Good morning, and welcome to the Paya second quarter 2021 earnings conference call. Before we begin, let me remind everyone that today’s discussion will contain forward-looking statements based on our current assumptions, expectations and beliefs, including financial guidance, the growth of Paya’s business, our objectives and business strategies, as well as other forward-looking statements.

Please refer to the disclosure at the end of the Company’s earnings press release and Form 8-K filed with the SEC today for information about forward-looking statements that will be made or discussed on this call. All statements made today reflect our current expectations only and we undertake no obligation to update any statement to reflect the events that will occur after this call.

You can learn more about the specific risk factors that could cause our actual results to differ materially from today’s discussion in the Risk Factors section of the Company’s Form 10-K filed with the SEC on March 8, 2021 and in subsequent periodic reports that the Company files with the SEC. Also during this call, we will discuss certain non-GAAP measures of our performance.

GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in the earnings press release. In the 8-K filed with the SEC.

This call is also available via webcast. You can find all the information I have just described on the Investor Relations section of Paya’s website.

Please note, we also posted a supplemental second quarter 2021 presentation to the Investor Relations section of the Paya website. Now joining us on the call today are Paya’s CEO, Jeff Hack; and CFO, Glenn Renzulli.

Following their prepared remarks, we will open the call to your questions. With that, let me turn the call over to Jeff.

Thank you, Matt. And good morning everyone.

Thank you for joining us today. As we review our solid second quarter 2021 financial results and discuss key highlights from the quarter.

Payment volume grew 37% in the second quarter to a record $10.7 billion with card volume growing 24% and ACH volume growing 64%. Revenue grew over 25% to $64 million led by growth in both card and ACH as well as incremental contribution from our Paragon acquisition in late April.

On an organic basis, revenue grew 17% year-over-year adjusted EBITDA grew over 18% to $16.8 million compared to the same period in 2019 revenue grew 24% and adjusted EBITDA grew over 31%, which highlights the differentiated strength of Paya’s business model to varied economic cycles. Glenn will cover more of the financial details shortly, including our updated financial guidance.

As mentioned in late April, we closed our acquisition of Paragon Payment Solutions. Since closing, we’ve been busy executing our integration plan, and I’m pleased to report that efforts are on track and we are confident, we will realize our expected synergies.

The underwriting we conducted prior to the acquisition was very much in-line with the results we are seeing. And we’re excited about the opportunities ahead to accelerate growth in the business.

The integration and migration of key talent and functions has largely been completed. We’ve also consolidated our physical office footprint within Northern Virginia while maintaining Paragon’s strong presence in the Phoenix area.

Furthermore, our go forward sales and partner development strategy is almost complete and we’re making solid progress on our combined sales efforts. Finally, we’re working diligently on platform and technology consolidation as we take the best of both worlds to enhance and strengthen our integrated commerce solutions.

Speaking of partner development and sales Paya had some new wins in the quarter with partners such as [indiscernible] Life Storage and more recently RECUR360 a cloud-based software and automation solutions provider that focuses primarily on the B2B vertical. Through this strategic partnership with RECUR360, we are able to offer our value added and market-leading integrated payment solutions to additional B2B clients across the United States, improving the efficiency of back office processes while dramatically improving the overall user experience.

In our government vertical, we saw some nice recent wins within one of our key partners customers and look forward to integrating these over the coming quarters. The ability to penetrate existing partners, base book of customers, is a key pillar of our growth strategy.

And these results give us confidence in our ability to continue to drive penetration rates higher. And finally, I’d be remiss not to mention that with our recent Paragon acquisition, we’ve been able to add some experienced sales talent in key verticals while also adding a healthy set of ISV opportunities to our existing pipeline for us to pursue.

All told our efforts to drive further growth through new and existing partners is progressing well. And that’s another key component of our medium term growth.

Turning to products and solutions, we’re delivering enhancements to our Paya Connect solution through new tools, features and functionality across the stack resulting in better user experiences, additional features and improved efficiencies for our partners and their customers. Specifically, we’re scaling our ability to support new and large partners who convert their existing book of business to Paya through additional hosted API and digital tools.

Not only do we differentiate ourselves on our ability to do this with little to no end customer impact, but we and our partners benefit from rapid time to market bringing revenue to our partners and Paya faster. We also delivered new attended and unattended card presence solutions for cloud-based payments in key channels while also providing updated solutions and tools into our ERP integrations.

Leveraging our position as Sage’s preferred payments provider in the U.S. we continue to differentiate Paya’s offerings in the market through new and innovative, critical back-office functionality, such as enhanced e-invoicing.

Developing and delivering product innovation to the market and being relentlessly focused on supporting our partners is a hallmark of our approach and a competitive differentiator for Paya in the markets we serve. As Glenn will mention shortly, we’re seeing opportunities to make targeted investments in key parts of our business to support our growth over the next few years.

And finally, we continue to see a healthy pipeline of acquisition opportunities in front of us. The deals we’re currently evaluating are of varying sizes and types across our existing verticals or in adjacent and complimentary verticals.

With our current balance sheet, which was further strengthened by our recent debt refinancing, we have the financial capacity to pursue significant strategic and accretive M&A. We will pursue these opportunities provided they make strategic and financial sense and can be integrated into the broader Paya business as M&A is a powerful compliment to our attractive organic growth profile.

With that, I’ll turn it over to Glenn to walk you through the financials. Glenn?

Thanks, Jeff, and good morning, everyone. We’re pleased with our solid second quarter financial results and the strength we’re seeing across the business.

Specifically, we continue to deliver favorable performance in our ACH product offerings and our B2B and government verticals. Total payment volume in the second quarter was $10.7 billion, an increase of 37% year-over-year.

In the quarter, card volume grew 24% and ACH volume grew 64%, with ACH transactions growing 31%. Total revenue in the quarter was nearly $64 million, an increase of 25% versus last year.

Integrated Solutions revenue was $39.6 million, up 31% led by growth in our B2B and government verticals combined with the incremental contribution from our Paragon acquisition. Payment services revenue was $24.4 million, up 17% year-over-year with ACH revenue growing 34%.

Gross profit for the quarter was $33.8 million, up 29% year-over-year with gross margin of 52.8%, up 160 basis points. Integrated Solutions gross profit of $21 million was up 30% while Payment Services gross profit was $12.7 million, up 28%.

ACH and mix were key drivers of margin expansion in the quarter. In the second quarter, adjusted operating expenses came in at $17 million.

As we layered in expenses related to our Paragon acquisition combined with targeted growth investments related to tech and product innovation. We expect to continue to make incremental, targeted growth investments when and where makes sense and provided the return on investment aligns with our capital allocation framework.

Adjusted EBITDA in the quarter was $16.8 million, up over 18% versus the prior year. Adjusted EBITDA margin decline year-over-year to 26.3%, primarily due to the year-over-year increase in public company costs.

Costs, which were not applicable while we were a private company in the second quarter of 2020. Excluding these public company costs, adjusted EBITDA growth would have been 27% in the quarter.

Finally, GAAP net loss for the quarter was $3.1 million versus net income of $0.6 million in the prior year. The loss was driven by one-time expenses related to our recently completed debt refinancing and Paragon related transaction expenses.

Adjusted net income was $13.7 million for the quarter. Regarding our balance sheet, at the end of the second quarter, we had $136 million in cash and $250 million of gross debt with a net leverage ratio of approximately 1.9 times.

Our cash position reflects the $20 million in cash data closing for Paragon at late April and an additional $15 million that was added to the balance sheet from our debt refinancing completed in late June. We’ve been recently completed debt refinancing, we were able to meaningfully lower interest rate, which should result in approximately $5 million of interest expense savings per year.

We were also able to upsize our revolver, which is currently undrawn to $45 million. At the end of the second quarter, our total liquidity is approximately $180 million and it positions us well as we continue to focus on opportunities to accelerate our growth through strategic investments and accretive M&A.

Net cash provided by operating activities in the quarter was approximately $8 million. And finally, our share count at the end of the second quarter was 127.4 million diluted shares outstanding, inclusive of approximately 5.7 million earn-out shares that have not yet met issuance thresholds.

Our supplemental earnings presentation provided this morning contains an updated illustrative walkthrough of our share count at the end of the quarter. Turning to our updated guidance for full year 2021.

We are raising our total revenue range to $244 million to $248 million, due to continued revenue outperformance reflecting growth of over 19% year-over-year at the midpoint of this range. We’ve also raised our gross margin guidance to arrange a 52% to 53%, reflecting continued strong margin performance in our business.

Our adjusted EBITDA guidance range of $64 million to $68 million remains in place and reflects the targeted growth investments in our business as we outperform on revenue and gross margin. As a final point, we are closely monitoring recent COVID-19 developments and the potential impacts that may or may not have on the business for the duration of the year.

That concludes my prepared remarks this morning. I’ll turn the call back over to Jeff to close out.

Jeff?

Thank you, Glenn. I’m proud of the solid results we delivered this quarter, which speaks to the caliber of talent and dedication of our employees, the unique and differentiated solutions we offer and our relentless commitment to serving our partners.

I’m also proud that we were added to the Russell 2000 index this quarter, especially after becoming a public company just a few short quarters ago. Although, we’re pleased with all our recent accomplishments, we remain focused on what’s ahead with a fragmented middle market and secular tailwinds driven by an ongoing digital transformation, we see further opportunities to grow and scale our business as we deliver on our promises to our partners and shareholders.

With that, operator, we’re ready to take questions.

Thank you. Good morning.

Revenue spreads came in above our estimate for the quarter and ACH volume notably grew more than twice the rate of transaction growth for ACH. So can you talk through the impact on pricing in the quarter?

And was there any material change and average transaction size that might’ve contributed?

Hey, David. Happy to take that.

This is Glenn. That’s correct.

Yes, we saw some lift from pricing this quarter focused on card, right, not on the ACH side. And you’ll see it in the sequential increase in spreads versus Q1.

So provided a little bit of lift, but yes, and then we also saw to your question on average ticket, some lift there as well, when you think about, just overall ticket level, ticket size, which we saw especially in our B2B verticals, where we saw a lift there. But yes, and then ACH continues to be a great story for us, right, I mean, 34% growth in ACH revenue year-over-year.

So again, we’ve already talked through in the past kind of the heavier volume and average ticket size there, which really accelerates the volume, but we’re getting good growth on the transaction side as well, which is a little more correlated to the ACH revenue growth. So very pleased with the ACH side and that’s helping and from a year-over-year perspective, again, we’ve gone through it before, but that influences the year-over-year spread with that ACH growth.

But yes, we got some lift from card in the quarter, pricing which was favorable.

Got it. Thanks for that.

And then your updated 2021 guidance brackets, consensus, revenue and EBITDA expectations in the middle of your new range. Can you walk through the tailwinds that might take you to the high end of the range for revenue and EBITDA and some of the headwinds that might keep you toward the lower or bottom end of the range?

Yes. David, happy to take that.

Again, this is Glenn. Look, yes, I think we’re trying to be conservative on the top line in our guidance, given the current environment, right.

We saw obviously a nice quarter and good – broad strength, we mentioned again the B2B side, which really had a very, very strong quarter. So to answer your question on accelerants, I mean, certainly, if the economy stays at a level, it wasn’t the second quarter, I could see us hitting more on the higher end of that range, right, if we kind of continue as it is.

And again, with the conservative nature, we built into the top line on our forecast. Certainly, if there’s a slight slowing compared to where we’re at today, then that would transfer to the – more that lowering guidance.

But I think we feel, – again, we tried to put a conservative top line guidance number out there, because of those kind of unknown macro factors. But aside from that, I think the accelerants again, would be kind of more continued as is versus not.

Got it. Just a quick final question.

What level of ACH and card volume growth do you have embedded in your second half 2021 revenue guidance?

Yes. I don’t think we typically get into the volume guidance just again, because some of the – it’s just a little bit harder to forecast and we do have still a healthy component of fee and service fee pricing, which helps us see some stability, even if volume changes a little.

So we tend to try to avoid kind of quarterly volume guidance. Again, the ACH example is a really good reason why, but, again, we’re seeing you – again, you’ll – in the quarter, we saw the know 37% volume growth card – card was up 24%, which correlates a little closer to the revenue side and ACH transaction 31%.

So yes, I think we’re continuing to see kind of good solid performance across the business. And we just want to see that carry through with such a strong quarter that we keep seeing that each month and so far so good, but I think there’s a lot of unknowns here in the second half, and we’re just trying to be very careful about that.

Understood. Thanks so much.

Thank you. And good morning.

I guess, just going up with that Glenn, so how did the July – look, how was July versus the trends and how did it trend through the quarter? And did you see acceleration?

I guess, when we had last popped, you had a pretty strong April, was that were the trends kind of steady and has that continued to be steady at a healthy rate?

Yes, we’re seeing volume kind of hold at a higher level here, right. So we’re not seeing any kind of decline, but we’re also seeing that like an accelerant right into Q3.

So I think we’re seeing kind of the strong performance continue from what we saw in Q2, right. But obviously still early in the quarter with just July, but very similar trends as what we saw in the second quarter at the moment.

And you call it out, I guess, B2B as an area. Can we maybe a little bit more color on the strength you’re seeing by vertical?

I mean, how beat it – what’s strong in B2B and healthcare, non-profit, anything else stand out?

Yes. No, absolutely.

This is Glenn, again. Thanks Bob.

Yes, look, I think B2B, we’re getting hit with a couple of positive factors here. One is, we talked about the ticket size, right.

That’s a big factor right now in some of those invert – sub verticals we serve, construction, manufacturing, industrial side. That’s seeing good price flow through.

And we get the benefit of that. We also have some favorable growing partners in this area.

That are focused on kind of field services, ERP, manufacturing systems or manufacturer providers. And that is also helping us.

There’s just good organic growth with our partners there. So we’re – that’s helping as well.

And again, we’ve got a little bit of price lifts there, but that wasn’t the lead story on the B2B side. But right now, I think when you think about volume ticket and just merchant growth, customer growth kind of thing, all those factors on the B2B side.

Healthcare, we actually started seeing year-over-year lift now, finally again, which is great. So coming out of that trough last year.

So a good story, they’re starting to see more volume and activity in healthcare, government continues to grow steady for us and had a nice lift there as well, a little bit above the overall trend in the business, overall growth number. And then yes, the one lag at the moment, which I think we’ve spoken about in the past, but is the based the non-profit side, just because we saw such an influx in 2020, you see a little more slowness this year there, that’s not really helping the growth rate.

Thank you. And then just last for Jeff, on the competitive front, are you – have you seen any changes in the competitive environment and as you look at M&A, what areas are you – would you like to add to the business, if you’re in a perfect world with, how was the pipeline and what – where would you like to add?

Good morning, Bob. This is Jeff.

Let me take those in turn. So competitive landscape, we were all together.

We like our relative competitive position. We are very proud of who we both beat and or displaced in serving great partners.

So I would not point to any discernible change in the past several months. We’ve talked about this before larger deals tend to be a competitive process.

Smaller deals are often proprietary and non-competitive, which is great too. In terms of the M&A landscape, again, our priorities have not changed.

So we look first and foremost to strengthen our capabilities within our existing verticals. And Paragon is a perfect example of going deeper into our existing space given their strength in both healthcare and not-for-profit, of course, we look at adjacent verticals and then finally, the broadening of proprietary technology capability.

So widening the value add across, if you will the payments spectrum. So we feel good about our pipeline.

We are doing a lot of work on a lot of opportunities, but – and as you guys know, we are disciplined and deals need to meet our strategic and financial criteria. And frankly, further bolstered by the successful and strong capital position we have, which I think you guys have noticed, which gives us ample firepower to execute on transactions that we like.

Thank you. Appreciate it.

Hey, good morning, everyone. Just thinking about disaggregating the growth a bit more in the quarter, look like the acquisitions added a bit more.

Can you talk about the underlying growth at those two acquisitions and then if possible, how should we think about ACH growth when we anniversary this large conversion from late last year?

Yes, no happy to, happy to take that. Yes, so for on the organic side, organic growth was 17% in the quarter and year-over-year.

So it gives you a sense for how much both TPG and Paragon are contributing or did contribute in the quarter versus the 25% growth rate. So happy to spend more time on that as well.

And then, yes, look, ACH is, I think the thing that we’re really excited about it, it’s really a broad-based story, right? Obviously, the lift we’re getting from the larger bank client, that’s layered in and that from a year of your perspective, that was a December item, right, 2020.

So we’ll see good year-over-year incremental growth from that. And that win through really the fourth quarter mostly, right, partially at least.

But, again, we’re seeing growth, not just there, right, it’s across the board in ACH, it’s at the – I think just a trend that a lot are – a lot of our end clients are just demanding and wanting that option for a transaction and we’re very willing and excited to serve them there. There’s just certain transaction sizes that just make sense over the ACH rails and we’re capturing a good part of that market.

So I think it’s going to be a continued area of growth for us, but we haven’t done our 2022, budget and planning yet, so we don’t have a AC number target yet for next year. But we expect that to continue to grow through a strong, maybe not as at the same level that we’re currently growing up, but still above trend and kind of probably above the overall business growth rate.

Okay. Okay.

And then it just on the acquisitions, I was trying to determine, are the recent acquisitions growing faster than the overall company? I mean, I would assume they would’ve just given some additional capabilities, but are they growing no notably faster year-over-year kind of on a apples-to-apples basis?

Yes. They are.

I mean, take them both apart, right, TPG in a very attractive area, similar to our FBS government business. So really good strength there and strong organic growth, and really allows us to serve kind of a smaller municipal client, which has been really a great feature of that deal, right, where SPS was more on the kind of the mid to high end of the municipal side TPG really allows us to do some smaller point solutions, so really rounding out the offerings there on the government side.

And then on the Paragon acquisition, absolutely, have some really good underlying partners in ISV that continue to grow with us. So we’re really excited about that, as well and so far so good and also off to a good start on the integration and kind of the early synergies that we are targeting.

So more work to go there, but we’re off to a good start one quarter in.

Got it. Okay, thanks.

Hey, good morning guys. Quite a few times on the call, you called out conservatism kind of the top line guide, and you called out the Delta variant as having a little bit of unknown to the back half of this year.

So is it fair to say, the guide raised would have been higher on the top line, absent Delta, if it doesn’t become a meaningful impact that you can see some outperformance there, just any comments or be helpful?

Hey, John, this is Glenn. I think that’s fair.

I think it was definitely a consideration as we thought about kind of the guidance and not getting ahead of ourselves and some of those unknowns. So I think that’s a fair way to put it.

Okay. And then nice outperformance on the top line, as well as the gross margin EBITDA in line, you called out growth investments.

So I just wanted to dive in a little bit, is that people or the technology, what exactly are you doing from kind of a growth investment side?

Yes. Hey, John, it’s Jeff.

So it’s – as I’m sure you noticed this is not major shifts, this is simply more a function of working to accelerate some of the product and feature capabilities roadmap, which we have in place. And as you know, those – the pace of those investments continues to grow at Paya and we saw the opportunity to accelerate a few of our initiatives and that’s what we’re doing and happy to do.

Okay. Thanks.

And then the last one for me, Jeff. Just you commented that a lot of the larger deals from M&A perspective or auctions, obviously we’re all well aware of valuations and what the environments like.

So should we expect more tuck-ins in the near-term? Or do you think that there’s a chance that you could do something a little bit more, a little bit bigger, maybe not quite transformational, but a larger deal.

How do you guys think about valuation and returns on capital, but when you’re evaluating a deal?

Yes, so, John, very good question. First of all, our priorities and our thoughts around this have not changed.

We are working on both larger transaction opportunities, as well as tuck-ins. As you know, tuck-ins need to meet a very high strategic bar to have the impact on the business that we would expect.

And the important point here is there are a lot of great small and mid-sized companies that will eventually wind up as part of Paya or someone else. And that’s a great part of the opportunity and our criteria have not changed.

We need to have conviction that the growth rate as part of Paya based on our capabilities and investments in sales and solutions will accelerate their growth. I think you guys know, we’ve got a great integration playbook to make sure we capture the synergies.

So our level of enthusiasm for getting the right deals done both larger and tuck-in is largely unchanged. And to your point, there will always be things that trade at some large number that we would not be comfortable with.

And we’re disciplined acquirers. We’ve got the capital and we’re confident we’ll get it done.

Okay. Appreciate all the color.

Thanks guys.

Thanks a lot. Good morning, everyone.

Thanks for taking my question. I wanted to dig into what you mentioned around one of your government partners.

You mentioned that you’ve been having some success with further penetrating that partner. You have some wins on the – coming from that partner.

I think it’s an important point given you’ve said very clearly that your biggest growth driver is further penetration gains within your existing partners. I think it would be just helpful to recap that penetration stance.

I think when we last talked, you mentioned that, of course, it can range from a newer partner and sort of the low single digits to some of your longest tenured partners. You were penetrated in the 30% to 40% range.

Maybe just talk a little bit about, where that is on average across the book and where it could reach maybe up into that 30% range and how that’s a driver of your growth over the next, call it, three to five years.

Hey Tim, it’s Jeff. Great question.

So it is hard to quantify in general averages, but we will just give you some color around it. There are two contributors to the penetration.

One is that you are penetrating, the rate of our partners and customers. And then the second is, once you sign one of those end customers, there is a relatively predictable adoption curve of digital electronic payments within this space.

So as an example, when a utility starts utilizing our services, their penetration rate typically starts in the single digits somewhere, perhaps at zero, perhaps it’s starting above zero. And then typically what occurred over the first week, the first 12 quarters is penetration and adoption goes into the thirties or 40% range.

So again, there is a multiplier effect here. Because you are penetrating the underlying customers of our partners, and then you are driving the accelerated adoption of our solutions, within that base.

And it’s really the combination of the two. And, in terms of the other part of your question, which is how does that blend across the space that is more art than science.

But the key point is that both are significant contributors to what is a lot of three to five-year runway to continue to penetrate partner base and underlying customer adoption.

Okay, great. That’s really helpful.

And then specifically on that, that government part that you mentioned clearly it was meaningful enough that you called it out earlier. The wins that you’re pulling out of that partner, is that something that was expected already in the guide?

Was that sort of an upside surprise?

Yes. I’m happy to take that.

This is Glenn, let me chip – peak in. Yes, no, I think, I think there’s kind of a mixed story with the large, government partner.

I think the – I guess negative is it’s taken a little while longer to ramp-up. The positive is, it’s starting to ramp now, right.

So we’re actually starting to see really good momentum come in and just start hitting the numbers now, as we look, as we got through the second quarter here with small impact in the quarter, but the pipeline with that large partner that I think we’ve discussed in the past is, is there, right? We have a nice schedule of implementations now and should really tee a nice lift as we look forward.

So it really, hasn’t been a big lift, over the last 12 months or so but really starting to take off now. So, I think we’re excited about that and I think that’s going to be one of the 2022 stories for us, as a kind of an acceleration there on the government side.

Excellent. Thanks a lot.

Yes.

Hey guys. Good morning and happy Friday.

First question, could you just talk a little bit about the funnel or the backlog for kind of integrated partners and how that looks, and then maybe just any update on the Salesforce or any changes you’re making there or additions?

Yes. Good morning, Mike.

It’s Jeff, happy Friday to you. The – so two things – in terms of integrated partners, I would observe that, obviously the opportunities and the level of interest remains strong.

One of the discernible changes in the last few months is the ability to start spending time together. And with deep integrated solutions making the most of those opportunities often involves of solution sessions workshops.

Not that you can’t do them on zoom, but I have to tell you, the ability to engage with folks in person really helps too, in terms of your question around the Salesforce, we continue to invest in quality salespeople, where the demand exists and where we find great people. I think the most important call out Mike is that pound for pound, the depth and the quality of sales talent that we inherited through the Paragon acquisition, we had high regard for it, during diligence, and it has exceeded our expectations.

These folks are hard to find and develop, and when you can bring them onboard in bulk, it is a huge lever, and we’re really excited about it.

Great. Thanks a lot.

Good morning gentlemen, hope everybody is doing well. Jeff, I think you mentioned that – you’ve spent some time and some money enhancing the Paya Connect capabilities.

It sounds like card not present, which I know a big part of your business. Can you talk a little bit about what you think the long-term yield lift potential, is with Connect and maybe provide some, some sense of what attach rate is if not by, sort of specific functionality sort of broadly what the opportunity is to drive attach in Connect as well?

Yes. Andrew, good morning.

It’s Jeff again. Thanks for the question.

So, it doesn’t this lend itself to a sound bite, but let me tell you what the key categories are that drive that adoption. So the first one, which is very powerful, but does not, it’s not as soundbite, like is constant enhancements in the user experience and user interfaces to make it easier for quick invoicing, for quick pay, for recurring pay for the adoption of recurring pay.

So a lot of the investment is, is not new features, but it is frankly making existing features, even better, which is what drives that adoption. The other thing in terms of attach rate and adoption, at Paya – I think this is – we developed Paya Connect, to be very tailored to the needs of each vertical that we play in.

And I think you guys know mostly B2B municipal not-for-profit healthcare. And so, the key there is that you are adding components tailored to the vertical so that your partners are using the full capabilities.

I think as you know, we generally speaking do not bill Al a carte features and functions. We try to deliver the most robust whole experience into each of the verticals.

And that is why our investments continue in those features and capabilities and most importantly experience.

Okay, appreciate it. Thanks.

Hey guys, good morning. A lot of questions already, but maybe just one on ACH.

And just, clearly the bank integration was unique. I was wondering if there’s any other unique opportunities that you’re seeing, with your ACH capabilities out there in the pipeline.

And then just one more quick one on the pipeline, any change out there and relative size or partners or anything like that, maybe moving, up market just a little bit and which would be good for, for growth longer term if average potential deal size is getting larger. Thanks a lot.

Yes. Good morning, Joe.

It’s Jeff again, I’ll take those in reverse order. So, one of the things we are most proud of is that as we continue to develop and grow as a company, our ability to both find and capture larger opportunities continues to grow.

I think you guys know that it’s been an important ingredient of our successful growth in the most recent periods. So, yes, we feel very good about that.

That does not come at the expense of smaller opportunities. But certainly, the more, the sharper we are in that focus and the tighter we are at executing the larger opportunities that obviously has an impact on the average mix.

And we’re proud of the progress we’ve made there. In terms of the other part of your question on ACH, it is, it really is a number of things.

So, obviously when you talk about a very large and unique, partner in this case for our ACH business, the question as to whether or not many come along, that look exactly like that, they tend not to, but what it does is it showcases the breadth and depth of our capabilities to other larger opportunities that you want to capture over time. And I think, there is no better testament to the strength of our proprietary ACH platform and the maturity of our capabilities, than finding a partner of that magnitude.

So that will serve us well. And then the other thing Joe, very important is, and this I think is something which is evolving in the marketplace, the level of understanding of larger software partners, particularly with larger ticket transactions, that they should be offering an ACH capability alongside card acceptance in card for smaller transactions, ACH for larger, that continues to build.

We have been investing in unifying that experience. So people are underwritten once, they are integrated once, they’re boarded once reporting and so on come together.

So, I think, to part of your question, we see that as offering great growth potential in the short and medium term. And frankly, you’re already seeing it in our results to some degree, but, to some degree the understanding of the importance and the role that ACH can play, I think may not yet be fully appreciated.

And we’re excited about our proprietary capabilities there.

Thanks, Jeff.

Hi, good morning. Thanks for taking my question.

Can you provide a little more color on your pricing power, especially in card. And do you expect this pricing power to continue as we move towards the back half?

Yes. Josh, hey it is Jack, I’ll take that in Glenn can add to it as well.

So first Josh, we have been very consistent and clear on two points. One when you have deep integrations, that drives a very strong retention, which in turn, of course provides some level of pricing power.

And I think that has been born out, frankly steadily over time. Having said that we are disciplined about how we apply price.

And so, we have a finely tuned methodology. We tend to leverage the bi-annual increases of the brands, obviously but we are very thoughtful as to who is impacted, and when and how often.

So it is not our intentions to maximize the last dollar of price in any given time period, but to do something steadily over time and surgically, that reflects the value that we provide. So we do see that we can and will continue, but used responsibly.

Glenn, anything you’d add there?

Nope.

Great. That’s very helpful.

Thank you very much for the color. Also following up on a previous question.

Are you guys seeing any change in customer behavior as the Delta variant has started to spread through July and the beginning of August?

We have not seen anything to date, just looking at July that would have differed from kind of how we were ending the quarter. So the answer is no.

Great. Thank you very much.

Thank you for the follow-up. Jeff, a big picture question.

When you guys became public, when Paya came public, there was kind of a model kind of low double digit organic growth and margin expansion. One to 200 basis points over the next couple of years.

I mean, as you sit here, coming close to a year from when your deal was announced, the guests are getting there and, as you look at the market, is that the right model? Or, I mean, are you seeing, more opportunities for growth such that you should be investing more into marketing to take advantage of that and maybe drive up that organic – I mean, you’re growing faster obviously this year.

We only got some pretty good momentum and has that sustainable as, but are you seeing opportunities? Is this to grow faster than maybe what was initially anticipated when you came public and then, would you in the short term, I mean, invest, as such that margins, don’t go up in the short term as you’re investing for long-term higher growth.

Yeah. Thanks.

Thanks for the question, Bob. This is Jeff again.

The – so let, let me just point out two things in trying to answer that, first of all as many of because you were with us in the process of going public, the first order of business was all the questions we had about projection and our ability in the latter part of ‘20 and in ‘21. To meet what you, kindly pointed out are some impressive growth objectives, and we have continued to hit the mark there, and we’re really proud of that.

And obviously we expect to drive that forward from here. I think the other part of your question, is, would you invest more to try to grow faster?

It is a fair question. I think to a large degree, we feel like within our business, we run today and the expenses we manage today, there is a fair bit of growth in embedded in that.

So obviously that is the first order of business. But what I would say to you, is if we saw something significant that we thought we should do, because it was in the medium-term interest of the company, we would do it right.

Capital allocation framework, invest in organic growth, inorganic we’ve talked about and so on. But generally speaking, we feel good about our ability to hit our growth objectives, within the income statements structure that we manage today, but we – you should expect us to be thoughtful and responsible on the margin, where we see those opportunities.

Great. I appreciate that.

That’s a appreciate the answer. And just maybe a quick up for Glenn, where do you feel comfortable, is like taking the leverage ratio for the right acquisition and understanding that you generate very good cash and you could deliver a relatively quickly, but where would you take leverage?

Yes, we’ve talked about it before. Right.

I think our cap is always going to be, right around four. Right.

And then we will always have the goal of moving it back down to three. Right now we’re in a very favorable position, net under two right, with the cash on the balance sheet.

But somewhere in that range, and yes, no, we’ve, I think the refinancing we, we went through this quarter, yes, I think it’s going to give us some nice interest savings gives us flexibility, for future deals. We upped that revolver as well.

So, excited about the new debt structure and gives us, a lot of capital today to go, find some nice deals and, we’re, we’re really focused on that, right? We’re, we’re spending a lot of time on looking at targets and, and trying to find, find something to fit in here.

Great. Thank you.

Appreciate it.

Great. Thank you, operator.

Listen, we are obviously very pleased with our progress. We appreciate your thoughtful questions, and we’ll look forward to updating you on our progress.

So thanks everybody and have a great day.