Andrew Schmidt

Andrew Schmidt inquired about the sustainability of Embed 2.0 growth, its future distribution scale compared to other channels, and whether the FY 2026 core revenue growth trend represents a stable base for future years.

Answer

CFO Rohini Jain clarified that current Embed revenue is from Embed 1.0, with Embed 2.0 being nascent and expected to impact next year. Chairman and CEO René Lacerte expressed excitement about Embed 2.0's rapid launch with new partners (NetSuite, Acumatica, Paychex), highlighting demand from mid-market customers. Jain confirmed FY 2026 metrics and guidance inputs are the correct basis for models.

Andrew Schmidt asked about the sustainability of growth in the Embedded channel, particularly given the rapid launch of Embed 2.0, and how its distribution scale might compare to other channels like accounting and direct in the coming years.

Answer

Rohini Jain, CFO, clarified that the reported Embed revenue relates to Embed 1.0, while Embed 2.0 is very nascent, with revenue expected closer to next year. René Lacerte, Chairman and CEO, expressed excitement about the pace of Embed 2.0's launch, with NetSuite, Acumatica, and Paychex partners now live within a quarter. He highlighted the broad strategy's success in reaching both larger (Acumatica) and smaller (Paychex) customers. Andrew Schmidt then asked if the current FY26 core revenue trends represent a sustainable base for future growth, considering other opportunities in FY27. Rohini Jain confirmed that the provided metrics and guidance are the correct inputs for building models and assumptions for the current fiscal year.

Andrew Schmidt of Citigroup asked for a breakdown of the fiscal third-quarter payments take rate expansion and for early insights on how new products like invoice financing and advanced ACH might influence future take rates.

Answer

CEO René Lacerte attributed the Q3 take rate expansion to three factors: volume growth in emerging ad valorem products (Instant Transfer, Pay By Card, Invoice Financing), lower FX losses, and a positive mix impact from seasonally lower TPV. He expressed confidence that new products are receiving constructive feedback and will be key levers for monetization growth into fiscal 2026.

Andrew Schmidt asked for more detail on the take rate, specifically ad valorem expansion excluding international payments, and trends in supplier acceptance and virtual card growth. He also inquired about changes to the product engine and the opportunity for more subscription-based products.

Answer

CFO John Rettig stated that ad valorem volume growth accelerated, driven by newer products like invoice financing and Pay By Card, while established products like virtual card saw consistent volume with no new negative acceptance trends. CEO René Lacerte attributed the increased product velocity to the company's scale, focused leadership, and a culture of innovation, highlighting a robust pipeline of ideas to enhance customer experience, often leveraging AI.

Andrew Schmidt asked about BILL's strategy for moving upmarket with its AP/AR solution, the expected impact on Total Payment Volume (TPV) per customer, and current trends in vendor acceptance and take rates.

Answer

Chairman, CEO and Founder René Lacerte explained that a focused go-to-market strategy on larger customers resulted in a 40% increase in spend from new cohorts. He noted the large market opportunity, with only 5% of larger SMBs having automated AP/AR. President and CFO John Rettig added that TPV per customer rose 2% year-over-year to $433,000 but is expected to be flat for the rest of the fiscal year due to macro uncertainty. Regarding take rates, Mr. Lacerte highlighted that focused supplier engagement and new automation features are expected to drive future ad valorem growth.

Andrew Schmidt questioned the current environment for supplier acceptance of electronic payments and asked about the early impact of the new supplier enablement teams. He also requested commentary on the broader macro environment and its potential effect on TPV per customer.

Answer

CEO René Lacerte explained that while suppliers want electronic payments, they need better reconciliation and automation, which BILL is investing in to improve the experience. CFO John Rettig noted that SMB behavior and TPV per customer have been stable for several quarters, and the FY25 guidance assumes this stable environment continues without anticipating a significant rebound or deterioration.

Andrew Schmidt asked whether branded checkout shortfalls are more attributable to the consumer or merchant experience, and requested insights into core PayPal consumer trends (account acquisition, TPV, ARPA, EPS) and the need for a more holistic versus transactional consumer experience.

Answer

Jamie Miller, Executive VP and CFO, attributed the branded checkout slowdown to both macro factors (U.S. retail weakness, K-shaped economy, international moderation, high-growth vertical deceleration) and execution issues (slower product deployment). Steve Winoker, Chief Investor Relations Officer, noted consistent 5% TPA growth (ex-PSP) and a focus on quality consumer base and power users. Jamie Miller also detailed new loyalty programs like Venmo Stash and PayPal+ to drive deeper engagement.

Andrew Schmidt inquired whether the shortfalls in branded checkout are more attributable to the consumer or merchant experience, and asked for details on core PayPal consumer trends like account acquisition, TPV, ARPA, and the need for a more holistic consumer experience.

Answer

Jamie Miller (Executive VP and CFO, PayPal) attributed branded checkout slowdown to both merchant and consumer factors, including U.S. retail weakness, international moderation, and deceleration in high-growth verticals, amplified by slower product deployment. Steve Winoker (Chief Investor Relations Officer, PayPal) noted transactions per active account (XPSP) grew 5%, consistent with prior quarters, driven by branded, P2P, and Venmo, emphasizing quality and depth of engagement. Jamie Miller also detailed new competitive rewards programs like Venmo Stash and PayPal Plus for a more holistic experience.

Andrew Schmidt inquired about the PayPal Everywhere program, focusing on adoption trends and any observed 'halo effect' on spending outside of the primary rewarded categories.

Answer

CEO Alex Chriss confirmed a significant halo effect, stating that debit card users show a 5.5-6% lift in transaction activity and generate over double the average revenue per user compared to checkout-only customers. He noted strong adoption with 4 million new debit card actives since launch and highlighted plans to replicate this success in Germany and the U.K.

Andrew Schmidt inquired about the drivers of PayPal's Q4 branded checkout volume performance, particularly in the U.S., and the key initiatives expected to drive growth in 2025.

Answer

CEO Alex Chriss explained that the rollout of upgraded checkout experiences, which boost conversion, reached 25% of U.S. traffic by year-end. CFO Jamie Miller added that U.S. branded checkout saw a 3-point sequential growth improvement in Q4 and that the company expects mid-single-digit TPV growth for branded checkout in 2025, driven by innovation and consumer engagement.

Andrew Schmidt asked about the expected trajectory for monthly active accounts, given new promotions like PayPal Everywhere, and inquired about the broader product pipeline for consumers.

Answer

CEO Alex Chriss emphasized that durable growth comes from innovation, highlighting recent launches like PayPal Everywhere and enhanced features in Venmo. He stated the company's innovation velocity is improving and there is a very healthy product roadmap ahead. CFO Jamie Miller added that monthly actives have shown steady progress and that PayPal Everywhere is seeing strong adoption with over 1 million new users, which drives habituation and has a halo effect on other branded spending.

Andrew Schmidt inquired about the progression of merchant solutions organic growth into 2026, specifically focusing on key drivers such as POS and software, and the impact of salesforce expansion.

Answer

Cameron Bready (CEO, Global Payments) and Josh Whipple (CFO, Global Payments) stated that 2026 drivers are centered on Genius market expansion, sales effectiveness, and increased salesforce productivity. They noted consistency with the medium-term outlook provided at the investor conference and for the combined WorldPay business.

Andrew Schmidt asked about the progression of merchant solutions organic growth into 2026, focusing on key drivers like POS and software, Salesforce expansion, and whether the company's outlook has changed.

Answer

CEO Cameron Bready and CFO Josh Whipple confirmed that the drivers for 2026 organic growth remain consistent with previous guidance, centered on Genius (market expansion, continued momentum) and sales effectiveness (incremental salesforce, faster productivity). They noted that the underlying theme for organic growth aligns with the medium-term outlook for the combined Global Payments and Worldpay business shared in Q1 2025, with Q3 merchant performance consistent with expected acceleration in the back half of the year due to transformation initiatives.

Andrew Schmidt asked for more detail on how Global Payments will manage product development across both SMB and enterprise segments to achieve faster innovation post-merger. He also asked a follow-up about the macroeconomic assumptions embedded in the company's guidance.

Answer

CEO Cameron Bready outlined a long-term vision where enterprise and SMB capabilities converge, driven by trends in digital and embedded commerce. COO Bob Cortopassi detailed a product management approach that combines centralized oversight for common platforms with decentralized teams close to specific verticals, noting GPN's history of democratizing enterprise features for the SMB market. CFO Josh Whipple confirmed the full-year outlook assumes a stable macroeconomic environment, consistent with recent trends.

Andrew Schmidt inquired about the sustainability of cross-border volume resilience, its drivers, and shifts in card-not-present (CNP) versus card-present (CP) travel, including specific verticals or corridors.

Answer

CFO Sachin Mehra attributed cross-border resilience to the strong value proposition, strategic portfolio wins (e.g., Japan Airlines, American Airlines), daily optimization efforts, and broad presence across card-present and card-not-present channels. He highlighted strong growth in card-not-present (ex-travel) at roughly 20%, including stablecoin/crypto on-ramp usage, emphasizing the intact underlying fundamentals.

Andrew Schmidt inquired about the sustainability and drivers of Mastercard's remarkably resilient cross-border volume growth, and any specific shifts observed in verticals or corridors for both card-not-present and card-present travel.

Answer

CFO Sachin Mehra attributed cross-border resilience to a strong value proposition for consumers and businesses, strategic portfolio wins (e.g., Japan Airlines, American Airlines), and daily efforts to optimize flows across corridors. He highlighted strong growth in card-not-present (ex-travel) at roughly 20%, including contributions from stablecoins and crypto on-ramps, emphasizing the intact underlying fundamentals.

Andrew Schmidt asked about the drivers of cross-border volume trends from Q4 into January, the outlook for 2025, and the potential impact of the Capital One/Discover transaction on Mastercard's financial model.

Answer

CFO Sachin Mehra attributed the slight moderation in January's cross-border growth to a pull-forward of travel spend and calendar effects, affirming the underlying trend remains healthy. Regarding the Capital One deal, CEO Michael Miebach and CFO Sachin Mehra noted that competing with partners is not a new dynamic and confirmed their best assumptions on the debit portfolio migration are already incorporated into the 2025 forecast.

Andrew Schmidt asked for further details on the Asia-Pacific region's improved performance, specifically inquiring about the drivers beyond timing and China's improvement, and whether this positive trend is sustainable.

Answer

CFO Chris Suh explained that the 2.5-point acceleration in Asia-Pacific was primarily driven by an improvement in mainland China and some idiosyncratic timing effects, noting that while some timing effects will normalize, the region is on a directionally good track for continued growth.

Andrew Schmidt asked for more details regarding the improvement in Asia Pacific's performance, specifically concerning mainland China and the sustainability of this positive trend.

Answer

Chris Suh, Visa's Chief Financial Officer, confirmed that the 2.5-point acceleration in Asia Pacific's constant dollar payments volume was primarily due to an improvement in mainland China and some timing effects. He expressed satisfaction with the momentum in China and across the broader Asia Pacific region, viewing it as an important and directionally positive growth opportunity.

Andrew Schmidt from Citigroup requested a deeper analysis of the robust growth in Value-Added Services (VAS), its components, and its expected performance through an economic cycle.

Answer

CEO Ryan McInerney highlighted strategic progress with products like Authorize.net, Unified Checkout, Pismo, and Featurespace. CFO Chris Suh added that while about 65% of VAS revenue is correlated to Visa payments, the overall business is more resilient than in past cycles due to greater diversification in everyday spend, debit, and e-commerce, plus a growing portion of VAS that is independent of Visa transactions.

Andrew Schmidt inquired about Visa's perspective on the U.S. regulatory environment under the new administration, including any insights from conversations with issuers and other partners.

Answer

Ryan McInerney, Chief Executive Officer, expressed optimism, stating that the administration appears focused on simplifying regulations to spur economic growth and innovation. He believes this will reduce the regulatory burden on the financial sector, which would be beneficial for Visa's clients and, in turn, for Visa. He noted, however, that it is still early.

Andrew Schmidt asked about the predictability and planning process that drives the consistent growth in Visa's Value-Added Services (VAS) business.

Answer

CEO Ryan McInerney attributed the consistent growth to rigorous planning, client engagement, and product road mapping. He categorized the VAS opportunity into three pillars: services for Visa transactions, services for non-Visa transactions (e.g., CyberSource, Pismo), and services beyond payments (e.g., consulting, Tink).

Andrew Schmidt of Citi asked about REPAY's inclination to scale its B2B business versus monetizing it, the status of the TotalPay solution transition, and the current health of the auto vertical.

Answer

CEO John Morris expressed strong conviction in the long-term growth of the B2B business. CFO Tim Murphy added that B2B grew 12% normalized in Q1 and that the TotalPay migration impact has stabilized. Regarding the auto vertical, Morris reiterated that it remains strong due to the nondiscretionary nature of the payments, with no specific negative trends currently visible.

Andrew Schmidt asked about trends in the personal lending vertical, the mechanics of the strategic TotalPay volume migration, and whether there is a broader market shift from virtual cards to ACH.

Answer

CFO Tim Murphy noted positive momentum in personal lending, with clients showing signs of loosening underwriting standards. He explained the TotalPay migration was a strategic decision to monetize total payment volume, including paid ACH, even if it meant losing some virtual card-only volume. Both Murphy and CEO John Morris confirmed that while paid ACH is being promoted, they still see healthy virtual card adoption, especially with new clients.

Andrew Schmidt requested that CEO John Morris expand on his comments about realizing shareholder value. He also asked for a framework to think about fiscal year 2025 growth, considering the roll-off of political media spend against new opportunities.

Answer

CEO John Morris stated his belief that the market undervalues Repay's profitable growth and cash generation. He affirmed his commitment to driving shareholder value by evaluating all aspects of the company, including markets, go-to-market strategy, cost structure, M&A, and capital allocation. Regarding 2025, CFO Tim Murphy noted that while it's early, positive drivers like the mortgage debit initiative, the auto captive rollout, and an expected consumer recovery should be considered against typical Q1 seasonality and lapping a client loss.

Andrew Schmidt of Citigroup Inc. inquired about trends in virtual card supplier acceptance, any impact from a recent auto industry ERP system outage, and the remaining opportunity for increasing card penetration among existing clients.

Answer

CFO Tim Murphy stated that widespread supplier acceptance issues are not being seen, crediting their proprietary real-time vendor enablement and TotalPay solutions. He also confirmed no material impact from the auto ERP outage. CEO John Morris and CFO Tim Murphy both emphasized the significant runway for growth, particularly in B2B payments and verticals like mortgage, where card penetration remains low.

Andrew Schmidt of Citigroup asked whether the strong performance was driven by internal initiatives versus the external environment and questioned the rationale for not fully flowing the Q1 revenue beat into the full-year guidance.

Answer

CFO Vikas Mehta confirmed the performance is primarily self-driven, citing high revenue visibility from retained customer cohorts. He explained that the forward guidance remains prudent due to macroeconomic uncertainties, even though the underlying business drivers are expected to remain strong and consistent with recent trends.

Andrew Schmidt asked about the drivers of marketing spend leverage in Q4, the contribution from organic customer acquisition, and the expected trend for marketing spend per active customer in 2025.

Answer

CFO Vikas Mehta attributed the leverage to product improvements driving word-of-mouth and better marketing ROI, which enabled record new customer acquisition despite a 16% decline in marketing spend per active user. CEO Matt Oppenheimer emphasized that strong customer satisfaction, evidenced by millions of high-rated app reviews, creates a foundational organic flywheel. He also highlighted sophisticated marketing campaigns that fuel this growth. Vikas Mehta confirmed they expect marketing leverage to continue in 2025.

Andrew Schmidt inquired about the drivers of the strong Q3 2024 results, asking if any one-time effects beyond currency influenced the outperformance and why the Q4 outlook appears conservative.

Answer

CFO Vikas Mehta acknowledged exceptional Q3 results driven by record new customers and high send volume, noting some FX tailwinds. He stated the Q4 outlook is prudent and does not assume these tailwinds continue. CEO Matt Oppenheimer added that the underlying strength of the product, which drives word-of-mouth and outperformance, is the fundamental reason for the strong results.

Andrew Schmidt inquired about any changes in the mid-to-upper sales funnel and asked to quantify the discretionary versus non-discretionary nature of the headwinds from project delays.

Answer

CEO Greg Adelson stated he has seen no slowdown or elongation in any part of the sales cycle for core and major products. He clarified that the delayed projects are contractually obligated, and Jack Henry has the right to begin billing after a certain period, so he does not foresee cancellations. CFO Mimi Carsley added that technology remains the primary solution for financial institutions' challenges, ensuring continued demand.

Andrew Schmidt of Citigroup asked about convert/merge revenue in the back-half outlook, the overall impact of end-market M&A, and the key drivers behind winning larger financial institutions.

Answer

CFO Mimi Carsley noted a modest amount of convert/merge revenue is expected, with a more significant impact likely in FY26 as industry consolidation accelerates. President and CEO Greg Adelson added that winning 'merger of equals' deals positions Jack Henry well for future acquisitions by those clients. He attributed the success in winning larger deals to five key differentiators: culture, service, innovation, strategy, and a proven track record of execution, which he believes is unmatched in the industry.

Andrew Schmidt inquired about the drivers behind the Q1 Core segment revenue growth and its expected trajectory for the rest of the fiscal year. He also asked about the potential impact of M&A and bank consolidation on revenue following the election.

Answer

CEO Greg Adelson noted that Q1 core sales were solid despite some deals being pushed into Q2 due to hurricanes, highlighting a major $7 billion asset win. CFO Mimi Carsley confirmed that Q1 would be the floor for Core revenue growth, with acceleration expected throughout the year. Regarding M&A, both executives stated that while an increase is anticipated, it's not baked into the current fiscal year's guidance beyond what's already known, suggesting any acceleration would be a potential upside for the next fiscal year.

Andrew Schmidt sought more detail on the expected EPS accretion from the Issuer Solutions deal and asked about the go-to-market motion for cross-selling credit processing.

Answer

CFO James Kehoe emphasized that while the deal is immediately accretive, the most important benefits are strategic and financial transformation, including a 35% boost to banking revenue and cash flow. CEO Stephanie Ferris explained the cross-sell motion leverages significant client overlap, allowing FIS to bundle credit processing with its existing core banking, debit, and capital markets solutions. This elevates FIS's relationships into the revenue-generating front office of its clients.

Andrew Schmidt asked for more details on the core banking pipeline, including implementation timelines for recent wins and whether the current sales pipeline can support higher bookings in 2025.

Answer

CEO Stephanie Ferris stated that recent core banking wins are expected to come online primarily in the second half of 2025, as implementations are typically avoided during year-end and Q1 freezes. She expressed strong confidence in the sales pipeline, particularly for high-growth verticals like loyalty, digital, treasury, and commercial lending, and noted that these pipelines continue to fill up, though implementation cycles vary.

Andrew Schmidt asked about the health of the hedge fund market, near-term improvements planned for Enfusion, the R&D intensity needed for the single security master, and the potential for future efficiencies.

Answer

CFO Jim Cox provided Enfusion's historical churn data, showing it has stabilized. CEO Sandeep Sahai noted Enfusion's shift to larger funds has improved stickiness. Near-term plans include cross-selling to Clearwater's base and pooling R&D resources. Sahai confirmed the single security master project would be funded by the combined 1,000-person R&D team and is expected to drive significant long-term scale and eliminate reconciliation costs for clients.

Andrew Schmidt inquired about the demand trend for the CWIC (Clearwater Interoperability Cloud) product and its role in the 2025 cross-sell opportunity. He also asked about the planned end-state data architecture for the combined Clearwater-Enfusion platform.

Answer

CEO Sandeep Sahai explained that CWIC's primary benefit so far has been driving operational efficiency, reflected in the record 78.8% gross margin. He clarified that direct revenue from CWIC is not expected to be a major contributor in 2025 but will enable future growth in '26 and '27 through marketplaces and Insights. For the data architecture, he described a phased approach, with the ultimate goal being a single data plane and security master, which he called a 'game changer.' The initial phase will focus on cross-selling existing solutions.

Andrew Schmidt asked for more detail on the drivers of Net Revenue Retention, specifically wallet share gains from onboarding additional assets, and inquired about the monetization strategy and opportunity for the new GenAI-powered 'quick' modules.

Answer

CFO Jim Cox attributed wallet share gains to client growth, M&A, and cross-selling new products, noting a 2% AUM tailwind from the rate environment. CEO Sandeep Sahai added that GenAI is already boosting gross margins through operational efficiency and is beginning to generate revenue from a new insights tool, which currently has over 10 paying corporate clients.

Andrew Schmidt from Citigroup inquired about the current pricing environment, particularly for enterprise clients in an uncertain macro, and asked about any potential changes to capital allocation strategy.

Answer

Taylor Lauber, President and incoming CEO, described the pricing environment as stable. He noted Shift4's value proposition to enterprise clients is based on total cost reduction, while its variable-cost model for SMBs is advantageous in tough times. He confirmed no meaningful changes to capital allocation strategy, though recent share buybacks were made due to an attractive equity price, with the primary focus remaining on M&A and R&D.

Andrew Schmidt of Citigroup Inc. inquired about Shift4's organizational approach to managing the high complexity of multiple acquisitions, internal simplification projects, and an active M&A pipeline, asking how the company mitigates execution risk.

Answer

CEO Jared Isaacman credited the 'Shift4way' culture, which focuses on a few needle-moving priorities, a strong project management office, and philosophies like 'radical ownership' and 'deleting parts' to avoid tech debt. He also highlighted the practice of elevating talent from acquired companies. President Taylor Lauber added that a strict adherence to ROI for all decisions fosters disciplined, entrepreneurial execution.

Andrew Schmidt inquired about Shift4's organizational approach to managing the high complexity of multiple acquisitions, internal simplification projects, and an active M&A pipeline, and how the company mitigates execution risk.

Answer

CEO Jared Isaacman credited the 'Shift4way' culture, which emphasizes focusing on a few needle-moving priorities, 'deleting parts' to eliminate legacy tech post-acquisition, and empowering talent from acquired firms. President Taylor Lauber added that a strict adherence to ROI for all decisions provides a disciplined framework that fosters entrepreneurial problem-solving and manages risk.

Andrew Schmidt of Citi revisited the demand environment, asking if sales cycles and client conversations had changed meaningfully in March and April. He also requested more detail on the confidence in the second-half revenue ramp, specifically the mix between already signed deals versus new business ("go-get").

Answer

Bill Stone (Executive) affirmed that the demand environment remains strong, citing a recent prospect meeting where the client was eager to deploy new technology for faster processes and better information. Rahul Kanwar (Executive) addressed the back-half ramp, stating that while there is always a "go-get" element and execution risk, the company has good visibility into large revenue streams coming online in Q3 and Q4 from already secured deals, which underpins their confidence.

Andrew Schmidt of Citigroup asked for a breakdown of the growth drivers for the GlobeOp business, such as price, markets, and asset types. He also requested an update on the company's automation initiatives, including the scale of savings achieved.

Answer

Executive Rahul Kanwar attributed GlobeOp's strength to continued momentum in private markets (private credit, real estate) and strong performance in the hedge fund business, where large clients are attracting a disproportionate share of assets. CEO Bill Stone added that SS&C's automation efforts, primarily through Blue Prism, now involve 1,550 'digital workers' and are driving savings toward the $200 million level. He also connected increased R&D spending to the strategy of reinvesting for organic growth.

Andrew Schmidt inquired about the 2025 outlook in the context of the company's 4-8% medium-term organic growth target, asking about pipeline visibility. He also asked about the company's philosophy on R&D spending and whether there has been a shift towards more organic investment.

Answer

Chairman and CEO Bill Stone expressed a bullish view on 2025, citing a strong sales force, global opportunities, and cross-sell potential with Battea. On R&D, he confirmed a deliberate increase in investment, pointing to a higher CapEx forecast of 4.1%-4.5% of revenue versus a historical 3-3.5%. President and COO Rahul Kanwar added that better business unit alignment has clarified R&D needs, often leading to funded development partnerships with anchor clients.

Andrew Schmidt asked about the impact of the recent spike in FX volatility on Western Union's business, including effects from hedging and changes in customer behavior.

Answer

CFO Matt Cagwin explained that the company hedges major currencies over a 2-3 year horizon to manage EPS volatility. CEO Devin McGranahan added that from a customer behavior perspective, a weaker U.S. dollar is typically a headwind for the U.S. outbound market because dollars buy less foreign currency. This can impact send volumes and is a factor in the current trends observed in the U.S. market.

Andrew Schmidt from Citigroup asked about the key building blocks for digital growth in 2025—such as user growth, frequency, and pricing—and whether the composition of these drivers would differ from 2024.

Answer

CEO Devin McGranahan confirmed the relevance of the mentioned drivers and added 'geography' as a critical dimension for Western Union. He explained that the ongoing rollout of the next-generation platform and new go-to-market strategies across different geographies enhances the other growth levers. He stated that the fundamental drivers remain consistent: acquiring higher-quality customers with better retention at an effective CAC, even if at a lower initial revenue per transaction due to competitive pricing.

Andrew Schmidt asked for details on performance in the U.S. to Mexico corridor, questioning the drivers, and inquired about any benefits seen from a major competitor's recent service outage.

Answer

CFO Matt Cagwin confirmed a recent macro-driven slowdown in the U.S. to Mexico corridor. CEO Devin McGranahan added that disruptions to regional migration patterns are a key factor. Regarding the competitor's outage, McGranahan stated that while they saw minor upticks in some corridors, it did not fundamentally change their business, as the market is far more competitive than it was in the past.

Andrew Schmidt requested more detail on the specific areas of investment for 2025 beyond sales and marketing, and asked about the strength and composition of the sales pipeline, particularly regarding new logo momentum.

Answer

Chief Executive Officer Nicolaas Vlok detailed that product investments are focused on digital interfaces, partner infrastructure, and the mortgage business. Infrastructure investments target data engineering and system scalability. Vlok also confirmed that strong sales momentum from the second half of 2024 has continued into 2025, driven by successful cross-sell initiatives and customer demand for technology that helps them acquire new clients.

Andrew Schmidt inquired about the drivers behind the mid-to-upper single-digit growth outlook for non-mortgage lending solutions and the demand trends and investment priorities for the company's account opening product.

Answer

President and CFO Larry Katz attributed the non-mortgage lending growth primarily to strong bookings converting to ACV release, with some offset from volume headwinds. CEO Nicolaas Vlok added that demand for account opening is solid from both new and existing customers, with investments focused on improving the user experience, automation, and partner integrations to create a touchless process.

Andrew Schmidt of Citigroup inquired about the timing and strategic goals of the newly announced portfolio review, and asked for a breakdown of the revenue headwinds in Canada between policy changes and underlying visa impacts.

Answer

CEO Mike Massaro stated the portfolio review is a response to ongoing macro headwinds, allowing the company to focus on controllable factors like investments and cost structure. President and COO Rob Orgel clarified that the primary issue in Canada is significant "demand destruction" from visa caps, which overshadows the timing impact of the Student Direct Stream (SDS) policy change.

Andrew Schmidt asked about the attach rate of Student Financial Software (SFS) on new wins and the sales motion to penetrate the existing base. He also asked if the moderated growth outlook for Australia assumes government caps are implemented.

Answer

President and COO Rob Orgel confirmed an acceleration in SFS wins, supported by new sales leadership and events like the 'Fly Fusion' client conference. Regarding Australia, he stated the moderated growth forecast does assume the proposed regulations will be implemented. However, he highlighted the significant opportunity to offset this by increasing penetration with Flywire's core cross-border, StudyLink, and Cohort Go offerings.

Andrew Schmidt of Citigroup confirmed that the 2025 guidance includes the Q1 tax impact and asked if any one-time positive items, like interchange fee changes, were inflating the strong underlying performance outlook.

Answer

CEO Michael Brown confirmed the guidance includes the tax impact. CFO Rick Weller clarified there were no one-time or extraordinary items contributing to the outlook, attributing the strength to 'good, nice, consistent performance' and a strategy of adding 'more products in more markets.' He also noted that the observed plateauing of the cash-to-digital conversion trend supports the durability of their business model.

Andrew Schmidt asked about the sustainability of ATM transaction trends in the EFT segment, particularly regarding international transactions, and questioned the drivers of outperformance in the Money Transfer segment's U.S. to Latin America corridor.

Answer

CEO Michael Brown explained that while the overall market for international ATM transactions is flat, Euronet outpaces it by expanding its ATM network into new, underserved markets. CFO Rick Weller added that as banks close branches, Euronet's network gains share. Regarding Money Transfer, Mr. Brown stated that the company's market share is growing over four times faster than the market, masking any potential weakness in specific corridors, and highlighted the impact of new strategic partnerships.

Andrew Schmidt from Citigroup sought clarity on the long-term EBITDA outlook, asking if the 2026 target reflects planned investments or general prudence. Additionally, he asked for the key drivers behind the significant increase in Tier 2 and Tier 3 deal volume.

Answer

CFO Jonathan Price confirmed the EBITDA outlook incorporates planned investments in key product areas like fraud, Innovation Studio, and commercial functionality, while also preserving flexibility for future opportunities. CEO Matt Flake attributed the strong Tier 2/3 performance to banks' urgent need to replace legacy technology with modern platforms to compete for valuable operating accounts, noting that Q2's win rates were slightly up year-over-year.

Andrew Schmidt asked about the drivers of the strong gross margin performance and its future progression. He also inquired about the Symphonix rebrand and the digital lending opportunity.

Answer

CFO Jonathan Price attributed gross margin gains to the revenue mix now exceeding 80% subscription, along with delivery and support efficiencies. Regarding Symphonix (formerly Cloud Lending), he explained the rebrand provides a distinct identity for its non-bank, international-focused go-to-market strategy, similar to the successful rebranding of Helix.

Andrew Schmidt of Citigroup inquired if the current environment necessitates changes to the Marqeta platform itself, beyond just processes, and asked about the impact on the new sales environment and resource allocation.

Answer

CEO Simon Khalaf responded that no fundamental platform changes are required beyond what was already on their roadmap for scaling, such as enhancing compliance dashboards. He stated that the sales pipeline continues to grow, particularly from embedded finance customers, indicating no hesitancy from new prospects. He confirmed resources have been shifted to help with implementation and customer consultation to ensure programs are structured for successful bank approval.

Andrew Schmidt inquired about the company's current perspective on M&A, given its valuation and market conditions, and asked if the upcoming election was causing any hesitation in Q4 sales cycles.

Answer

CFO Bryan Hill stated that the M&A pipeline is becoming more attractive with better quality assets and more reasonable valuations. He emphasized Alkami is a disciplined buyer with capital available and is organizationally ready to absorb a deal. CEO Alex Shootman added that M&A is a key part of their growth strategy. Regarding the election, Shootman noted that historically, macroeconomic and geopolitical events have not impacted the steady pace of digital transformation in their market.