And so we are being cautious as we walk into the very strong holiday season, we are being cautious on what that year over year GTV growth is going to look like. On hospitality as I mentioned just now earlier, Q2 is our seasonally strongest quarter. That is when, you know, folks dine out in the summer months. And so we expect to see Q3 to be down from Q2 from a hospitality perspective. So all told, you know, given those factors as well as what we are seeing happen in the macro, we are being prudent on the guide.
Unidentified Analyst: That makes a ton of sense, Asha. Thank you. And then I may have missed it and apologies if I did, but previously you have talked to the payment penetration ratio exiting this fiscal year at I believe 30 to 35% range. Do you have an update there?
Asha Bakshani: Yes, yes, that is correct. We have said, you know, in the past quarter that we expect to exit the year at 30 to 35%. You have seen us move the needle by about 300 basis points in Q1, a little more than that in Q2. And we do expect by the end of the year we will be in the 30 to 35% range.
Operator: Your next question comes from the line of Andrew Bosch from Wells Fargo. Your line is open.
Andrew Bosch: Hey guys, thanks for taking the question. And nice job on the payments processing strategy. Just you mentioned, made some comments around once the payments, monetization efforts are complete, then the software side of the business would accelerate. I guess could you put a little finer point on what you mean by the completion of that? I know it sounds like the back half of the year you are going to start to pivot towards software, but just a little bit more color there would be helpful.
Jean Paul Chauvet: Yes, I’m just going to try and reiterate what I said earlier on. So of course, as payments becomes a success, we are doubling the ARPU per customer, just give or take and on a net basis. So that frees a lot of money for us to be able to re-inject. And if you look at today we are in a way throttling the engine because we don’t have enough basically, money to allocate to growth when we look at our overall balance sheet. So the idea here is to say, I’m now going to use, you know, let’s call it three quarters of this year to get as many customers as possible onto payments. And then as the regions are fully done on the payments job, that means I can now redirect my salespeople into going after new customers and more salespeople instead of having them, you know, focus on unified payments.
And at the same time, I can allocate enough cash for marketing and, you know, and outbound strategies so that I can accelerate growth of customers. Today if I had way more free cash flow to give to my marketing engine and my sales engine, I could intake way more customers than I’m taking today. So that is really the strategy. It is very simple, but it is we believe we are really going to be in a very strong spot and especially with North America, we are going to start with North America because that is the first industry we went after with payments. And that means as we get into the second half of the year, we will be allocating more and more salespeople to going to get new customers, mainly in North America.
Asha Bakshani: On the timeline, Andrew, the only thing I would add to what JP was saying is that, you know, this year is the initial launch of Unified Payments. So even though the migration of our back book onto payments continues into next year, we should start seeing the improvement in software in next year as well.
Andrew Bosch: Yes, I mean, it is a multi-year strategy. Just a follow up on, in the 4Q, it looks like you guys are embedding some, some softer assumptions for just an EBITDA. And I assume that is macro, largely macro driven. But are there anything else in the comps or other things we should be considering as far as investments in the back half of the year that would be kind of leading to that implied guide being a little bit lighter?
Asha Bakshani: I’m going to refer back to what we talked about a little bit earlier on the rule of 40. As we have mentioned, there is a huge TAM that is out there, and we want to make sure that we are taking as much of that tam as possible for sure. Profitability put some parameters in place as to how quickly we can grow. And so we are being cautious or prudent I would say, on the EBITDA guide so that we have the flexibility to reinvest in sales and marketing to get more of the tam if that is what maximizes our rule of 40 metrics. Because that is really what we are anchoring ourselves around.
Operator: Your next question comes from the line of Martin Toner from ATB Capital Markets. Your line is open.
Martin Toner: Wanted to ask a little bit about growth of large merchant locations, it is strong but has decelerate a little bit. Can you talk a little bit to the extent to which up is a distraction and you expect that growth rate to re-accelerate going forward?
Jean Paul Chauvet: Yes, so look, it is a year or two halves. So we were expecting less growth in the first half versus the second half. And just going back to what we just discussed, as I get more money to invest and I can free my resources, I’m going to accelerate that. I think the other piece for me that is very important is that it is not a question of numbers and that –I mean, you look at the profile of the customers we brought in this quarter, they are absolutely outstanding. And Gustoso Group with a hundred locations Joël Robuchon. So I think those are the most important for us. And so what we are seeing simply put is we are seeing ARPU of new customers go up. We are seeing ARPU, which is revenue per user of all the flagships, be much stronger than the old products, and we are seeing higher attach rates. So even though, the growth has been 9%, we are very happy with the profile and the ARPU that these customers bring in.
Martin Toner: Follow-up is on cash flow. The cash flow burn, I think this quarter was about the same as last quarter. Can you talk a little bit about what those dynamics will look like for the balance of the year and what items are sort of holding you guys back from like reducing that burn even further?
Asha Bakshani: No, I will take that one. So from a cash flow perspective, overall cash burn was a little under $10 million for the quarter, similar to last quarter. As we look forward, there are a couple of things that that will improve that, but also certain things such as our merchant cash advance business growing, that that does improve that. Overall, they are working capital items such as the fact that about 70% of our customers pay us monthly. Yet our contracts with our vendors are typically paid annually upfront. So those working capital dynamics does drag the overall cash flow down and cause it causes it to be more, more negative than our adjusted EBITDA, for example. As we move into next year, our view is that we will be incentivizing our sales team to bring in more annual deals paid up front and that should alter the working capital dynamics on that front and then the other, the only last thing to keep in mind is we do intend to continue to grow our merchant cash advance business, which is a large use of our working capital.
