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We will layer this with new product features to continuously scale and be the best in the offerings for our market. And I see huge opportunities within generative AI. Some of those we've already applied today such as within business development and content creation. We also see opportunities in velocity sales for autom... |
So that's it for me. I want to thank you very much. As you can see, I'm really excited about this opportunity, and I appreciate your time. Thank you. |
Michael Praeger |
Thank you, James. I think I'd seen that talk 2 or 3 times now. Every time, I get more excited because, again, I just use this word scale. Every one of those opportunities is just spot on. And when I think about taking Avid to the next level, it's just the right recipe. Speaking of scale, last night, our new -- you've b... |
But let me just start by reminding you Gear 1, Gear 1 is just about building great AP software, right, invoice and payment automation software that solves the problem for a buyer, right? We want to solve a problem for buyer, that's Gear 1. The way we measure our effectiveness in Gear 1 is total sales value. So we get a... |
Gear 1 is going to make up about 1/4 of our sales growth over the next 3 years. So as a baseline, just to kind of give you an idea, over the next 3 years, we expect for our total sales value metric to grow at about 15% a year compounded. And in that growth component, we're expecting a 1/4 of that to come from specific ... |
So here's kind of the big 3 areas. And I think it would be good for me to just use a little bit of a now next kind of framework for where each one of these things are. So the first theme is around purchase automation. And I think you've probably seen us in the marketplace, press releases, et cetera, with new launches a... |
What's next would be what we're doing with line item capture. So this is us actually getting detailed line level data off of invoices and allowing our customers to do 2-way matches, perhaps even 3-way matches to those -- to that line level detail. That's super important for job cost. Entire invoices show up, they've go... |
The last one in the purchase automation category is lean waiver. I'm not sure if you've been watching the wire, but we just did a press release. We are live now with our lean waiver product. This is super important for construction that helps facilitate that exchange between, as an example, a general contractor and a s... |
So that's theme 1, just call it purchase automation. It's getting us deeper and deeper into the purchase to invoice flow, more complicated workflows, 2 and 3-way match extends us into our current verticals where they need that functionality and also facilitates us going deeper in new verticals. So that's number one. |
Second one is invoice automation. I think you all have heard a lot about AvidConnect. It's also been called our invoice capture platform, IDC. This capability has lots and lots of upside for us. So number one, for a customer in Gear 1 and being able to sell more to a buyer or solve more problems, this allows us to inge... |
So we're actually taking capabilities for Avid, modularizing them and offering them as platform services to our ERP partners. So really taking the capabilities that we've built for ourselves and offering those up to ERP. That's a huge opportunity and that's happening next, okay? So now would be Avid capture, the improv... |
In addition to that, what the IDC and Avid capture platform are doing for us is giving us better resolution into what we can pull off of an invoice. So I've got a couple of terms up there. Do they capture and terms capture. On every invoice, there's always a due date. It usually takes 2 or 3 forms or when you're late, ... |
But think about going to a supplier and saying, "Hey, we understand because we have all the data we watch these transactions, we understand that this particular buyer always pays you late, very late. And the ticket size is very high. Would you be interested in an approach where we pay all of these on time for approved ... |
Last theme is, next-gen pay and Mike talked a little bit about this when we talked about capturing more of our buyer customers pay file. That's really our objective. We want their entire pay file. Everything that's outgoing, we want to help them automate. Right now, we have a significant opportunity in their time-sensi... |
So what are time-sensitive payments? Think about utility bills, where if they're not paid off on time. Factories can shut down, think about insurance payments that are very similar, think about maybe payments to service loans. Anything that is a highly critical payment that they might be reluctant to offer up into the ... |
We're also looking forward to expanding our currencies for our cross-border payments. We think that makes us even more competitive in that space. We always are looking to improve workflow automation. That's a now item. Avid Analytics, we launched last year. This is the ability for the buyer to really understand where t... |
And then last but not least, we believe there is a significant opportunity to integrate spend management, travel, virtual card mobile, physical plastic card management in with AvidInvoice and in with our suite products, allowing our CFOs to be able to go to one place to see everything and leveraging the many integratio... |
Unknown Executive |
Do you think you can quantify how much of the pay file you're not capturing just as we think about quantifying that next opportunity. |
Daniel Drees |
Yes, we -- I mean, from a next opportunity or the whole thing. |
Unknown Executive |
That whole next-gen pay, seems like it's a big incremental... |
Daniel Drees |
So we have some really good views of kind of the entire spend wheel of different industry segments for middle market. And the kind of high nondirect cost kind of middle-market customers that we tend to gravitate towards. We're probably getting 25% to 30% of the current total spend file. And think about that as like you... |
Okay. So that kind of makes up Gear 1. I hope you get an idea of the themes. I hope it did a good job of like what's happening right now think the lean waiver is probably the best example of the press release just went out today. A lot on the horizon for what's next as well. |
So let's move now to Gear 2. So as a reminder, I got to keep reminding all of us, including myself, Gear 2 now is about us taking that great software that we've built that solve problems for buyers. We're trying to connect it to as many ERPs and as many partners as we possibly can, right? So we've got great software. W... |
And similarly, we would measure Gear 2 with that same TSV effectiveness. And just by matter of ratios, we expect 3/4 of our growth in the next 2.5 years to come really from this category, the integrations. And that usually has 3 flavors. You've heard a lot about it already, so I won't bore you. There's accounting syste... |
We've got our bank channel growth, and we've got kind of an all other strategic, and kind of the list there, which I won't go through, would be those categories that I would say are those partners and ERPs that are all in growth mode right now. So those are all kind of like now mode. |
But there's 2 really, really important things that are enabling Gear 2 for us. And I want to double-click on them to do -- to just set up the first one, and Mike did a great job of this. So I'll dovetail on it. Remember, our software doesn't work if it's not integrated to the ERP. I mean we have to -- our mission is to... |
Second little backdrop item is that the middle market is not like anything else. We're not small business. We don't get the convenience of having 1 dominant ERP like a QuickBooks, we have 350. So what's been really a moat for us having multiple integrations to kind of a highly fragmented ERP. That's been a moat for us ... |
So this is new. 2 years ago, AvidConnect did not exist. We were building it. We were talking about it with you. AvidConnect today is live. At the center of AvidConnect is a brand-new set of next-gen APIs and middleware. And we, with that architecture, we're then able to make a single connection to all of our products. ... |
You can't do that times 350. So now with AvidConnect, we make a single change to AvidSuite or AvidPay or any of our other products, and that particular feature gets extended to all of our ERPs to all of our partnerships. It's an absolute game changer. |
So today, we have about 30% of our classic integrations. We've been migrating since the beginning of this year. By the end of the year, we should probably be at 80%. I think the tail will be a little bit longer. But what that does for us is it creates a ton of productivity. The maintenance of those integrations goes wa... |
So we've got drag and drop, we've got menu-driven, it also is attached to a portal. So our customers and our onboarding teams can see exactly how those APIs or file-based connectors are performing. That's a game changer for us. And I think it will come out even more why this is so, so important when I talk about really... |
In summary, AvidConnect for us has been on the drawing board. It's probably been an idea for 3 or 4 years and someone would probably tell me, "No, Dan, I thought of it 7 years ago." 2.5 years ago, Angelic was instrumental at pushing this kind of architecture. And today, we're leveraging it, and it's going to dramatical... |
Now let's talk about number two. And this one, I got some really, had really good discussions about this, and you've heard about partners and bank channels and things like that. So I want to kind of demystify this and hopefully it helps you understand really the progression of how we take partners from really a single ... |
So for the most part, we meet up with customers who are responding to our outbound marketing. Most of the time, they will show up in our shop and say, "I'm sure you don't have an integration for my obscure ERP because there's 350 of them. But we're interested in invoice automation." For those customers, we're going to ... |
Once we get that 1 customer, we begin to learn as quickly as possible, and then we do our best to make that pivot to start to market directly to similar type customers, okay? And this is really that first phase, that value demonstration. We're deciding to ourselves, "Hey, is this somebody we can really take care of, is... |
So think back to the Avid Connector example. You have to be able to do file-based integrations in a really good way to begin to build this kind of momentum. But we add a second, a third, a fourth, a fifth customer. If we do our job well with more targeted marketing being able to benchmark existing customers, explain to... |
At 30, 40, 50 customers, we begin to start to get the attention of the ERP. We have 50 of customers. They like it. We'd like to work with you, what about direct marketing? Would you like to refer people to us? If you do, there's an opportunity for rev share. So that really takes us into Phase 3. This is where things us... |
So with the power of that ERP and us working together, think about joint trade shows, think about joint marketing, joint landing pages, we begin to build traction, and this is where the ERPs say, "Wait a second. We now have 200. We now have 300 customers. These are all file based. Why wouldn't we build an API together?... |
So -- and the outcome of all of that is just a ton of long-term value for the ERPs, and that's really part of what we're about in this year, too. So when you think about all of that, so you've got 350 ERPs in the middle market. We've got it on a ouija board in an office down here, and we're thinking about how we're goi... |
At the stage there in so that when they finally say, "Hey, I want to go after invoice automation and payment automation and I need a partner that we're ready for it." But if you think about how value grows across those 4 phases, so the customer experience is going to get better. The joint marketing and go-to-market is ... |
So at any one of those stages, our partners can go from just kind of a bystander to a referral partner to perhaps a reseller or a built inside white label. So there's a continuum there. And depending on the ERP and their strategy, we're going to be really flexible to work and deliver files. |
So I hope that gives you a good kind of overview and maybe take out some of the questions around how all that evolves. And I hope you're connecting the dots on that with AvidConnect because to do all those file-based integrations, times 350 and then turn them into APIs and do that at scale cannot happen unless you have... |
So what I thought I'd do now just to kind of bring all this home is let you hear more directly from one of our partners who's kind of been through that journey. So do me favor and welcome up Pat Ghilani from MRI. |
Patrick Ghilani |
Thank you, good to see you as well. Where is the fire? It's supposed to be a fireside chat. |
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