So as we saw performance on some of our marketing initiatives decline, and we created some inefficiency continue to hold back on marketing spend. The impact that has is on really the smaller businesses. In fact, in Q2, if you look at our larger Spend and Expense businesses, the demand, the top of the phone from those was consistent, actually up from Q1. So we feel good about that. It’s really in the net as a result of the smaller businesses. So in the very near term, we would expect to be a bit lower than we have been historically. But from a revenue and revenue per customer standpoint, we feel really good about that setup because that ties into the second part of your question about moving to a higher propensity to spend customers, which is a direct correlation to larger businesses that are more financially stable and likely to have an effect of increasing ARPUs for us, and this is across both BILL and our Spend and Expense product.
Taylor McGinnis: Awesome. And then just as a follow-up. So you started to mention it in response to Bryan’s question, but when you think about the rollout of more automation, things like straight-through processing, working closer with suppliers. Can you just help us think through the timeline of when those are going into place? Maybe some of these initiatives have already gone into in place and how that influences how you’re thinking about the second half improvement into 2025?
John Rettig: Yes. I mean it’s pretty — when we talked about this last quarter, we already had some of the activities and initiatives that we mentioned, in-flight, working with suppliers making changes. We certainly have a pipeline of improvements that we’ll be rolling out over the next several quarters. Our expectation is that we start to move the needle more materially on driving volume across these higher monetizing products into fiscal ’25 versus ’24. But we have also seen some good progress with other products beyond virtual cards and FX payments in the most recent quarter we saw a good uptick in working capital. We saw a contribution from both AR and Instant Transfer or real-time payments that we’re providing support for the take rate. So we think those will continue in the second half of the year as well.
Taylor McGinnis: Great. Thanks so much.
John Rettig: Thank you. Thanks, Taylor.
Operator: Our next question comes from Darrin Peller with Wolfe Research. Please proceed.
Darrin Peller: Guys, hey. Let me just follow up on the — first, the volume trends that you saw were clearly stronger, I think, than we anticipated and I think then and it’s flowing through to some degree than your guidance was for the current quarter. So it was great to see if you could just give a little more expansion on what you actually are seeing among your customer base in terms of behavior. And obviously, you took a bit of a conservative stance in what you’re expecting for the remainder of the year, but is that just conservatism? Or is there anything going on in terms of what you’re seeing with customers? And just very quickly to follow on, again, just one more time on the monetization opportunity because I think what we’re seeing is the evidence that you’re convicted that the second half improvement will occur.
I think the questions we’re still getting is just whether or not there’s a magnitude of it being impactful in ’25 in the next fiscal year and beyond that we should be on a steady state. And so if you could just give a little more color on whether or not you believe these fixes should lead to a resumption of a steady-state improvement? Or is this not going to be more volatile?
Rene Lacerte: Thanks, Darren, for the question. I’ll start and then let John add in a bit. So the first thing I would just say across the customer base when we kind of look at all the different segments, we definitely see holding pattern for all but the largest of businesses, which are still declining, just not as much as they were. So if you look at the overall TPV, while we had good growth year-over-year, it was not what it should have been because the largest businesses are still spending less than they were a year ago. And so that declining rate is less than it has been in prior quarters. So that gives us confidence in the ability to kind of whether the storm is well and to be able to see that as they start spending, we will have an opportunity to grow and serve that part of the spend that they have.
So that’s kind of — the first thing I would say is that what we are maybe happy to see is that all but the largest businesses seem to be more in a holding pattern and not declining right now. And then with the monetization, just to kind of give you one example, some of the conviction we have. It is a lot of different payment products we have, and there’s lots of different activities across those payment products to be able to drive adoption and customer success and happiness. And so one of the things, for example, on international payments, that’s super important is that we get a bigger share of wallet. And so if you were to look internally across the platform, are continuing to increase the share of wallet of international payments. Now one thing that’s going counter to that in the last year has been that there’s been an increase in adoption of U.S. dollar payments versus FX dollar payments.
Particularly, if you looked at, I think, broader economic data, you would see that euros are less favorable to dollars these days for some reason. And we could all speculate on the geopolitical reasons as to why but that impacts all the goodness that we’re doing on driving FX adoption inside of our customers. So we have strong wallet share growth, and we have strong adoption where we have some more influence with Canada and the U.K. and the portal we have, but the opportunity and conviction we have around the future is because of those underlying facts. So that just gives you one highlight. I don’t know, John, if you have anything you want to add to that?
John Rettig: Sure. So just on the TPV volumes, we were at about $450,000 and TPV per customer, excluding the FIs in the quarter, which was certainly ahead of our expectations. And I think reflected some small seasonal uptick in spending, unlike we’ve seen the prior year, our assumptions for the second half are that we’re reverting certainly for the March quarter to more of a seasonal pattern and we’re expecting some declines as you can see in our number. And in terms of the monetization improvement, we do have a lot of levers, as Rene mentioned, and I think we’re working hard to, if you will, cover to our prior monetization level in fiscal ’24. And as we talked previously, going back quite a while, we feel like there’s a multiyear opportunity in front of us in terms of monetization expansion. Exactly how that plays out in terms of linear starting in FY ’25 or not, we’ll certainly have more to say about that trajectory as we get through fiscal ’24.
Darrin Peller: Thanks, John. Just — not to beat up the topic again, but just on BofA, we’re getting questions. I think there’s — it’s worthwhile clarifying this. People are wondering if you’re losing the entire opportunity on the existing customer base that you would have read to earlier or is this just a change. Maybe — just if you can clarify that a little bit because we’re getting a lot of questions on it.
Rene Lacerte: Thanks, Darrin. Yes. So again, just dividing the customer base to new customers versus the installed customer base that the bank has. We continue to serve the new customers and on the existing installed base, the opportunity with them is to look at how do we deploy what we’ve developed and the other capabilities that the BILL platform has inside of the new payment strategy that’s now been broadened inside of the bank. So it’s early days so unfortunately, I can’t say more than that because we’re just like literally last month is when we kind of understood that this was a change on their side.
Darrin Peller: Got it. Thank you, guys.
Rene Lacerte: Thank you, Darrin.
Operator: Our next question comes from the William Nance with Goldman Sachs. Please proceed
William Nance: Hi, guys. Appreciate you taking the questions. I just maybe wanted to take a step back and ask about maybe the structural versus cyclical aspects of what’s been happening over the business. I think on the cyclical impact, it sounds like you’re starting to see some green shoots on volume. The take rates came in slightly better. I can’t really tell us your outlook on the take rate going forward is better or worse or kind of the same than it was last quarter. And then if we think about some of the longer-term sort of structural tailwinds that people have been focused on, the cross-sell of Divvy that was a huge strategic initiatives. It sounds like that could be impacted by some of the challenges in the go-to-market that you mentioned.
And then, John, I think you mentioned something like three to four of core BILL net adds ex-FI. I think previously, we’re talking closer to four, so maybe a little bit lower there. So just maybe putting it all together, I guess that uncertainty is still high. I think the questions that we’ve gotten over the past three months have been increasing uncertainty around some of the long-term structural tailwinds in the business. So maybe can you talk about what you’re seeing in the market? And if anything has sort of changed near or longer term over the last three months?
Rene Lacerte: Yeah, I’ll start. Thank you, Will. The — from a structural perspective, some of the examples I just gave with international payments. I could give you other examples inside of virtual card initiatives that we’re doing. I can give you examples inside of invoice financing, it’s in transfer, all the different payment initiatives. And so when we think about the confidence we have and the ability to kind of continue to drive more payment volume and more dollars going through our platform, that are positive economic to BILL, we have high confidence in that just because we have lots of initiatives. Now what I do know, and I’ve been building software companies now for over 25 years. And what I do know is that there is a cycle that you go through in building, you build and then you adapt and then you iterate and then you build and then you adapt and then you iterate.
