Tim Murphy: On the auto captive, as I mentioned, we’re in the process of going live with that, and we expect it to be processing in late Q2 and ramping throughout the second half of this year, and that will be a multiyear growth opportunity, Joe. We’re very excited about that, and we’ve done a lot of work on that. And we’ve been building a pipeline of additional captives, and we’ve intentionally gone upmarket with some of our sales hires to address the enterprise space across really all of our consumer verticals, not just auto, but auto is a good example. So that’s a second half contributor and then I guess at multiyear growth opportunity as the business continues to ramp. In terms of mortgage, I mean, we see a lot of positive signs there. And it’s not in our forecast. It’s not in our outlook, but we’re continuing to progress and there’s certain clients that we’ve identified that we think we’ll adopt the debit solution, and that’s progressing nicely.
John Morris: Yes. And I mentioned as well on our call about a larger credit union we just brought on board, which is one of the largest top 50 credit unions. They do a good bit of auto lending as well. So our ability to continually enhance that overall consumer digital experience. We’re seeing really positive traction in the credit union space.
Tim Murphy: It’s been an area of strength for us, Joe. You see we added 15 this quarter and that we’re now up to about 290 credit unions out of just under 5,000 across the U.S. We’re signing really large credit unions. We have the right software integrations in that space, and we have all the different payment capabilities that give us the ability to win.
Joseph Vafi: And then I mean, you’ve got a lot of software partners now, which is great. And I imagine that some are better producers than others in driving revenue. And just kind of how you look at that large portfolio of software partners now in terms of where maybe how much penetration do you have there with their end customers? And of the 266, is it like half of them are bigger producers or just trying to understand how some of those numbers work with a pretty large partner network now?
John Morris: Yes, it’s different by vertical in reality. So you know that we are vertically specific even in consumer payments and even in business payments. On the business payment side, some of those partnerships of their ERP systems are very broad and very, very large. But even inside of that world, we try to hone in on the verticals inside of those ERP systems. But also on the Business Payments side as well, we really think there’s tremendous growth opportunities in the outer years for these large enterprise software ERP platforms such as like a Blackbaud that really manages the entire workflows. We think the monetization of payments has many long years associated with that. We assign our individual vertical leads to these areas.
We have almost — we kind of have somewhat of a pod related to these verticals, so we can be vertical experts as well as payment experts as well as the software expert around the channel we’re going through. They vary in size, as you indicated, some that deal with very large enterprises and then have medium. So we focus on medium to enterprise. There are some, especially in our consumer payment side that would have some smaller type clients. We are typically in the medium to enterprise level there. Some are more sophisticated than others, but we have individual team members assigned to drive that with marketing campaigns associated with that. We like a lot of our sales sequencing around that. We like the way some of the areas that we’re focusing on is we are prioritizing around many of those as we refresh some of our integrations around some of our product features and functionality as we open up more of those payment modalities that in itself drives capture drives — that pay anywhere in any way any time as the consumer wants to pay, even as the business wants to pay.
Our TotalPay solution does that. That is a significant opportunity. That one-stop shop, single payment is very valuable in itself. And our clients want to be able to move money all the different ways and have one single provider that can help them do that fully embedded in that. We’ll continue to drive that home as we build that out and prioritize that by individual systems, which we do evaluate by opportunity.
Operator: Next question, Mike Grondahl with Northland Securities.
Michael Grondahl: Two questions. First, was the contribution from tax season this year, was that outsized compared to the last couple of years? Just kind of curious if you can quantify that at all. And then secondly, I know we’re still a ways from the election. But do you have any sense or feel if the revenue related to that is looking a little better or a little worse? Just any color there would be helpful, too.
Tim Murphy: On tax refunds, we track those very closely with IRS data very similar to the prior year. So it was in line with our expectations. It wasn’t necessarily a greater contribution than prior periods of what we expected. So very similar trend there. And then with political, we’re still expecting — we compare to what we did in 2022. In 2020, a little over $6 million of gross profit and we think that business can grow about 20% this year, given it’s a presidential cycle. We’ll have a lot more visibility leading up into the election just a few months before as to how that 20% looks. But right now, we’re still anticipating 20% growth on the $6 million or so GP in 2022 cycle.
Michael Grondahl: And lastly, any updated thoughts on the macro, whether that’s consumer driven or rates? Are you seeing anything there to call out?
Tim Murphy: As we just mentioned, I mean, very similar to what we talked about during the last call, the auto is similar, like I just said, and we’re seeing similar trends across some of the other end markets. So what we try to do with our planning is taking into account the most recent run rate trends we see, both in our own business and in the macro and bake those into the rest of the year forecast. So nothing’s really materially different than what we saw before.
John Morris: Stable, healthy consumer with a stable healthy job market.
Operator: Next question, James Faucette with Morgan Stanley.
Unidentified Analyst: This is asking a question on behalf of James. So given the strong free cash flow, could you provide an update around capital allocation, maybe what you’re seeing in terms of M&A pipeline currently, how valuations are trending? And maybe what verticals might be most interesting to you?
