Joel Wilhite: Maybe first on capital allocation, then Mike can mention in context of what we are seeing in the M&A pipe. I think we are, again, sort of turning profitable, looking at sort of meaningful free cash flow in our future. I would say from a capital allocation perspective, M&A is really interesting to us and in terms of our balance sheet kind of looking at all the options that we have available to us.
Michael Praeger: Yes. Maybe a little bit of a pipeline. We think it’s long term, it continues to be a part of our overall kind of growth expansion playbook. We think in addition to kind of our 20% kind of growth mantra that we expect to deliver consistently on a long-term basis, that there is an inorganic growth lever that we can add to that, should we find the right opportunities. So I think we’re very focused on. We’re talking to lots of participants. Typically, they’re smaller companies that are in the different nine verticals that we’re in. We also have some targets in terms of new verticals that we would look for acquisitions in. And we’re having lots of conversations. I think, are still have not seen the kind of private market valuations reflect those that are at the public company level yet.
And so I think we are continuing to be cautious. And however, when the right opportunities present themselves, certainly, with our balance sheet and capabilities are in a great position to execute these. I think the core playbook, however, is around vertical market expansion. We feel really good about our product capabilities. And so that wouldn’t be kind of a key focus for us. It’d be more – continue to grow beachhead of customers within the nine verticals that we’re in as well as use it as an opportunity to expand those verticals even further.
James Faucette: Great, thank you.
Operator: The next question is from Tien-Tsin Huang with JPMorgan. Please go ahead.
Tien-Tsin Huang: Hello, good morning. Really good results here. Just on the outlook, I wanted to ask if new product contribution is a meaningful or measurable contributor to fiscal 2024 here relative to your past initial guides to just new product contribution?
Joel Wilhite: Yes, Tien-Tsin, it’s a great question. I think probably what I would just add is on the supplier side, we talked about the payment – opening up new payment modalities, but otherwise kind of all the products in the bag.
Michael Praeger: Yes. And I think, even when we think of the new products that we have, Payment Accelerator and then spend management, as I alluded to earlier, those really are – it really factors in, in terms of executing this year. They really set us up nicely for 2025, 2026 and beyond.
Tien-Tsin Huang: Got it. So really build up the momentum, and then we’ll feel more of that in fiscal 2025. Okay. Got it. Just on the – just thinking about – I know you got a lot of questions on FastPay and visibility. I’m just curious when will you get closer visibility on that? Is it really going to be in – just in that third quarter in terms of how real or conservative that outlook that you are setting up will be? I am just curious how quickly you might see that? What the lead time would be based on the past?
Michael Praeger: Yes, remember, based on the past is the key word, this is our first political cycle. So, in a non – or I mean, presidential cycle, I should say. In the kind of interim cycles that we do have some experience with, we saw a smaller level or lower level activity occur earlier in the year, and then obviously it builds up and Q3 is the monster quarter for it. And so I think, we are taking a cautious approach and expecting a kind of a similar build to the year as we’ve seen in the non-presidential cycles. But we’re probably as anxious to see how everything falls out as you are. We just take a cautious approach to it. But we think we’ve set ourselves up really nicely in terms of our market positioning. We’ve added some really nice political customers since the last cycle, and really like our industry positioning and being the leader in political payments.
Tien-Tsin Huang: Yes. No, it seems set up well. Thank you both.
Joel Wilhite: Thank you.
Operator: Our next question is from Alex Markgraff with KeyBanc Capital Markets. Please go ahead.
Alex Markgraff: Hey guys. Thanks for taking my question. Just one for me. Quickly on some of these partnerships, AppFolio, M3, you mentioned the sort of contribution in the second half of 2024 starting to show up. I am just curious, is that sort of the time to benefit we should start to think of as you sign more of these, or are there some early learnings from the first couple that might kind of accelerate that time to revenue as you add more partners here?
Michael Praeger: So first of all, we are super excited about our overall sales motion. I’d say the partnerships is certainly exciting. I’ll talk about a second, but remember also that over the last year, it’s been a phenomenal year in terms of building the talent in our go-to-market strategies. The addition of James Sutton as our Chief Revenue Officer earlier last year, and then the addition of Doug Anderson later in the year as our Chief Product Officer. That combination is really powerful in terms of how we kind of really accelerate that organic growth, kind of, formula. And then executing on the partnerships is a key piece of that. So I think like some of the new product stuff, we typically have a cautious approach to any new partnership until really we begin to see the scaling of it.
However, although AppFolio has the characteristics of being our largest partnership ever in terms of the number of customers that they have 19,000 customers, of which roughly 50%, we think, are right in our sweet spot of core customer profile. And we have lots of learnings from all the other partnerships that we’ve executed that we are certainly applying to both M3 and the AppFolio partnership. So, we feel really good about our playbook related to executing these partnerships, combined with the talent level that we’ve assembled to position. So as Joel indicated, it will certainly more noticeably begin impacting the second half of the year. But again, we feel really good about the setup for 2025, 2026 and the impact of these partnerships long term.
Operator: This concludes our question-and-answer session. I would now like to turn the conference back over to Michael Praeger for any closing remarks.
Michael Praeger: Thanks again, everybody, for your interest in AvidXchange. As the only publicly traded company with really critical mass in the automation of accounts payable and payment automation for the middle market, we believe we’re in a really solid position to capitalize on the secular trend around digital transformation of the back office. And given our disciplined execution in the face of continued kind of macro challenges, along with our financial strength, we believe there’s a significant runway for revenue growth, profitability and value creation for investors. With that, we look forward to sharing our progress with you in our next earnings call. Thanks again, everybody.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect. Goodbye.
