René Lacerte: Yes. I would just add that businesses have been in this holding pattern just wait and see for well over a year now. And I think as rates remain high, that’s going to continue to drive more action that’s really macro related. And so when we look at the underlying fundamentals of the business, we see so much opportunity to continue to do more and to drive more success across the business for our customers and for the business. And things that we can do to – there are many things we can do to continue to drive and leverage payment choices that we haven’t done historically. And so this is – we will – are adjusting and pulling in the road maps that we have for some of these things, but it is definitely a macro environment.
Darrin Peller: Okay. And just very quickly, any changes in your plans for this year, given what we see now in terms of the spend trends by your customers in terms of your investments/profitability expectations or anything on the sort? Thanks again guys.
René Lacerte: Yes. Thank you, Darrin. We are – our DNA is to really manage the business for both profitability and growth. It’s how I’ve built the business over the years. It’s how John and I think about it, it’s how the teams think about it. And we’re committed to the profitability path that we’re on. We believe the opportunity with the portfolio of products we have to continue to make progress on both is there because of the strength of the business that we’ve built. So we will manage the expenses that we need to in order to drive the goals that we set.
Darrin Peller: Thanks guys. Appreciate it.
René Lacerte: Thank you.
Operator: Thank you. Our next question comes from Tien-tsin Huang from JPMorgan. Please go ahead. Your line is open.
Tien-tsin Huang: Hi, thanks. Thanks so much. And John congrats on the new President title. On the outlook, maybe can you elaborate how much of the guidance revision is tied to the weakness on spend that we’ve been talking a lot about versus the adverse selection of the payment choices. And does it make sense to maybe talk about that the penetration of some of the ad valorem products so that we better understand the impact.
John Rettig: Yes, great question. Thanks for that. I’d say if you step back and look at our overall estimates for the year, the majority of the adjustment that we’ve made is actually related to the Spend and Expense product, which has mostly to do with slightly lower spend per ticket per transaction by customers. That’s directly related to macro. And then indirectly, proactive adjustments that we’re making to line sizes and things like that in an attempt to mitigate any increased exposure as a result of worsening credit conditions in our customer base. The average size customer, as you know, for our Spend and Expense product is much larger, mid-market type customers versus the core BILL product. In the quarter – this last quarter, we did see increased penetration across all of our products, better usage, although we saw lower actual volume growth on some of our higher monetizing products like virtual cards and FX, as I mentioned.
And some of these trends are directly related to the choices that larger suppliers or customers are making. And those are the trends that we’re expecting to persist throughout the year. We do have levers at our disposal, including with the launch of our unified platform many more opportunities to drive customer behavior and create awareness and things like that as we think about a more modular approach to pricing and packaging that we think we can make progress with this fiscal year. So those are some of the puts and takes that we considered.
Tien-tsin Huang: Okay. And quickly on myself on the Spend and Expense side, the ability to dial up and down the credit standards. When did that change for you? It sounds like maybe you might get a little bit tighter on the credit side before reversing them. I just want to make sure I understood the timing of that. Thank you for the question.
John Rettig: Yes, thanks for the clarifying question. We’ve actually been making adjustments and doing more frequent reviews of our customers’ financial position and more frequently engaging with them over the course of the last year. So this didn’t just start in the last quarter. However, we have made some more significant more aggressive adjustments to line sizes so that we minimize our exposure. Previously, we talked about doing things like reducing open to buy, where if a customer is using $50,000 a month consistently, and they have a line of $100,000, we will reduce the line to $50,000 and things like that. So we’ve been – I think, evolving some of these adjustments over the last year, but we’ve been more aggressive with them over the last quarter or so, and we expect for the remainder of the fiscal year to be a little bit tighter, if you will, on the credit limits because we’re really managing to avoid credit losses.
Tien-tsin Huang: Makes sense. Thank you, John.
John Rettig: Thank you.
Operator: Thank you. Our next question comes from William Nance from Goldman Sachs. William, your line is open. Please go ahead.
William Nance: Hey, guys, appreciate you taking the question. I was wondering if can you spend a little bit more time on some of the supplier behavior changes that you guys have noted. And I guess – how does that – how do we kind of square that with the historical guidance you have had on take rate? Like should we expect take rates to be kind of flattish in this environment? And maybe just a more rich discussion on what is the kind of mechanism for some of these suppliers to change their payment preferences? Is this – it sounds like it’s concentrated among larger suppliers. But is this something that can reverse at some point in time? Or do they – have they found a cheaper way to do it and this is how they’re going to accept payments from now on. Maybe you could just talk about like the stickiness of some of the headwinds to take rate.
