All right. Sorry we're a little bit late. Really happy to have BILL here to do a fireside chat with us. René Lacerte , Founder, CEO, John Rettig, of course, CFO. I know you guys have always submitted great questions to me, so I'll do my best to get through them. René, John, thank you for being here.
Thank you.
Great to be here. Means a lot, for real, to have you both. René, I don't think I've had you at a public conference before. I know we've had discussions as when you're a private company.
Right.
Going back to that, and it stands out to me quite a bit, and it was really helpful for me to think about, you know, your vision and whatnot, just to go back to the beginning and the founding of the company. Would you mind going through that story, including the PayCycle piece where you know, had a payroll solution that you ultimately sold to Intuit? You know, what did you learn from that, and how did it ultimately, you know, come together to create Bill.com?
Sure. Great question. You know, going way back, I come from a family of entrepreneurs. My parents and grandparents had half a dozen businesses each, all of them in accounting and finance-related fields since the sixties. I've been in the payments and SMB space for over 30 years now. I'm in my fourth decade of serving these customers with payment products. I think that, you know, what I've learned over time is the importance and the value of actually getting it right. SMBs, I guess at the core of my mission is to actually serve SMBs, 'cause I grew up in a family of SMBs, and my parents served SMBs. What I saw with SMBs is that they're just kind of the glue of our communities.
That glue is something that I think, you know, makes society unique and something that I wanna make sure that we support because nobody else is doing something for them. For me, I, you know, got my first taste 31 years ago, then I ended up working at Intuit, worked on their bill pay product. I was the product manager lead on that bill presentment. I was the leader on their payroll solution from a product perspective. You know, the bill pay product got shut down eventually. Not when I was there, but it got shut down eventually. You know, payroll ended up being a backbone of what they have today. I left to start PayCycle because there was an opportunity seeing something online, right?
In the day, so to speak, in late 1990s, Intuit was not anywhere close to being online. You know, my focus was, how do we do something innovative? How do we help, at the time, you know, SMBs and accountants really have a solution that was gonna change the way that they manage their payroll? I would've been remiss to say that when I started doing the day-to-day operations of running a business, I realized that nothing had changed for me on how I was processing compared to how my grandfather processed his transactions 60 years earlier. That's where the idea and the genesis came for BILL. It was constantly asking the question why on every transaction. Why is it that this is manual? Why is it that this is paper-based?
Why is it that I can't use an electronic payment? Why is it that I can't do this? Why is it that it's hard to do this? All those questions end up forming a hypothesis that the cloud was gonna allow us to connect all these capabilities in a way that would solve that problem for SMBs, to take the mess off the desk, to take the shoe box away and throw it in the trash. All those things were something that was driving me, and so I left the day-to-day in 2006 'cause I saw the opportunity being so big. I left the day-to-day at PayCycle in 2006. Stayed on as a board member. We sold that to Intuit in 2009.
I've been doing this 17 years, and I think what I see every day is that that aha moment was truly an aha moment. Like, there is an opportunity to reinvent how financial operations is managed for businesses, and that's what we're pursuing. It's what we've achieved. We've defined this category that nobody else even knew existed, and that's something that we're proud of, and we're constantly redefining it. From my perspective, it really is kind of, you know, the experience leading up to everything in my life has kind of led to this, so I'm happy about that.
Perfect. Look, I always appreciate and love founder-led CEOs. I learn a lot, you know, covering different companies. I know you and I have talked about that quite a bit with some, with some common friends in the network. I think it's ironic, right? That you're familiar with the Intuit business, yet one of the most popular questions I get is what's gonna happen with Intuit as a partner and the potential for them to get into the whole automated accounts payable business. What's your response to that, just to lead with this, René, and how does that impact the vision?
Yeah. I mean, the first thing I would say is we define this category and we're constantly redefining it. You know, when I step back, I would say that, you know, others across industry are looking to us to actually tell them what to go do. Now, what you're seeing from us today is what we started building two or three years ago. We have a long roadmap of capabilities that we're building into the product. You have a roadmap that we've already executed on that connects, you know, the entire life cycle of a transaction from beginning to end.
Everything from document management to reading the invoice information, to connecting with suppliers in the network automatically, to then obviously having workflow capabilities and collaboration internal to your company to, you know, executing a payment and then connecting that back to the supplier with that capability, and then having the ability to reconcile all of that all along the way. We can do this day in and day out and add any type of payment product that suppliers or customers need. That capability takes foresight. It takes a purpose-built company from the day one on a platform that was designed to take advantage of the capabilities that the cloud enabled. When I look at it, I see, like, we've got a massive opportunity in front of us. We have been defining this category.
We have, you know, I would say every day, my team and myself, we are more excited about what we see in front of us, the opportunities we see. If you talk to customers, they say 50%-75% of the time it takes to manage their back office. That's a lot of time. You do that day in and day out. You do that for accounts across hundreds of clients. That's a lot of time. That's a lot of value. Nobody else did this for them before us. We've defined that category, and we're gonna continue to do that through the diverse ecosystem that we have. I think one of the things that is unique about us is not just that we have this great product, but we have this massive ecosystem that we've built.
We go to market direct, which actually allows us to learn and drive some great ARPU, great revenue per customer on that front. We also go to accountants, which allows us to reach, you know, the businesses that accountants, you know, are trusted by businesses more than any other entity, and that helps us. Banks are also trusted, and we're able to go through that. Being in this, you know, ecosystem that we can get customers in any of those three different ways, as well as through our network effect, where we have 4.7 million in the network, gives us a unique advantage, which I think, I know from our experience and conversations that you and I have at least seen this before, when you look at consumer bill payment.
What actually drove adoption there, it was a multi-channel approach. You had to have the multi-channels. Ultimately, financial institutions end up being the strongest channel for consumer bill payment, but it took all of that to actually drive the adoption, drive the awareness to actually make these things happen. You know, from my perspective, it's I look at the roadmap that we've built and that we're executing on. I look at the ecosystem that we've built, that we've kind of, you know, knitted together and created, and I just think it's really rather difficult to compete with that. I think that the opportunity for us to continue to expand will mean that other people come into the space. The parallel that I would provide or think about is like, you know, ADP defined the payroll space.
Now then there was Paychex, and then there were other players. You know, now there's hundreds of billions of dollars in market cap associated with this category of payroll that ADP defined in the late 1940s, early 1950s. You know, we're building this for the long haul, and that's the way I think. You know, I'm just as excited about what's in front of me tomorrow as I have been for the last 17 years. This is just a moment in time, and we're going to continue to define.
Good. No, I always like drawing those parallels, and it feels like there's a pathway here for BILL, which is why we've liked it. I'm curious to hear your thoughts on the demand environment and the cycle, right? I know we've come off the pandemic. You had a lot of nice client additions that made a lot of sense, you know, during that period. You're still growing at a nice pace, but of course, the cycle's a big question on a lot of investors' minds. What do you see on the ground?
Yeah. I think, John, why don't you take that one?
Sure. I mean, part of the reason we're seeing capital and other players come into this space is just the sheer size of the market opportunity. If you go back a few years, we would have said one of the biggest challenges to accelerating growth is just inertia on the part of small businesses who keep doing things the way they've done for years, and awareness. The pandemic came along, and that changed the awareness component of the decision-making for small businesses. They all haven't adopted yet. There's a long way to go. The market, in terms of its evolution and maturity, is still very nascent. Demand is very strong.
There are some externalities that are impacting small businesses today, things like high interest rates, inflation, tighter credit, those are certainly gonna weigh on businesses as they decide what their priorities are. With that said, in the last quarter, we had our largest net new adds quarter in the history of the company. Much of that was due to this multi-channel distribution strategy, the ecosystem that René mentioned. We had a very strong quarter in terms of net adds from our financial institution channel, and a little bit lighter net adds relative to recent history in our direct and accountant channel. Bringing all of these ways that we go to market together, I think are really important to allow us to continue to grow through this near-term cycle that we're in.
I'd say, as much as anything, businesses are facing a decision about when to go digital, when to automate, when to take this on. It's not if. Maybe there's a distraction factor right now over the next few quarters, the next year or so that force us to maybe build a bigger funnel, help businesses decide that now is the right time to make that change in the way they operate. So we're really excited to be positioned where we are.
What KPIs do you track or should we track to measure the health of SMBs? You're so close to it.
I mean, I think the, one of the wins that we disclose is the number of transactions they do.
Right.
Right? They use our platform to manage their transactions. That stayed consistent. The TPV per transaction has actually gone down. The spend per transaction's gone down because as they prepare and, you know, watch the economy, they're managing that. That shows the health, that they're able to use our platform to manage their spend. I would say, you know, kind of the overall, you know, satisfaction that we see with the customers or retention, you know, all of that maintains at the levels that we're accustomed to and are happy with. You know, everything that we see is that SMBs are getting tremendous value from our platform and that there's more and more demand for it. People are just kind of waiting to see what's happening with the economy, right?
I know your distribution matters, you know, having covered a lot of these different spaces you talked about, consumer bill pay, but distribution definitely matters. You've covered all of your bases, right, in terms of direct, indirect, through FIs and accountants. Tell us a little bit more about the economics of each. Do you see that evolving? Is there room for some change so that maybe we can get into another gear on growth?
Yeah. One of the things that we've worked hard to do, and this was, you know, by design from the beginning, was to make sure that as the central hub for SMBs, that, you know, once we got the information into the platform, that we'd be able to execute the transactions as required. The ability to be able to do international payments and FX transactions, to be able to do virtual card transactions, to have Instant Transfer for suppliers that need to be paid right now, to invoice acceleration that we're getting into, to having the ability to kinda just do a check from any stage. Having that all in one place actually matters to.
To customers. What that means is that, you know, the success is driven by having all of this in one place. Our ability to kind of continue to drive that forward will be part of what drives success forward. How I think about the value that we're creating for SMBs is that having the platform design from day one to be able to support all of this is a key part of the success that we've had and what will be happening in the future.
We probably focus too much on direct and FI is my view, but I know the accounting channel is very important. Again, learning from companies like Paychex, right? The accounting channel is huge.
Yeah.
You have a huge advantage.
Yeah.
On the accounting side. Can you describe that and tell us how much more you can maybe get out of that channel?
Yeah. I mean, my commitment to the account channel goes back to the fact that both my grandmothers were accountants. I worked at PricewaterhouseCoopers when I first got out of college. All the businesses that I've worked in have been around finance, and it's because accounting is the language of business, right? That's something that I think maybe everybody in this room takes for granted, but that's something that most SMBs don't understand. If you can actually help and drive the success of the accountant to be able to support their clients, those businesses are gonna be more successful. They're gonna be happier, they're gonna contribute more back to society. For accountants, what we focus on is creating a tool to actually enable them to put their gear into higher gear, right? To put their practice into higher gear.
What we see is that when they're on our platform, they start with a handful of clients, but then they quickly grow to many more. We have firms that can easily be hundreds, if not thousands of clients that are on the platform, and they all tell us that they're just getting started with this transformation. What we have done for accountants is we've been a part, a core part of the platform that allows accountants to move to Client Advisory Services, which means you're not just selling tax for audit, you're now selling strategic advice. Some people call it CFO in a Box. I don't think John would appreciate me ever thinking calling him, you know, capable of being put into a box.
You know, the opportunity there is to give accountants a unique opportunity to change how they interact with their clients, and that allows for businesses to be more successful. My passion around the business has been around each of the channels that have a strong commitment to making sure that we differentiate and provide value for every channel for what they need. We do the same type of thought analysis for financial institutions.
What is it that they need to be a unique provider to their clients? What is it that our direct customers. We are so committed to actually each one of our channel partners that we have a platform, and we knew from beginning, like, how often does this happen? I had a company before that was called PayCycle, right? Where we had multiple channels. When I started BILL, we made sure to build for all channels from day one, right? We had a platform that we could do that. That doesn't happen often. People aren't always thinking about that with the experience. That's the value we have. It's why each of these channels work for us, and it's why we talk about them, you know, from an earnings perspective.
Good. Let's pivot a little bit and talk about spend. I know a big learning from a couple quarters ago was cyclicality and spend, and we learned a lot around spend per user. I think you did 11% growth in TPV, if I remember correctly, and the expectation was flat. Tell us what drove some of the outperformance, and I think you're guiding similarly to a flat expectation. What's driving that thinking as well, John?
Yeah. Going back to the December quarter, we saw that our small business customers' spending patterns deviated quite a bit from what we normally see in the December quarter. Pre-pandemic, we'd see quarter-to-quarter growth of between 10% and 13%. During the pandemic years, 20% quarter-to-quarter growth, and we were up low single digits. What it reflected was the adjustments that small businesses were making in their overall spending. We had assumed some of those trends would continue into the March quarter, just given the rate of change and how far off the seasonal patterns we were. What we learned is that, again, SMBs are resilient, and we started to see signs of stabilization in the March quarter, and the numbers came in much better than we anticipated.
I'd say we're still expecting this adjustment cycle, lower spend businesses to pare back. We think that's gonna continue for a few quarters. In the current quarter, we are projecting TPV per customer growth, but it's very low. It's flat to up, which is below normal seasonal patterns, but better than the trend lines that we saw, say, in the December quarter. I think early signs of stabilization, it's a little bit early to call the bottom and a return to expansion mode for SMBs, but seems like a healthier environment in terms of the spend levels than we were seeing in the fall.
Okay. How do you benchmark the spend? You know, we make the mistake of just looking at some of the card data around SMB and again, learning is a good thing. That doesn't capture a lot of the spend. Like, as we start to talk to small businesses and very anecdotally realize like how much your advertising spend is down, that's big. It's not in card spend or IT spend. CapEx down. We've missed a lot of that. How do you benchmark performance on the spend side?
Yeah, I mean, it's very interesting because we have probably one of the broadest views.
Sure.
Into the details of how SMBs spend. That's across all payment types. Our customer base is across all industry verticals, so it's horizontal, and we have, obviously, lots of different AP automation payment types and card payments. We have really good insights. We try to look at macro trends around B2B spend, isolating things like T&E, which tend to be over-indexed for some of the card companies, even on the business side. Then we're obviously closely monitoring some of the factors that influence spend. We talked about some of the macro cyclical factors already. There's also some structural or secular trends that we pay attention to. What share of wallet are we able to have with our customers? In other words, how much of their processes are we able to automate for them?
Therefore, how much of their spend comes onto our platform as a percentage of their overall spend. We know that there's a positive relationship between the number of payment products we have, the number of processes we help automate, and the overall share of wallet that we have from customers. We're monitoring a bunch of third-party data. We see lots of consistency in normalized business-to-business non-T&E spend between our platform and third-party data points as well.
Good. Let's pivot a little bit to take rate, spilling into the spend. The take rate did perform better than we had expected. Can you talk about the drivers of that?
Sure. We had a much lower monetization expansion or take rate expansion in December quarter. In the March quarter, we actually had one of our largest quarter-to-quarter expansions on record at a full basis points. I think it comes from two primary drivers. One being, we had a reversal on some headwinds associated with FX from the December quarter, and these are product changes, improvements in payment execution and things we're doing with foreign currencies. Two, ongoing progress they're making with supplier enablement, driving virtual card adoption, and working directly with suppliers, as really as customers. Perhaps not subscribers, but as customers to deliver them the same level of choice that we deliver to AP buyers. We're seeing that have positive results on FX penetration for international payments.
As an example, when we give suppliers in Canada and the UK, which are two places we've been doing this for a little while now, choice about how to receive payments, what currency, timing for those transactions, we see a much higher percentage of FX. As that happens, obviously, it has a positive impact on take rate and monetization. Then there's some newer products that we have that are starting to scale. One example would be on the funding side as opposed to disbursements Pay By Card, where we're giving small businesses choice of how to fund their payables transactions.
In this case, it would be with their own credit card. It's a high monetizing product. It supports take rate expansion. If you look at what we've done over the last several years, significant growth in take rate, and we feel like we're still in the early innings of a multi-year expansion period.
Right. It has propped up or elevated your gross margin as well, right?
Absolutely.
I don't know if there's other factors that are propping that up, but I think you mentioned that could moderate from here. Is that tied to the comments around payment monetization?
It's part of it. We have obviously a big tailwind currently with the interest rate levels we're at and float revenue. That's adding 100-150 basis points in non-GAAP gross margins. We have a very favorable payment mix right now where high monetizing ad valorem payments are a big share. As we roll out new products, they're not all gonna come at the same margins. I think we peaked at 87%, just above 87% this last quarter. We're expecting more like mid-50s in the near term as we start to see less of a tailwind associated with float revenues as interest rates perhaps peak and more broad-based payment products with different monetization levels start to come online.
Okay. Good. Staying with the product theme then, you know, we've been thematically talking about in fintech here, this idea of everyone wants to bank their users, whether you have a consumer platform or a merchant platform, they're providing more banking services, right? Going into these adjacencies and expanding ARPU, that kind of thing, as you mentioned here. René, I see that a little bit of that with BILL, with Instant Transfers and W ith the working capital product. I would argue you have a big data advantage given what we just talked about.
Yeah.
With spend and you being the hearts and lungs for the SMB. Is that on your mind? Is that a big area, banking your users as an opportunity in the product roadmap?
Yeah, it's, I would say extending the product roadmap, and that's one of the capabilities, is definitely on our mind. I would say core to any of the things that we've developed, is that we have a risk management platform that is unique.
Right.
And you don't have these opportunities to develop and add these payment capabilities without having that. That also goes back to the founding, which is, you know, I probably could have mentioned this when you asked the founding question. I've had the good fortune in my career of doing all the different functions. I've done engineering, I've done operations, I've done finance, I've done sales, I've done marketing. When I started BILL, I made sure that our platform had operational capabilities in place so that we could actually, you know, scale our risk model, from a design perspective that would allow us to offer these payment products. There's more to do to, you know, to continue to scale that, but we feel very, very strongly that we have a unique capability that allows us to consider any of these products.
It starts with, you know, moving the $250 billion on an annual basis that allows us to kind of see and touch millions of transactions, you know, connected to millions of suppliers, you know, across, you know, billions of dollars. Like, that ability and insight allows us to see what products do people want. We've used this capability, the data insights that you talked about, to actually drive some of the product adoption that we've done. We've added international payments because we saw that on our platform, but then we managed it in a way that was, you know, relatively, you know, secure and safe and efficient from our perspective, as well as the customers using our risk platform.
I think when we continue to think about the abilities of, you know, Banking as a Service, if you will, like, we have a product called BILL balance w hich allows customers to deposit the funds with BILL so that we can instantly transfer payments anywhere. There's gonna be more capabilities around that. Again, this will allow us to continue to enhance the experience for the customer and the SMB, and that's gonna always be the motivating factor behind it. There will be other factors coming out of the data, other opportunities, you know, using the data analytics like the capabilities that Finmark has and applying that to give our customers insights across all businesses and across the network. Just a reminder, the level of data we have is unique. We have line item detail on invoices that are now in our database.
That's all new, and to be able to have these documents that have the invoices and have all of that will allow us to actually have far more insights, I think, than what's been possible in the past.
Yeah. No, it's gonna be fun for us to track it, and it leads me into thinking about Divvy, Opportunity for you to see more data and to capture some of the spend and tie the spend tool to the actual software itself. Where are you in the tech stack integration? I think it opens up a lot of opportunity to cross-sell. How big could Divvy be?
Super excited about spend and expense being a core part of the capabilities for the company and for our customers. When we did the acquisition, we looked at the data that we had, and we already had, you know, a good number of customers that were using spend and expense. Divvy was by far the favorite. It was the one that customers liked the best and had the most satisfaction. That's why we bought the company. We're able to scale and grow that. I think what's unique, and maybe just to kinda help folks understand, is just to give a customer example. There's a local nonprofit in the Bay Area called Hidden Villa, which actually does organic farming, has been doing this for 50 years. They bring kids out to actually help them learn about farming. It's a very interesting nonprofit.
You wouldn't think such a thing would have 20-30 checks a week they have to write. There's a lot of manure they're buying, there's a lot of feed, there's all sorts of stuff they're doing, and that's a lot. Well, they came onto the BILL platform in 2021. They just loved it. It's, like, changed their entire nonprofit experience. They're just so happy with it. They added Divvy in 2022.
Now they have spend and expense cards across all of their buyers, and it's just changed their experience. They're like, "I get to go back, be with the kids, work on the organic farming." That's why we're doing this. Like, to take the hassle, the mess, the shoebox, like I said earlier, out of the vernacular of how they actually operate their business and actually get back to doing what they love. That's the power of what we're building, is to have this foresight and this vision across all of these end-to-end transaction complexities and simplifying it into something that you can do on your mobile phone from anywhere in the world. Opportunity is massive. After we get the unified platform integrated, you know, later this year, we'll start being more aggressive on our cross-sell and marketing opportunities.
The reason I gave that example is we're already starting to cross-sell. We're learning on that front. We're not being as aggressive as we will be, and, you know. We're super excited about what we see, the customer interaction, the value that they feel that they get when they use both.
Look, it feels like it's a big opportunity on the expense side of it. Expense spend side of it has been hard for a lot of the banks to crack, but it feels like you're in a good position here to, you know, to drive some penetration. You know, we've talked about a lot of different things, a lot of different products. We talked about the cycle. I know that there's this focus on profitability, and you've been doing a good job of that, of course. With so much growth ahead of the company, René, and, you know, you've built companies before, this trade-off between growth and profits, like, how does that, you know, settle out in your, in your mind? This is one of the fastest growers that we cover.
Yeah.
Talk to us about that balance.
Yeah, I'll start, and John, feel free to add. I mean, the first thing I would say is that the amount of intentionality that we've put into building a business model that works and scales, it's happened since day one. There was nothing that's happened in our execution of the business, has surprised me. It's all been, you know, not exactly on the timeline, but it was all things that we knew were capable and we built into from day one. Intentionally, we've always made trade-offs between investing and growing, and we've done that thoughtfully over 17 years. The current environment obviously is requiring that, you know, for us to discuss that transparency, I guess. It's not something that's new to us. It's kind of part of our DNA.
Yeah.
It's all about balancing. It's not like a one-for-one trade-off. It's a huge market opportunity that's early. We have focused on unit economics from the beginning, in part because serving an SMB customer base, you've gotta get that right. You've gotta acquire them at the right cost, grow your relationship with them, drive retention and whatnot. Success there is the indicator of our ability to scale and create operating leverage. I think we've grown rapidly. We've increased gross margins, even without the benefit of Float. We've operated the last Q2 at operating income ex Float positive. Obviously much higher than that in terms of non-GAAP net income, $80+ million in free cash flow year to date, leading north of 100 for the year.
We're trying to accomplish both, but not taking our eye off the ball of the really big market opportunity and how far we can go in terms of market penetration and building a big business.
Is it fair to say that the go-to-market investments, that's non-negotiable, and that that's an area that you'll continue to lean into? Is there more room to expand the partner pipeline or your own direct sales force, that kind of thing?
We've always had a very thoughtful approach, I think, on go-to-market with a strong payback. John can give the numbers on that, but that's been by design. We're gonna continue to invest, and when we see opportunities to accelerate customer adoption, we're gonna do that. When we see partnerships that make sense, for awareness, for driving adoption, we're gonna do that. We're gonna balance it across the entire P&L. We have a $1 billion in revenue and expense now that we are managing, lots of opportunities to manage it.
Yep. On the... Just closing out here. Just trying to rapid fire and get through some of these questions. You know, I know valuations have come in, maybe a little bit slower on the, on the private side. Appetite to do M&A, is that important here at this point in the cycle?
One of the reasons we went public was to have the currency and the capital to do M&A. There's lots of things. We've already demonstrated how we have a broader roadmap than what our core product would've suggested. M&A is gonna help us accelerate that core, you know, product roadmap. We've done some, and we'll do more.
I know there's a buyback in place as well, and I know we've seen a lot of volatility in the stock. It's bounced up, you know, from its lows. I'm curious, what do you think is misunderstood about the name? Are you opportunistic here from a share repurchase standpoint? It has settled in a little bit, which is nice.
Yeah, yeah. I'll let John answer the buyback, then I'll-
Yeah. I mean, I'd say that the buyback was opportunistic, just given where we've been at. It's small relative to our overall capital position 'cause our number one priority is really investing for organic and inorganic growth, and we think there's lots of opportunities to do that. Over the longer term, we're gonna continue to deploy capital to build on our platform. We'll do M&A. We're patient in that regard. Public valuations have adjusted much faster than private valuations, and I think over the next year, we have a lot more opportunities looking ahead than, say, we've had in the last couple of years.
Okay. What do you think you've been talking to investors, René? You know, there's a lot of volatility in the stock market, of course, in general. What do you think is misunderstood based on all the questions you've been getting?
I think it's the simplest way I would answer it is that, you know, what looks easy from the outside is simply complex underneath the hood. Like it is. The amount of transactional complexity that's involved with payments is real. I've been involved in payroll, I've been involved in payments, I've been doing this, you know, pretty much my whole life, and the emotional attachment that anyone has to money, it's real. When something goes wrong, it creates a service component. When you think about the service component of any transaction, millions of transactions that happen in a given month, billions of dollars in a given month, all of those have exceptions. No, not every one of them, right? There's an exception rate across every transaction.
You have to have a team that's capable of addressing that. It takes time to actually address those exceptions at scale so that it actually becomes an effective cost model. We're at scale now. We have the transactions. We've learned. We know how to operate at that. I think that's misunderstood. I think the complexity is misunderstood. I think the value of leadership is actually sometimes misunderstood. You know, the strategic leadership that we have had in defining this category and the fact that we are not done and we're demonstrating that we're not done, that we're constantly innovating, I think sometimes people get worried, well, somebody might copy that. It's like, no, you can't copy strategic leadership because it's leadership.
Leadership is something that's defined by how you act, not by what you've done because of other people have done it. Like, we constantly are defining the category and inventing and caring deeply about SMBs in a way that I think creates a unique opportunity for us to differentiate and to continue leading. You know, that intentionality around building a platform for SMBs from day one and having a leadership position that we care deeply about, not because we want to lead, because we want to serve. The mindset of our company is servant leadership. It is to always serve the SMB, to make a difference in their lives every day, because that's who we care about. We know that they have pains that have not been solved, and we are going to solve them.
We're not gonna wait for somebody else to show us how to do it.
Good. That's probably a good note to end on. I appreciate your passion. I know you guys are super busy, so it means a lot, again, like I said, to have you guys here give us an update. Thank you.
Okay. Thank you, Tien.
Thank you.
Thank you.