John Rettig: Yes. Thanks for the question. Well, just to clarify on the $6 million benefit that we referenced earlier, that’s really a positive impact on cost of revenues, cost of sales that improved gross margins. It’s not a revenue and monetization impact. So that has no real bearing on our take rate, which is a function of transaction revenues and the appropriate segment of TPV, in this case, Bill. So we did make progress, we grew. We were at 14.2, I think, last quarter and expanded without including a separate one-time step-up, which was around some AR volume that transitioned between providers. That volume will continue at a higher rate. But as we look at like seasonality in Q4 and how payment volume falls, we’re expecting some of the near-term headwinds on some of the higher-monetizing products to continue.
And that serves to kind of mute volume expansion across those products, and we know that we’ll have expansion seasonally in the quarter associated with check and ACH payments. So those are some of the dynamics that are all at play in our expectations for the Q4 monetization. So it will be, as we said previously, an improvement by Q4 versus Q1 or at least at the Q1 level with limited opportunity for volume growth in the very short term. And that’s how we get to those assumptions.
William Nance: Okay. That’s super helpful. So the $6 million is not in revenue, it’s in COGS. And there’s a separate one, but that one is going to be an enduring uplift in the take rate?
John Rettig: That’s correct.
William Nance: Awesome. Appreciate it. All right. And then just, I guess, a separate topic on just go-to-market. I’m just wondering if you could talk around the net adds that we’re seeing across, I guess, really more the core BILL platform. What is the mix of sort of channel versus direct these days? I guess more accounting versus kind of not talking about the FI channel. And I guess specifically, how do you kind of envision that changing over time? And is there anything you’re doing to kind of get the next more towards the direct channel in the near term?
John Rettig: Got it. Yeah. We — as you know, historically, if you look at our ex FI go-to-market, the majority of our new customers come from our relationships with the accounting firms, so the accounting channel. That continues to be the case. I don’t think we’ve broken out previously specific numbers between the channels. So I won’t get to that level of detail. But — and we are continuing to invest and enhance our presence and build relationships in the accounting channel that we think will provide a long-term growth trajectory for continuing to acquire customers. At the same time, we’ve referenced recently a little bit more focused internally on slightly larger businesses. And we’ve also said those like with the higher propensity to spend, meaning get on the platform, get up and running now.
We have the most control over that in our direct channel, how we target sales and marketing resources and where we deploy some of the programs that we have. And we’re starting to see the early signs of that playing out. And so I would think from maybe a revenue perspective, slightly larger businesses over time in that direct channel and from the accounting channel, all sized businesses and continue to be the majority of our customer acquisition.
William Nance: Got it. Super helpful. Appreciate taking the questions and appreciate the clarification.
John Rettig: Yeah. Thank you.
Operator: The next question comes from James Friedman of SIG. Please go ahead.
James Friedman: Hi. Thank you for taking the question. I wanted to ask about this BILL stand-alone TPV ex FI. First of all, do you think that that’s still the right way to analyze the company? And Rene, in your earlier answer, when you were using that language neutrality, is that what you’re referring to?
Rene Lacerte: The — thank you, James. The neutrality I was referring to was just with respect to kind of the same-store sales, right? Just the businesses are kind of managing their spend. They’re not decreasing their spend. They’re not increasing their spend. They’re not expanding their spend. And so what that means is that across the platform, we have seen — we do not see a contraction, if you will, the way we saw in prior quarters. So we haven’t seen expansion. We’d like to see expansion, but we haven’t seen expansion yet. So that — just to clarify my — what I meant by spend-neutrality versus spend expansion, that’s where I was meaning there. Overall, on the BILL TPV, like we feel really good about what we’re able to drive.
We continue to add more and more capabilities around the payments to actually drive more share of wallet. We continue to add more and more customers across the platform, which we think is super important. And a lot of this, I would just say, is just continued strong execution. It’s super important of execution. And I’ve been fortunate enough I’ve been building and creating online software solutions that automate financial operations since 1992. And over the years, I’ve learned that having a vision, while it’s super important, it’s not nearly as important as the will, the grit, the passion and all of that to execute better and better each day. And that’s what we do at BILL. It’s what we’re made of. It’s our DNA, and it’s what we’ve always done.
It’s what we’re always going to do. And when you combine that vision with that passion, that grit, that will, you have a combo that is unstoppable. And we feel really good about where we’re at and the ability to drive the go-to-market results that we’re seeing.
James Friedman: Okay. Thanks for that. And then if I could just ask maybe for a one-liner around the interchange change. Is that something you’re prepared to comment on yet or you’re going to wait for fiscal 2025?
John Rettig: Yeah. I think it’s early for us to have any specific commentary on that. From a timing perspective, it appears that would first potentially come in to be in our fiscal Q4 2025. So it’s a little ways out there. We’re obviously aware and paying close attention to that, but there’s a little bit more information needed for, I think, us to understand exactly what the impact is.
James Friedman: Okay. Thanks. I’ll jump back in the queue. Thank you.
John Rettig: Thank you.
Operator: The next question comes from Brad Sills of Bank of America. Please go ahead. Your line is open.
Brad Sills: Oh, great. Thank you so much. Wanted to ask about the integration, the progress you’ve made on integrating receivables with payables and the mobile functionality. How significant is this? In other words, could we start to see this kind of add to the flywheel effect of customer acquisition in your business and how so might that play out?
Rene Lacerte: Thanks, Brad, for the question. We — I mean we think simplicity is core to the value proposition the businesses need. And so having an integrated mobile app that has all of the AP, AR and the other capabilities, Spend & Expense and cash flow insight and forecasting, having one platform that does all of that will be super important for adoption in the short term, medium term and definitely the long term. And what we did share was that the mobile app is also worse, obviously, for suppliers. And we’re seeing increased usage from suppliers using it for Instant Transfer and even creating invoices back to the customers on the BILL platform. So we think it’s part of the overall strategy. I guess another thing just to maybe step back is we talked about our scale.
The reason we talk about the scale, the amount of money we moved, the number of transactions is because we know that scale drives further scale. And so in this case, the ability for us to — to really drive more simplicity for our customers comes from how we’re seeing them using it across the entire network of hundreds of thousands of businesses and millions of network members. And I think when we look even broader at scale, how we are able to use that to actually understand the payment products they need, the AI capabilities that we bring into the platform, these are all things that we’re fortunate enough that we have the type of scale that we do. And that does lead to better product innovation, which is core to our work every day at BILL.
Brad Sills: Great. Thank you. One more, if I may, please, just on the macro. Maybe I’ll just ask it a little differently to you, John. The TPV per customer metric is one we all kind of follow here as a gauge there. Are there any signs of improvement, whether it’s in certain categories, for that metric to potentially accelerate? I think it grew 1% this quarter, which is kind of similar to last quarter in the core business. Thank you.
John Rettig: Yes. Thanks, Brad. Yes, it was up slightly this quarter. And if you look at historical sort of patterns with the core BILL platform, there is a seasonal effect in the March quarter that typically holds — and so we saw that play out as well. But we haven’t seen any large-scale signals across, say, multiple spend categories that would lead us to believe there’s near-term expansion per customer. And I think that leads to Rene’s earlier comments about, it feels like it’s a somewhat neutral spend environment in the very short term. Obviously, on the card side with our Spend & Expense solution, card volume there exceeded our expectations. It was stronger than we were thinking. And there’s definitely strength in the T&E category that is visible there, and that’s not — that’s consistent with other companies and airlines and whatnot who are reporting similar stats.
That’s not necessarily broad-based yet such that we believe there is significant near-term expansion. But I think we have a little bit of a ways to go with regards to inflation, interest rates and other conditions that will give small businesses the confidence that now is the time to expand.
Brad Sills: Great. Thank you, John.
John Rettig: Thank you.
Operator: Thank you. We have time for one more questions. Our last question is from Taylor McGinnis at UBS. Please go ahead.
