we have lost. And I think that’s indicative of our customer base by the new technology platform to compete, because they want to be around for a long time. And so therefore, they having net acquirers of these businesses out there. And we are going to stick to that philosophy moving forward, because it’s paid off for us and I think you are going to see more M&A and I want to continue to be on the right side of it.

Great. Thanks, Matt. That’s helpful.

Yes. Thanks, Joe. And operator, we are running tight on time. I want to make sure we get everybody’s questions in.

Not a problem. Josh Beck from KBCM. Your line is open.

Thank you. And Jennifer, congrats. I think it’s pretty impressive that you kept your title or retirement. I think that was a common path. But you pulled it off. Yes, you all covered a lot. And I know, you’ll be talking about this big fintech that’s coming on your BaaS service later. But just would like to hear maybe competitively what you think really got you across the line with them? And really what was distinctive? You are obviously not the only offering in the market and why there was a good partnership there?

Yes. I think, to some extent, we have a track record with some of the larger fintechs and delivering. It’s the cloud technology that we’ve built. The simplicity of that, they start right there in the sandbox and writing against our APIs within two weeks. It’s quick to market. Our network – the relationship that we have with banks or we can put them in a depository relationship with the bank that’s less than $10 billion and under Durban. So the economics are better And it’s best-in-class technology and whether it’s credit card or these other guys we continue to be highly differentiated in those offerings. And so, that’s as simple as it would be. It’s cloud. It’s quick. And it’s best-in-class.

Okay. Great. Thank you.

Thanks. Have a great day.

Steve Comery from G-Research. Your line is open.

Hey. Good morning. Just wanted to ask a question on the growth that I think has been asked, I know, yet a little more directly or differently. So, for customers who haven’t closed deals, but are in negotiations, I mean, what do they need to get there? I know, Matt, you mentioned the election and the potential stimulus and questions around that. But ex those two pieces, are any bank customers looking for more clarity on COVID credit losses, before making decisions? And as their feelings changed on that, back now versus June 30, for instance?

Well, I think the election was a big piece of it. But if we go to the first question of this earnings call, it was about the difference in 2016 and 2020. And I would say, the big difference is the macro environment around COVID. It leads to uncertainty, whether it’s going to be government lending programs. If the government rolls out on the stimulus program, I think it’s probably good for the businesses and the customers of the banks. But the bank has to shift their focus to make sure they can distribute those funds immediately. And so, the macro environment is probably the long pull in the channel. A lot of these decision delays. And then, the evaluation of credit risk. But to some extent, government lending programs go hand-in-hand with credit risk, because you are helping the customers that maybe in trouble. So, that would be what I would – we would say are some of the delays after post – I don’t know if it’s post-election, but post – whenever we find out who the President and everything else is, that’s going to be probably the thing that’s going to continue to drag to delay decision-making somewhat. But other than that, - other than the shooting hell of play in this link, I mean that’s a pretty big deal for us, right now. And so, we are trying to get through those issues. But we are navigating them pretty well and I feel good about the first – this quarter and then the next – and then the momentum going into 2021.

Okay. Thank you.

Thank you, Steve.

Arvind Ramnani from Sandler. Your line is open.

Hi. Thanks for taking my question. And let me include what you already heard, Jennifer, congrats on your retirement. I just wanted to – obviously ask about your SI partnerships. You have talked about expanding your system and integrated partnerships and to put into in fact, on driving both revenue growth, as well as improving margins. And as your product offering continues to expand and your relationship with larger banks continue to expand, do you have any update on sort of expanding your SI partnerships?

Yes. I mean, I think, ultimately, Arvind, as we’ve always said, the customers we sell to which are about $100 billion in revenue below. I mean, in assets and below on the digital banking side who want us to deliver their products and they want – one person to build the products to deliver a man support them. Now we are seeing some partnerships with other systems integrators to maybe help the project, but ultimately, I don’t think you are going to see a significant portion of systems integrators come on the platform side. On the Cloud Lending side, with Force.com we do have systems integrators that we are working with. But in general, you are not going to see a lot of systems integrators come into play in this space on the direct banking side, but on the Cloud Lending side, there are opportunities for us to do that.

Great. Thank you.

Thank you, Arvind. Appreciate you taking in there too. And I would just thank everybody for their time and also thank Jennifer for everything she has contributed. And so, I hope everybody have a day and we’ll be in touch. I look forward to everybody getting a chance to meet David Mehok in the coming weeks. Thank you very much and have a great week.

Thank you, all.

This concludes today’s conference call. You may now disconnect.