Hello, and welcome to the Usio third quarter 2023 earnings conference call. [Operator Instructions]. Please note today's event is being recorded. And now I turn the conference over to your host today, Paul Manley. Please go ahead, sir..

Thank you, operator, and thank you, everyone, for joining our call today. Welcome to Usio's third quarter fiscal 2023 conference call. The earnings release, which we issued today after the market closed, is available on our website at usio.com under the Investor Relations tab.

On this call today are Louis Hoch, our Chairman and CEO; Tom Jewell, Senior Vice President and Chief Financial Officer; Greg Carter, Executive Vice President of Payment and Acceptance; and Houston Frost, Senior Vice President of Card Issuing.

Let me remind our listeners that certain statements made during the call today constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities and Litigation Act of 1995 as amended.

Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties are described in our earnings press release and in our filings with the SEC.

The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements. During today's call, we will refer to non-GAAP financial measures such as adjusted EBITDA. Our earnings release includes a reconciliation of adjusted EBITDA to GAAP operating income.

Management will provide prepared remarks, then we'll have a question-and-answer session. So let me start off with some highlights from this afternoon's release. I'm pleased to report another quarter of strong growth with revenue up 25% our 13th consecutive quarter of revenue growth.

We also are reiterating our guidance of 18% to 20% revenue growth for the year. In our release, we announced a number of exciting developments across our entire organization.

This includes an investment in output solutions that should increase capacity by 50%, our largest ever quarter of prepaid card load volumes, our strongest ever card pipeline and the expectation that ACH volumes will start to grow again in the fourth quarter.

In addition, we continue to be in excellent financial condition with strong cash flow this quarter, in part supported by record interest income, which we expect will add over $1 million to our cash position over the second half of this year.

In total, this has enabled us to add nearly $2 million of cash to our balance sheet over the first nine months of the year. So at a time when many companies are forecasting slowdowns in their business, Usio continues to charge ahead. Now, I will turn the call over to Louis..

Thank you, Paul, and welcome, everyone. It was another quarter of strong growth. Consequently, I am pleased to reiterate our guidance for revenue to be between 18% and 20% for the year. Results once again reflect our diversified business strategy, diversified in the markets we serve and the payment channels that we offer.

This quarter, results were led by a strong performance at prepaid, where revenues were up 197%. As a sign of prepaid's continued growing momentum, the third quarter was the first quarter in the company's history in which the volume loaded onto prepaid cards exceeded $100 million.

For the quarter, prepaid continued to have solid growth, not just in load volumes, but in transactions processed and purchased dollars processed.

While residual revenues from expiring card programs were certainly a contributor to our strong revenue growth, load volumes, transactions, and purchased dollars process were all generated from ongoing programs. Consequently, these record amounts provide a clear indication of the strength of our prepaid business beyond any reliance on expired cards.

Houston will discuss new accounts and the strong growth with the long term corporate expense and disbursement clients. But let me quickly touch on one of its most significant accomplishments. As recently announced, we won our first state administered program. This is totally new, a very large market opportunity for us.

So we believe prepaid has built a solid foundation of reoccurring revenue programs as a solid base of which we can grow, evidenced by the increasing load dollars. Loaded dollars on the cards is a leading indicator of future revenues, creating either revenue from spend or revenue from spoilage.

Both revenue and margins were up again at output solutions this quarter as Sy Green and his team continue to utilize every ounce of available capacity. For that reason, we're investing approximately $1 million in new technology at output solutions that should increase our capacity by 50%.

At the same time this should also increase the speed of production and reduce costs. This new system will increase our flexibility, including the ability to handle mail, run data files, which is a key requirement for large projects where we were previously less competitive.

Last quarter, we noted that we had hired two seasoned print and mail sales executives. So combining his contacts throughout the industry with expanded capacity will make us a formidable competitor for larger, more lucrative programs. Often this should lead to what we believe will be both a better top and bottom line.

We continue to expand our relationship with LA County, handling their check disbursements needs both fees and fines that were overpaid. We mailed 142,000 letters and 27,000 checks for LA County in the third quarter.

We also took on additional cities in the quarter handling their utility bill credit for the quarter in total was sent out a record 900,000 checks.

Developments and output continued to be representative of the transformation and integration taking place across Usio output recently launched with a toll road customer for disbursement bill by plate toll bills. The bills have a QR code that the recipient scans, which takes a little to a payment portal built and operated by Usio.

There is strong interest among government agencies and utilities in the scan to pay options. Not only is it easier to set up, they've created a more traditional customer portal. It also seems to drive payments early. We also continue to attract new accounts which are completely electronic with no credit or mail service.

Such accounts involve the creation of e-bills that are e-mailed the customers and then directed to a Usio managed payment portal. This is obviously higher margin business.

Turning the card, PayFac continues to generate strong growth, 27% for the quarter, as Greg will discuss, it's been a busy quarter of increasing penetration with existing ISVs, implementing new ISVs and building a strong pipeline, including three significant new opportunities which we are aggressively targeting.

And in ACH, total revenues were up on the strength of associated services such as PIN-less debit and account inquiry. We expect this to be the last quarter of which volumes are below year-ago levels as this is the last year-ago quarter that included meaningful Voyager volumes.

This in turn should help us improve overall segment revenue growth and profitability. Margins were up in the quarter due to the highly profitable ACH revenue growth as well as due to spoilage revenues from our prepaid segment. Our business will always include some spoilage from expiry that card.

In the immediate term, the majority has been generated on the New York City COVID incentive program, which will be winding down further in upcoming quarters. In the third quarter, we did see an increase in our selling, general, and administrative expenses. Many were onetime in nature.

We expect these expenses to trend down in the fourth quarter, but probably not to the levels we experienced in the first and the second quarter of the year. Having grown revenues 25% over the first three quarters of the year, costs are understandably up to support this rapid expansion.

Our goal is to keep the rate of overhead expenses growth below that of revenues in order to realize the significant operating leverage our business model can deliver, and we expect to see that improve as we move forward.

The net result is an increase in operating income, adjusted EBITDA, EPS from a year ago, although each was down sequentially from the second quarter, which we called out on our last quarter conference call. Cash was a good story as we generated nearly $750,000 of cash over the last three months.

Some of that was a product of over $500,000 in interest income in the third quarter. We anticipate another significant increase in interest income in the fourth quarter. In summary, prepaid is positioned for the future with its high loan zone cards. Card is sitting on some of the potentially largest new ISPs in our history.

ACH is rebounding and we are increasing our capacity and output by 50% due to strong demand. Another solid quarter with strong top-line growth, internal investments to sustain that growth, and improve operating leverage over time. Consequently, as Paul noted, we are reiterating our guidance for the year.

And now I'd like to turn over the call to Houston Frost..

Thank you, Louis, and thank you to everyone participating on our call this afternoon. As Louis noted, prepaid had an exceptional quarter with strong revenue growth in our first ever quarter with over $100 million in card loads.

It is important to remember that carloads are a forward-looking metric, providing a measurement [Technical Difficulty] client. Loaded clients will generate interchange and transaction fee revenue over the ensuing months as well as inactivity fees and breakage beginning 12 months after the loads occur.

As such, our record Q3 card load results are particularly exciting for the impact that could have on 2024 revenue, considering the roll off in activity and inactivity fees generated from vaccine incentive programs from 2021 and 2022.

Perhaps more importantly, the record load volumes demonstrate the card issuing business's continued growth and strength even in the complete absence of any pandemic related card programs. Our client base is increasingly diverse. Today, 6 of our 10 largest clients are expense management or disbursement programs with private enterprises.

Equally important, many of these are long-term growing clients we've been serving for years. Among them are fintech such as Class Wallet and MoviePass, which we've mentioned on previous calls.

While our government clients are drawn to the transaction restrictions and controls, virtual cards and/or consumer choice offerings, the fintech market appreciates our ability to integrate our external authorization feature with their technology.

Our ability to offer technology that appeals to both government and private sector are essential in attracting new customers as well as retaining existing clients over the long term. As these organizations grow or programs expand, we are growing right alongside them. We also continue to board new clients.

Most recently, we won our first state-administered program. This program actually arose from the recommendation of a very happy smaller government entity, Usio customer within the state.

We are extremely proud that the card-issuing division continues to receive introductions like this as it illustrates the customer satisfaction on which we pride ourselves. This steady stream of referral business also enables us to run a lean sales and marketing organizations with the attendant benefits to our profitability.

Our success continues to be built on operational execution, the flexibility and capabilities of our proprietary processing platform, and our relentless focus on the client relationship.

As we look to the future, we will continue to focus on the increasing -- on increasing the diversity of our client base, and the card programs we support, and continue to seek out opportunities that generate recurring revenues. With that, I'd like to turn the call over to Greg Carter..

Thank you, Houston, and good afternoon, everyone. Card revenues were up again with year-over-year growth in our PayFac business, accelerating sequentially to 27% in the third quarter.

Both dollars and transactions processed were up from a year ago with PayFac on target for three quarters of $1 billion of processing volume in what is shaping up to be a record year.

While the third quarter is typically a slower time, this year, we onboarded a record number of new merchants from our existing ISV relationships, up substantially compared to any previous quarters with an average of more than 100 new onboards a month compared to 60 recently.

I attribute this steady improvement to our business strategy where we keep adding new ISVs and they, in turn, continue to penetrate their account bases. As our base of ISVs grows, this is a natural result of our disciplined processes. It was even more exciting is the number of ISVs that are mandating their users adopt our PayFac solution.

One example is the new fitness exercise practice management ISV we recently implemented. This ISV is rapidly transitioning all their users from Braintree to Usio. Once adopted by their entire client base, this ISV could be one of our largest. There's been a recent industry development that is providing an additional tailwind.

It's becoming much harder to become a registered PayFac. The requirements are much more stringent and many ISVs simply don't have the experience or resources to justify building the necessary infrastructure themselves. Consequently, this is making our PayFac as a service value proposition increasingly attractive to ISVs who want to monetize payments.

Louis alluded to a number of large prospects in our pipeline, which we attribute to both our diligent marketing efforts, but also in part due to these new complexities and challenges. The third quarter is always a great time for prospecting.

It is the boring part of sales involving a lot of state work, but it sets us up to have a strong pipeline for the fourth quarter, and on into the new year. We attended several different conferences this quarter, especially in the lending industry.

For instance, we attended LEND360, which is probably the biggest lending conference for the sub-prime and alternate lending channels. We are seeing increased activity in the tribal lending space. We've always been in that space, but we're becoming more visible and that is yielding new agreements directly with the tribes.

It's a good market that contributes to ACH both ways, both in funding and then servicing of the loans. In the third quarter, we also attended the Tribal Lending Conference in California. PIN-less debit is also doing very well. It's a less expensive alternative credit card and is becoming very popular with fintech lenders and loan servicers.

Revenue growth in this product line has been outstanding and we intend to capitalize on the momentum being created by more widespread adoption.

So the third quarter can be characterized by strong growth in onboarding new merchants driven by growth in our existing ISV relationships and the recent implementation of other ISVs that have had immediate impact. We have a solid pipeline of new ISVs in various stages of implementation.

We are doing the spade work now to build our prospect pipeline for the future. I remain very optimistic for the balance of this year and for 2024 in general. With that, I'd like to conclude my remarks and turn the call over to Tom Jewell, our Senior Vice President and Chief Financial Officer, to discuss our financial results..

Thanks, Greg, and welcome, everyone. Thanks again for joining our call today and for your interest in Usio. Let me quickly provide some highlights around this quarter's results before opening the call to questions. Revenues for the quarter were up 25% to $20.5 million, driven by growth in all of our segments, especially prepaid.

I also note that ACH revenues were up year over year in the quarter after being down in the first half of the year. Output Solutions was also up nearly double digits once again, while credit card revenues were up 5%, as our PayFac business continues to grow at a faster rate than the wind-down of our legacy traditional payment processing.

Gross profits were $4.1 million and margins were up 170 basis points from the year-ago quarter. Gross margin improvement reflects a higher contribution from breakage and spoilage and better margins at Output Solutions.

Gross profits and gross margins were down compared to the second quarter, principally due to a sequential decrease in prepaid profits and gross margins as our share of the New York City COVID incentive breakage and spoilage stepped down.

As our share of New York City breakage and spoilage profits are sequentially reduced, we expect prepaid profits and margins to contract further in the fourth quarter. Our long-term strategy remains to manage strong growth in gross profit dollars, although potentially at lower margins.

Selling, general, and administrative costs were up from a year ago, reflecting increases in marketing and professional fees. Since some of the increase in the quarter was from nonrecurring expenses, we expect fourth quarter SG&A to trend lower.

As Lou stated, over the long term, we expect to improve the operating leverage in our model by keeping the rate of overhead growth below that of revenues. We reported an adjusted EBITDA loss of just under $100,000, which was a $400,000 improvement from the year ago quarter, although down from the last three quarters.

For the quarter, we reported a net loss of $700,000 or $0.04 per share, which was a big improvement over the net loss of $1.8 million or $0.09 per share a year ago, but again, down sequentially. Non-GAAP adjusted operating cash flows as defined in our SEC filings was $2.4 million for the first nine months of the year.

Our cash position at the quarter end was $7.4 million or approximately $1.7 million higher than at the beginning of the year. A contributing factor was the over $500,000 of interest income in the quarter and we expect another quarter of strong interest income in the fourth quarter.

Transitioning to year to date results, for the first nine months of the year, revenues were up 25%. Gross margin has expanded 290 basis points and SG&A was up just 7%. From a profitability perspective, adjusted EBITDA was $2.1 million compared to a loss of $1.4 million in the first nine months of last year.

Again, this reflects my previous comment about the significant improvement in profitability this year compared to last year. As Louis noted, we expect to meet our revenue guidance for the year, but expect to see a slight slowdown in revenue growth in gross profits in the fourth quarter due to declining breakage and other items.

With that, I will turn the call back to the operator to conduct our question-and-answer session..

[Operator Instructions]. The first question comes from Scott Buck with H.C. Wainwright..

Hi, good afternoon, guys. Thanks for taking my questions. I was hoping to get a little bit more color on the new state pro card program.

I guess what I'm trying to figure out is whether or not there's an opportunity for this program to be renewed 12 months from now work or this is more of a one-and-done type deal?.

Well programs that we're supporting is -- it has got a fixed amount of funds. What I will say is that as of end of Q3, it was less than a third deployed. And so it's going to be deployed over time, but it is a fixed amount of funds. That being said, we obviously continue to have additional opportunities from other state programs like this.

So does that helps with your question. That's -- the particular [Technical Difficulty] fund..

Yeah. And they have told us that they're going to put out $95 million on the cards..

Okay. Yeah, no, that's helpful.

And I guess, Louis, can you talk a little bit about the flow of funds? I mean, I think it probably has something to do with the high level of interest income in the quarter, but do they give you all of that money upfront and you loaded incrementally over time on the cards? Or how does that -- how exactly does that work?.

Yeah. Anytime we sell the credit out at our company, our customer base has to send us good funds before we initiate that credit. So the cards are no different. to date, they send us $80 million of the $95 , and we're about $35 million has been loaded on the cards. The rest of it is sitting a bank account..

Okay, perfect. That's great. And then I wanted to ask you about Output Solutions and the new capacity you're bringing on.

When does that become available? And as a follow up for a second piece of that, have you guys lost business or turned away business due to the capacity constraints you're under currently?.

Yeah. So we are investing in a new machine that will increase our capacity by 50%. And Output Solutions has an amazing pipeline of business from internal sales and from cross selling across their divisions. And we know that there's business out there that we can have. Right now, we're running two shifts or 16 hours a day.

We could be filling up another shift if we could find people that work in light, but that's kind of impossible. So we believe there's a lot of business for us to capture and we are able to get a bank loan, a very favorable one, we purchase that equipment..

Okay, great. That's all I had, guys. I appreciate the time. Thank you..

Thanks..

The next question comes from Jon Hickman with Ladenburg..

I have a couple of questions.

The new machine, is it smaller than your other one? Is that why it's only 50% and not double?.

No, it's -- it's this big, Jon but it's not a new printer. It's a different way to fold and insert and cut paper that will remove some other folding in the existing our machines. It also takes less labor to operate.

So we'll see some savings there, but it just increases the speed of the overall process from the beginning of receiving a data file to the point where it actually gets put in the Postal Service..

So it's not a printer, it's a supplemental improvement. Okay. Thanks.

Then can you elaborate on the one-time expenses, how much were onetime expenses in the quarter?.

[Indiscernible] about $250,000..

Okay. Thanks. That's it from me..

Thanks, John..

The next question comes from Michael Diana with Maxim Group..

Ok, thank you. Greg, I think you referred to some of the ISVs not been large enough to be, I think, you used the word registered PayFacs. If I got the word wrong, you can tell me the right quick, what is that all about? I am not familiar with them..

A registered PayFac is with the card brands themselves. So it's a level of diligence and capabilities that you have to display before you become a registered PayFac and what we offer is PayFac as a service. So our ISVs don't have to go through that diligence review or that process to become registered with the card brands themselves..

Okay. So that's a competitive advantage, basically..

Absolutely. There is -- speed to market could be as much as 2 to 2.5 years faster by using Usio rather than trying to embark upon that yourself as the ISV..

Right. Okay. And you also mentioned the fitness studios.

Can you give us any more color on maybe where that is and being rolled out? Or are there end customers actually using it?.

Well, absolutely. They've an excess of 300 merchants or facilities online now. The owner of that ISV is a practice management software for that industry and they are going to require everyone to be using the payment component by the end of this year.

The good news is when they went live, most of their -- large part of their merchants went live with the processing capabilities of Usio. So we'll see some additional uptick this month and end of December, beginning of January, then all existing fitness studios and all net new will be using the payments solution powered by Usio..

Okay, great. Then I think you mentioned tribal lending.

How do you interface with that with? Who exactly are you providing services to there -- middleman or something, right?.

Yeah, there's really two components to that. Traditionally, the tribes themselves are sovereign nations or they're sovereign entities that use loan servicers as an intermediary for processing or issuing those loans. But most recently, several tribes have taken that servicing capability upon themselves.

So now we can deal directly with the tribe and not with a third party entity that is providing services to the tribe. That's -- hopefully, that's clear..

Yeah. Okay. Great. All right. That's it for me. Thank you very much..

Thank you..

[Operator Instructions]. The next question comes from Gary Prestopino with Barrington Research..

Hey, good afternoon, everyone. A couple of questions. First of all, Greg, you said the payback growth was up 27%.

Is that processing volume or revenues?.

Revenue..

Okay. So I guess, and I've always asked this question, but your card revenues were only up 4.8% in the quarter. Yet PayFac was -- generated -- there is a really big delta there. What percentage of the card revenues are generated by PayFac? Because it's got to be that that legacy portfolio keeps trading.

And that's what keeps us from really showing pretty strong revenue growth in your segment..

No. You're -- that's exactly correct. We added an additional $45 million in processing volume through the first nine months of net new processing volume on the PayFac platform and the legacy singular portfolio is trading faster than it has historically. So we're making up for that.

It's kind of -- we've got to sell or we've got to process twice as much just to show that growth curve. But the --.

How much of the portfolio singular is left, then?.

There's a meaningful amount. We have two legacy portfolios, one from PDFs and singular that's -- about if you add those two up, it's about 60% of our card business. But the increase that we saw, the $1.1 million increase over the first nine months is 100% PayFac..

Okay.

So this is still going to be something that is going to continue to impact the growth in card for quite some time?.

At the macro level, that's correct. I mean, card in general, we're not selling into those portfolios any longer. We're doing our best to manage the attrition. So obviously, the sales efforts are on new ISVs exclusively..

Have you given any efforts? You just thinking about selling those portfolios and then you just have a pure PayFac comparison there?.

No, we don't want to sell the portfolios. The majority of those portfolio customers are integrated with us, which makes it a hard portfolio to sell. And that portfolios still generating quite a bit of revenue for us..

Okay. And then-- I was writing down which you're saying, did I hear you right that we can see a step down in gross margin in Q4 or decline in gross profit in Q4? I couldn't quite get that because you were talking about that prepaid spoilage -- is coming down..

It's definitely going to depend on what the mix is from product lines. But we will know that we're going to be paying New York the majority of the spoilage in fourth quarter and first quarter and second quarter of next year. So we're anticipating that the quarter should look very similar to this quarter..

Okay.

So similar quarter, and a step down in SG&A, right?.

Yes. We will have as many one-time things as we have this quarter..

Okay.

And then on with these with this state program that you signed up, is that a guaranteed income program or is that an unemployment program or what exactly is that, Houston? Can you please elaborate?.

The State of California [indiscernible] disaster relief, it's funded partly from federal funds from the USDA with the State of California administering it. And they told us that there's $95 million that will go out with cards. We've only loaded about $35 million today.

So that program will continue for -- until the money's all exhausted and I know in the state of California, they'll probably add more money to it to serve..

So that would deal with things like fires, earthquakes that they have out there? That money would be released at that position?.

[Technical Difficulty] from the floods that occurred? It was already -- the disaster has already occurred. When people ask us, why further does that imply it was signed as a whole..

So many disasters out there. Okay.

So this dealt with the floods last year, right?.

Yeah. Because we've we won this business because of our success with LA County..

Okay, great. Thank you..

The next question comes from Steve Riney with Integrity Wealth Advisors..

Hey guys. Great work in the quarter and the year so far. Just a quick follow-up on the last gentleman's question about the next quarter at Louis. I think you said that it's going to be very similar to this one with the exception that those one-time charges might be in there.

So is that am I understanding that correct?.

Yes. And interest income will be up dramatically. Okay..

So on an adjusted EBITDA basis, we'll have a profit because of this, we only had $100,000 adjusted EBITDA loss in the quarter.

And so if the expenses are down and the interest is up, that should be a really good look for us as am I reading that correctly?.

I'm not going to provide guidance there, but I can tell you where you're going..

It's just simple math, I guess. So I just wanted to make sure I heard it right. The other thing is congratulations on the state, whether it's one-time or not, it's a good new market. You mentioned it was a new market.

Can you talk about any other new markets that you're getting in and you're looking at getting in any expansion of what you're going to be able to do, especially after the investment into the capacity?.

Well, was the outputs new machinery, we're going to be able to have some technology implemented that will allow us to take on larger print jobs that require each item envelope to be monitored and we do some of that today, but we can't due to the high volumes and we're soon to be able to do it at high volumes.

And we know that there's cross-selling business out there that we haven't got because we haven't tried to close it because we didn't have the capacity. We are hitting the ball out of the park with our cheque production with the hidden new niche with bankruptcy distributions.

And last year we printed like a million checks all year for Spectrum, Verizon AIG and DirecTV in this year, I think we're going to do over 3 million checks. And for us to print 900,000 checks last quarter. I mean, again, the idea the niche that we're starting to develop with bankruptcy distributions does have some legs..

That is remarkable, good work. And I guess the other question -- before I get to Paul, movie pass.

Can you give us an update on that business?.

You know, I can't give you specific metrics, but we're continuing to see our card activity there. We do know that they're kind of in the middle of another financing round, I believe. And so we'll probably see additional marketing efforts and promotional efforts by movie pass. Yeah, can't really share much more beyond that..

Okay.

Could you share if you're generally pleased with the way things are progressing with them?.

If that weren't the win level sale, other French transaction volumes continue to go up. And you know the--̱.

I know that your profit percentages are much better with MoviePass and with some of the alternatives. So I guess the other question that I would have, Paul for you is, as you look, obviously, we're in a terrible, our small-cap microcap bear market. You guys are trading for well less than one-time sales. You're generating cash.

What are you hearing what letter? What are investors telling you as to what they're looking for, what they're waiting for in order to get more aggressive with you are with your stock with your company?.

Well, we talk to funds all the time in a year where that and we're going to conferences, we do non-deal roadshows. We're definitely committed to educating these phones are they're all they all almost all of them love the story. And the other ones that fit don't just have the capacity to understand technology and they have been limited.

But, you know, it's the investment decisions are the funds and they all have different reasons why they haven't pulled the trigger and having to increase their position. We have seen some very positive activity with a few funds that we've been working with and hopefully our best town story on a regular basis will increase that activity..

And I would just add, Steve, that if a few of the funds, they just wanted to get see us maybe execute for a couple of more quarters and we get into 2020 for non. So like Louis said, we're planting a lot of feed right now. We're meeting a lot of balls with school. So I'm excited about the pipeline of people that we're meeting with that.

Can that pull the trigger..

Okay, fantastic. Keep up the good work. We'll be in touch soon and have a good afternoon.\.

Thank you, Steve. Operator Gary Prestopino, Barrington Research..

Yes, I just wanted to ask on you say you're investing in marketing and sales.

I mean, has it does PayFac have its own dedicated sales force yet to go to ISVs? Have you expanded that in a big way? And where are you putting the sales muscle into the company?.

Yes, we've always had a dedicated ISV or PayFac sales team. We still to this day in addition to a proxy sales force of referral agents and referral partners. So they are quota-bearing.

They are very active in the industry and they're exclusively targeting higher speeds so our marketing support around that generally, marketing supports the entire enterprise all three business units. But on the short answer to your question is by all means we have a dedicated sales force just for paper..

It's our largest sales force in Paris because we realize that PayFac is our in our main growth engine. And interestingly enough is a seasoned industry salespeople who have come to us because we have unique products and they know that there's a need for this..

Have you given any thought to extending the sales force into going after markets that maybe the ISVs are not going after? Or is that just not applicable on within the industry?.

Well, I mean, the return on our investment on the headcount, obviously is maximizing. We sign ISVs that can bring hundreds if not thousands of merchants with one sale, but we don't ignore standalone certain enterprise opportunities as well.

So we've got two individuals that kind of span, not only PayFac but the acquiring ACH side and they can go after the market figure talking about solar, ACH, single stand-alone and our processing merchants as well..

Very that pipeline for Patriot is bigger than it's ever been..

And there's three deals in that pipeline that what we would call mega deals in.

And hopefully we're able to close some of those?.

Well, yes..

I mean, if I'm reading this right, what you're saying is it's going to be very difficult for others to become a registered PayFac because of the August regulations or whatever. So there's going to be a very natural lack of supply on the PayFac side for the market.

So it should lead to much more frequent growth, much more explosive growth for you guys versus what you have, although you've had good growth overall. So that's why I bring it up here..

Yeah, here I read that right, Gary. I mean, the hurdle to become a PayFac is very largely Financial, but there's also technology and risk management because when you're PayFac, you take 100% risk on all your traffic and so it's hard for in our companies to qualify even on just that first metric.

And so and then we're going to have a bank sponsor, some of those banks sort of tenant and you know that us being around 25 years and generating cash is very important..

Thank you. And this concludes our question-and-answer session as well as the call itself. Thank you so much for attending today's presentation, and you may now disconnect your lines..