It’s just managing the expense side that’s kind of maybe new for us as well as the larger businesses also managing where they have some additional discretionary. So I guess, the step back is, we have a large portfolio of customers, lots of opportunity within them. And this is more – the macro is impacting today, the larger businesses more than the rest of the portfolio.
Brent Bracelin: Super helpful color there. And then just one quick follow-up for John. The implied guide for the second half does still look like you’re looking for 10% overall growth, does that assume increasing wallet in the soft landing? Or are you actually baking in a hard landing into those 10% growth rate? Thanks.
John Rettig: Yes. We have, I think, a long track record of increasing our penetration with customers, helping small businesses automate more of their processes with all the payment products that we have, our whole portfolio, that allows them to bring more payments onto the platform. We’re assuming that those trends continue, but that the overall payment volume and the payment volume per customer is very muted down slightly as we talked about in the second quarter, mid-single digits on a year-over-year basis on a TPV per customer. So we’re not trying to predict or forecast the overall sort of macroeconomic impact here other than projecting forward the behaviors that we’ve seen from our customers in this environment, which, as we said, have shifted a little bit.
So we’re assuming those ships will continue and we’ll be able to partially offset or mitigate some of those through continued progress with share wallet and some of the product improvements and experience improvements that René mentioned earlier.
Brent Bracelin: Got it. Thanks.
John Rettig: Thank you.
Operator: Thank you very much. Our next question comes from Samad Samana from Jefferies. Samad, your line is open. Please proceed.
Samad Samana: Hi, good evening. Thanks for taking my questions. So maybe, John, just thinking through the commentary on ad valorem and payment type selection I know you addressed the type of both where – what payments are going towards in terms of end spend and then talking about payment types. But maybe if we could actually triangulate, if you think about the ad valorem transactions themselves, right? So you gave 3.2% of the mix in the fourth quarter was from virtual card and 1.7% was from cross-border in local currency what’s the concentration there look like, right? So if I isolate it to that 3.2%, how concentrated is that amongst a certain number of suppliers? Because if I annualize that, that’s like $8 billion, is it a handful of suppliers that are accepting that in terms of virtual card? Is it hundreds of suppliers? I’m just trying to get at the level of concentration within that spend?
John Rettig: Yes. Thanks for the question Samad. So I’d say on cross-border payments, it’s very diversified across a large number of suppliers without a significant concentration. On the virtual card or vendor direct side of things, it’s thousands and tens of thousands of suppliers, not tens or hundreds. With that said, we do have large suppliers who are – think of examples like national providers, whether its utilities or telecoms or things like that, which are used by many customers of BILL. So there’s a many to one relationship. But if we step back and look at the overall spend profile for any of our payment products, but that in particular, we don’t feel like there’s any sort of outsized concentration or anything like that of a very small number of suppliers.
Samad Samana: Got you. And then maybe asking the question on the spend side. So if I think about the type of payments that are made using ACH versus the type of payment that a customer may choose to make virtual card in. I guess what I’m wondering is, is that are the payments that are typically selected for ad valorem more discretionary versus maybe something that is more recurring if it’s ACH. Once again, just trying to understand if there’s different concentrations at this specific higher fee level.
John Rettig: Yes. That’s a great clarifying question. I’d say there might be a higher percentage of discretionary spend that flows through our Spend and Expense card program because that involves individual cards, some of which are physical cards, not all virtual and therefore, more sensitive to things like T&E, which we mentioned before, that’s been strong. On the virtual card program, the Vendor Direct side, AP automation for BILL. We don’t see significant differences between, say, an ACH payment that might be set up for a one-off transaction or even one that’s an auto charge or an auto debit to a bank account versus a virtual card payment that’s delivered to a supplier. In some case, it’s the supplier who’s driving.
Here’s how I want to get paid, and their buyer takes that action. In other cases, it’s the buyer. I don’t think there’s big differences other than transaction size, where most suppliers do have limits and various other variables that they want to manage when deciding whether to take a card payment.
Samad Samana: Great. Appreciate the clarity. Thanks for letting me squeeze two in.
John Rettig: Thanks, Samad.
Operator: Thank you. Those are all the questions we have time for today. So I’d now like to turn the call back to René for any final remarks.
René Lacerte: Thank you, everyone for joining us today. We’ve built a great business over the years of our constant focus on automating the financial operations for SMBs. We look forward to serving them, and thank you again for joining us.
Operator: That concludes today’s conference call, everybody. Thank you very much for joining. You may now disconnect your lines.
