What Investors Want to See From Platforms with RMS & UBS

Hemmo Bosscher - 00:00:01: Welcome to Adyen Presents: Embedded Finance, real talk for SaaS leaders on embedding payments and financial products. Software platforms today are no longer just about software. Winning platforms embed payments and financial products like business loans, accounts, and cards to become full-service operating systems for customers, building loyalty and new revenue streams. Now, the opportunity is clear, and we've heard much about it, but tactics are largely undefined still, and that's why we're launching this podcast, to hear from the platforms and experts shaping the strategies. This episode explores what investors want to see from platforms when it comes to embedded finance. I'm joined by Adam Seskis, CEO at RMS, leading cloud-based software for Hospitality, streamlining reservations and operations globally to help businesses maximize profitability. And Justin Forsythe, lead payments analyst for EMEA at UBS, bringing deep expertise on the market. First up, we have Justin. Welcome back, everyone, to Adyen Presents embedded finance. Today, we are here with Justin Forsyth from UBS. Welcome, Justin. Could you take a few minutes and kindly introduce yourself to our audience?

Justin Forsythe - 00:01:12: Yeah, thank you very much for having me, Hemmo. Really good to be here. So that's right. My name is Justin Forsythe, and I am the EMEA payments and FinTech Analyst here at UBS. For those of you not familiar with what that is, it's a fancy way of saying I cover publicly traded companies. We have forecast, buy and sell ratings, and write research on the space. I cover companies such as Adyen, Wise, Nexi, and several others, and spent a few years in the U.S., covering the space as well before coming out to Europe, about four years ago.

Hemmo Bosscher - 00:01:43: Four years ago, alright. And if you look at sort of the theme of embedded finance broadly, how long would you say this has been a thing or something worth covering for you? When did you sort of see it pop up?

Justin Forsythe - 00:01:53: I think, and we'll probably come on to this a little bit more, it's something that is really just getting started here in Europe, I would say. It's something we've been tracking for a very long time, going back five, six years ago. But in reality, it's something that's really coming to prominence, I'd say, now. And we recently wrote a report saying, effectively, we're at the tipping point of software-led payments. And as a part of that, I would layer in embedded finance as well, right now in Europe.

Hemmo Bosscher - 00:02:21: And when you say, it's been a thing for five, six years, but it's just having its moment now in Europe. How do you explain that delta between Europe and a market like the United States? Is that a cultural thing, technological things, regulatory? What goes into that?

Justin Forsythe - 00:02:33: It's a great question. So for context here, in this report that we published, and this went out about September of last year, our analysis showed that about a quarter of payments volumes, so that is the euro or dollar amount of payments, are software-led, so flowing through software channels. And by the way, we're talking about small businesses when we say that, right? Which is the predominant way in which a software-led payment would flow, right? So enterprises, and you guys would know this, typically aren't going to buy payments from a software provider, right? Because they're going to go and buy individual pieces of software and fit together and orchestrate their entire technology stack themselves, right? So when we're talking about software-led payments, we're predominantly talking about SMEs. And I think that is a confusing coin to some. So when we're saying a quarter of payment volume in Europe is software-led, we're talking about SME volume specifically. In the States, just for context, we estimate that's about two-thirds. So 64% is the exact number that we had as a forecast for 2023. And so you have effectively what we would call a greater than 10-year adoption delta, right? So if we were to take it back to 2016, I think we had the U.S., in the 40% range. So we're not even sniffing that yet in Europe. Now, why is that? I think there's a whole host of factors. Fragmentation is probably the clearest and easiest thing to pin it on. So you have multiple different currency regimes, multiple different central banks within these countries that have different objectives. You have different regulations even in these individual countries. Yes, of course, you have the EU, which is the unifying factor or force across a lot of these different countries. But correspondingly, you have individual requirements as you go through each of these countries. So one thing, a great example is fiscalization, right? In some countries, you need to have as a point-of-sale software provider, a linkage directly to the tax authority. And that prevents any impropriety when it comes to taxation, tied to all of the sales going over a point-of-sale software platform. So I think this high level of fragmentation is tied to a bunch of different things. Clearly, there's different culture. And I think selling SaaS on the ground, I think people just assume it just incredibly easily ports across country barriers. But I mean, you have to - Selling SaaS remote is incredibly challenging. I think you need boots on the ground in addition to all these different types of customizations. And the provider as well, and the VCs backing them probably are sitting there to themselves saying, where is my next step? Where am I going to go? And someone's going to say, hey, look, this U.S. market's pretty big. There's a lot of software going on there. Maybe you should go there. And that might be your next jump-off point. And so I think when you compare the size of individual countries and the customization required to go there, that's the question that some people are asking. And eventually, I think the opportunity in Europe will outweigh the opportunity in the U.S. from a penetration and saturation perspective. And the relative risk-reward is going to reverse effectively, which is one of the reasons why we can-

Hemmo Bosscher - 00:05:37: But we're not there yet in your estimation.

Justin Forsythe - 00:05:39: No, no, I don't think we're there yet. I mean, so like we think we're at the tipping point, right? And why do I say that? I mean, if I rewind and go back to say Money 20/20, which is an industry conference.

Hemmo Bosscher - 00:05:49: Yeah, I remember.

Justin Forsythe - 00:05:50: In Amsterdam. So near and dear to you guys, I know. In 2021, was I hearing players talking about software-led payments in Europe? Not really. But I feel like I'm getting so many connections, interactions, engagements with startups in this space, recognizing we're at the precipice of this. And by the way, with many things, innovation starts north to south within Europe. And so you'll start to see the inklings of it in certain countries. And so in the UK, the penetration rate is going to be higher than that 25% I cited. In the Nordic countries, it's much higher. And so you're starting to see like in Germany, there's actually a lot of, a decent amount of point of sale SaaS. And also, by the way, this penetration rate is going to vary by vertical.  Restaurant is the most obvious thing to picture in your head. Like I go, there's a big platform in the States called Toast. And so if I think of Toast, I think of that with restaurant, I think of that with software.

Hemmo Bosscher - 00:06:43: You made a good point there. That fragmentation in Europe leads to overwhelming complexity, which makes just doubling down on the U.S. much more appealing. That's very simple. But then once you reach saturation, so let's say you look at Toast, you've sort of, you know, divided up that vertical in the U.S., there's a few players that remains, like winners take most. And then you start to look overseas. Where else can I do the same trick I did in my home market? That's logical.

Justin Forsythe - 00:07:07: Absolutely. And I guess where I was going with that is that, sorry, Toast is a restaurant vertical. There's going to be other verticals that are way lower penetration. And it's not as obvious or apparent that you should be embedding payments in it. But you actually should be, right? So if I think about like legal services, or if I think about construction services, right? It's not necessarily natural in the first place that you'd be going. In insurance, financial services, right? There's a whole host of places that you can go with this where there is software. And it's not apparent to the SaaS platforms that payment should be flowing through this.

Hemmo Bosscher - 00:07:36: If we can look again at restaurants or F&B and you sort of look at what happened with food and beverage platforms in the U.S., you can see that there were many more just a few years ago. Now there are a few and they've sort of divided the space between them. Toast, the one you mentioned is probably the biggest winner. Do you see this consolidation through differentiation and mergers and acquisitions? Do you see that as inevitable to happen in all these verticals and all these markets?

Justin Forsythe - 00:08:02: Yeah, it's a good question. It's tied, I think, to the single market infrastructure of the U.S.. It's a little bit easier to scale something like a category killer, right? It can take off like wildfire. I remember the early days of Square where, I mean, now this is one of the predominant micro merchant SaaS operating platforms out there. Initially, I mean, it was literally just a dongle that you plugged into your iPhone to accept payments that-

Hemmo Bosscher - 00:08:23: I remember, yeah.

Justin Forsythe - 00:09:24: And I mean, this was groundbreaking stuff. Where you were historically taking cash to the point of sale. And so these things are able to scale like wildfire. These micro merchants that were - this was all TAM expansive. These micro merchants that were previously “unsurged’, now are able to take payments. And yeah, it might cost a little bit more. Yeah, maybe it is just a dongle to start. But this was able to really rapidly take off, I think. And you can look at actually the preponderance of large platforms like Share, really leading platforms in the U.S., and compare them across to Europe. You just don't have it like QuickBooks in the accounting space. I mean, we're talking about 70% share of that market. You can go down the list. The concentration is really high for that point. I think in individual countries, you might have a degree of concentration, like in Epos Now, which is doing what? 70,000, 80,000 locations. And there's going to be others. But I think that the fragmentation aspect and the ROI aspect is what is driving that delta a little bit. And then also certainly inertia, the desire to just do things the way that they have been done for so long, and you've been okay doing them that way. I think this is another aspect to it. I think one thing we have to be cognizant of is the cost perspective and the cost of accepting a payment in Europe as a merchant. So if I'm in the States, it might cost me all in, you know, the rack rate for a Square could be 300 basis points, give or take, so that's the  merchant discount. So if a customer is paying a hundred bucks, the merchant at the end will get settled 97, like the merchant discount rate. In Europe, like if you're using, like, let's just take France as an example. If I'm using a local scheme, a local card processor, so the local scheme would be Cardboncare, which is a local debit platform. If I'm using a local payment processor, which is maybe going to have a crossover and a local issued card. So all of that together, I mean, what you could be paying all in 20 basis points to accept that payment, 30 basis points. And so I'm talking about-

Hemmo Bosscher - 00:10:12: The joys of capped interchange.

Justin Forsythe - 00:10:14: Yeah, exactly. So, I'm paying 99.7, and so along comes software platform X, Epos Now, whichever one it is. That's moving into continental Europe. And they say, well, sorry, guys, like there are some costs to building this platform. We're going to charge you an ARR on a monthly basis, which you're already paying because you need the software. We want to embed the payments like, okay, great. How much is that going to cost me? It's like, well, that's going to be, you know, all in rack rate, a hundred basis points or 60 basis points. And, you know, you can go to the merchant and say, guys, you're doing a ton of manual reconciliation yourself. This isn't plugged into all of your backend accounting. This is a way better experience for you. You might save 10 hours a month. And I've heard that 10 hours a month. What do you value your time at? Is it 10 bucks an hour, 20, 30, 40, 50? Is it invaluable? But because they're used to doing it the way they're doing it, and they maybe don't realize the efficiency gains they'll get from it. You have this kind of push and pull where, you know, it can be challenging in some aspects to convince that-

Hemmo Bosscher - 00:11:10: It'll be slower,

Justin Forsythe - 00:11:11: The incremental. Exactly. However, eventually you're going to get to a point where it just becomes a tidal wave. Where everybody's using it. And there's like, how often do you go somewhere in the States or even in the UK and you see somebody with a notebook.? Keeping their books. You don't, right? But you might have 15 years ago. And so this is just something, it doesn't really matter, I think, what country. It's something that's incredibly relevant for modern systems, modern payment systems, which are built on card.

Hemmo Bosscher - 00:11:38: You said before, innovation in Europe moves north to south. Can you talk a bit more about that and perhaps explain, is there a market in Europe, maybe an unsung one or a surprising one that you're particularly bullish on? Because I think the industry focus often just goes to the biggest margin pools. So you talk about the UK, France, Germany, and then the others. Is there anything you see perhaps in the Nordics that's worth calling out?

Justin Forsythe - 00:12:00: It's a good question. So I think it's just going to take time and modernization. I think the way that I think the desire to modernize will come from, it might even come from competition. The way I think of say, U.S. companies coming to Europe typically has worked. The language barrier is obviously important, so the first step, the first jumping off point historically has been UK and Ireland. Then I think if I'm the one sitting there and about like, you have to put yourself in the shoes of somebody running the strategy team at insert company X, where do I go next? Probably thinking I'm going to go, what is the place that's worth the investment? Where is the biggest team? Where is the most money? Typically, that's going to be tied to the countries with the largest GDP pools, and perhaps the most modernization. And so if I'm company X, am I going to go to Spain first, second, third, fourth, fifth? And how do I go to Spain? Do I do an acquisition? These are the types of things you're thinking about. And so one example, I would say, like, I think Germany is a great example of one where the competition is really starting to increase, right? You've seen a U.S. player acquire a software platform in Germany. You've seen a lot of the players in their home country there acquire software companies like Nexi acquired Orderbird and in several others there. And so I think, why is that? Well, Germany's the second or third biggest economy in Europe, so where are you going to go next? Where's the biggest opportunity? And what's the most modern, right? If you compare and contrast that against France, where does all of the payment volume sit? Because you have this massively popular and successful local debit scheme, carte bancaire, and actually the banks control a lot of payment processing, that's going to be a really hard ecosystem to unpack and modernize because of the cost. So it's nuanced on a country by country basis. But I mean, if I'm thinking where a really big opportunity will be, and it's not going to be as immediate, I'm looking in Southern Europe, I'm looking at Italy, I'm looking at Spain. I think, you know, there's going to be a really meaningful modernization opportunity there. And I think as these other areas get more and more tapped out, you're going to see the desire to push into Southern Europe start to rise.

Hemmo Bosscher - 00:14:04: Yeah, that's interesting. I wasn't expecting that take. So that's genuinely interesting. Let's pretend we're the strategy team at Toast because you mentioned them before. Are you optimistic on your chances to duplicate the success you've had in the U.S. and do it also in Europe? Or are the headwinds that you explained already at length, are they too significant?

Justin Forsythe - 00:14:22: It's a really good question. I mean, I think there's an opportunity here because of that 25% I said before. And so if I'm anybody, I don't think it matters if I'm Toast coming from the States, if I'm Epos Now Now coming from the UK, if I am a Dutch platform saying, I want to control Benelux, Germany, DAC, Austria, whatever area, there's this big opportunity. And I think there's just going to be a little bit of infighting, I would say, all of these things are going to be coming together, confluence together at the same time, is there like the subscale software platforms you're saying, oh, I see these American competitors coming. Maybe we're going to need to up our game a little bit. Maybe we need to think about our embedded payment strategy. I think it could actually be one of the factors in this quote unquote tipping point that we're talking about. Does this then spur us-

Hemmo Bosscher - 00:15:10: Yeah, it's an accelerator.

Justin Forsythe - 00:15:11: Yeah, exactly. Does it spur us to make more investment? Does it spur us to go to another country instead of now? And it might actually as well say that there is, Toast sees there is opportunity. Toast also sees the saturation or the penetration levels in the U.S., and understands that there's large untapped opportunities elsewhere. So why not the players that exist in these geographies also see that? So I think it will serve as a kind of an increase of a competitive dynamic and perhaps an accelerator is a great way to say it.

Hemmo Bosscher - 00:15:40: That was the buy the book answer. And thank you for that. But if you were a betting man, and I would ask for your personal opinion, do you think it'll be a local hero that wins or one of these North American logos that duplicates their success or replicates?

Justin Forsythe - 00:15:52: I like the local hero narrative because you need to know the nuance of these individual markets, but you also need to be modern, right? I don't think it will be local just for the sake of being local. I think you need to have an understanding of the market such that if I'm going into France, I need to understand I can't just go in blindly because if I do, I risk going in investing and then going to a merchant and saying, hey, here's our proposition. We accept Visa, Mastercard and Amex and, we don't have the local allergens, right? We just have our go to the click.

Hemmo Bosscher - 00:16:26: Good luck to you.

Justin Forsythe - 00:16:27: And so if you're a foreign player and you understand all of that or you acquire yourself into the market, does that give you perhaps an upper hand at understanding the culture and the boots on the ground aspect? Absolutely. And so I like the local flair aspect to it. And I think there is an advantage there, but I think the local players can't think that there's a massive preponderance of time here to just sit on this advantage. They need to act now to realize, kind of. the tidal wave that is coming here and that they need to invest now in building out these propositions.

Hemmo Bosscher - 00:17:01: Well said. And if you look at, just to pivot a bit, if you look at the products built on top of payments, like capitals or MCAS loans, bank accounts, maybe card issuing, from an equity research perspective, how do you look at that? Is that everyone has to do it? Is it just a good value add? Only works in some verticals. What's your take?

Justin Forsythe - 00:17:18: I think, something that, and you said from an equity research perspective or from an investor perspective, to me, it feels like from an investor perspective, this is flying under the radar. So there's companies in the States that have been doing this for a decade, and Square is an example of one of those companies. But it feels like something that people aren't appreciating fully as an upside opportunity. And by the way, when we think about the size of the overall embedded finance market X payments, we've done plenty of work on this. We've sized that at 500 billion with a B, X payments globally. And so this is a very sizable market to play into. And so in our view, we perceive it as untapped potential, something that is accretive to the growth of players in this market, rather than something that is being embedded into any current expectations. And so I think also because it's such early days in the payments journey for software led in Europe, it's something where, well, if we're thinking about beyond payments. Can we even go there yet? And I think the answer is yes. It's happening way differently. So in the States, what happened is you had effectively software 1.0. Where you had more or less some of these, call it traditional software players with the point of sale software with either zero integration or very light touch integration to a bank-based acquiring terminal. And then over time, the objective was to sell in payments into those propositions, or you had some of the more modern cloud-based providers building it out themselves and almost inherently embedding payments within it. I think in Europe, it's going to be happening lock and step together almost in a way, it's like, oh wait, capital and payments, capital and bank accounts and payments initially, all at once. And so the thing that's really important here to get across more broadly, and maybe we'll come on to this a little bit more, is we are moving the nexus of where financial services are distributed to small businesses from banks to software. The small business does everything with their software. They do not do everything with their bank. And so if I can just easily get an embedded capital offer pop up, and it literally happens like this. So I have a coffee shop. I'm running that coffee shop. There's undulations in my sales, maybe because of the current environment you're having. An increase in your input costs. So I'm saying, well, why don't I front load some inventory purchases in coffee? Coffee beans coming from Nicaragua or something. Okay, great. Well, let's think about that. That's going to cause a strain on my cash flow, probably, because I haven't sold any more coffee. What might my embedded software provider do? Say, hey, Hemmo, Hemmo's coffee shop, do you want a loan? Just pop up, say, pre-approve 5,000 pounds, 5,000 euros. I mean, the power of doing that instead of, hey, bank, can I get a loan? Well, do you have your bank statements from the past three months? Yes. Well, what's your cash flow look like? Not much. Oh, okay. What's your FICO score? I'm an expat. I don't have a FICO score. Or my FICO score is really low. Okay. Well, sorry about that.

Hemmo Bosscher - 00:20:09: If they even look at the application for a low amount like that. 

Justin Forsythe - 00:20:12: If they even look at it, exactly. So I think with capital, this is, in my mind, the biggest opportunity. Actually, the size of the TAM is the largest out of the subcomponents of the embedded finance TAM and I think the two aspects here are, there is, you know, is this entirely going to be taking 100% share from the banks? No, I don't even think it's the preponderance of the share. I think the majority of it is going to be, right, as you say, this individual merchant, they weren't able to access capital before. But you ask everybody, they need it. They could use it. They could buy additional inventory. They could, you know, maybe do another location. They could get a new custom-built fridge to store more fruits and veg, whatever it might be, whatever type of business you have. And so a lot of this is TAM expansive. That business that wasn't getting access to capital before, this is something new. This is the ability to finance your operations. And so I think the question we think about then is like, what is the ceiling for penetration? So of the 50,000 merchants that software platform X has on their platform, what percentage of those are going to put their hand up and say, yep, I could use that capital loan. I think it could go pretty high. What the industry is telling me at the moment is like the quote unquote cap is 25-ish percent of the underlying merchants are putting their hand up to say, yep, I want that at the most mature SaaS platforms.

Hemmo Bosscher - 00:21:33: Yeah, but I mean, you explained it before, you hinted at it, there's so many growth factors to this. From the normalization of these software platforms, payment penetration, then you've got the penetration of the product itself. And yeah, now obviously we're very bullish on this as well. We're making a big bet, big, big bet in this space. When you think about that though, that sort of cultural shift to taking banking services from a software platform instead of from your bank, I would argue the U.S. and the Anglo-Saxon markets are a lot further along than a market like continental Europe. And we see now today in the offerings that software platforms put out, many business owners still hang on to their normal banking relationship. You know, they've still got that on the back burner. How long do you think that'll take before they no longer need that? That the bank account and the services through a software platform are so feature-rich that they don't need a relationship with the bank around the corner. That's not even around the corner anymore because they closed all their offices anyway. So how long?

Justin Forsythe - 00:22:29: It's a great question. Our folks at UBS Evidence Lab, which is the data side of UBS research, a unique offering that we have. We've done a survey, a merchant survey. We had respondents across the U.S., the UK, and three countries in Europe. So Germany, France, and Italy. And one of the reasons that actually spurred us to write this piece of research on embedded finance, which we put out in early February, which was very simple. Would you take a working capital loan from your software provider in the next 12 months? So I'm not even talking about ever, right? The question was very, very targeted in the next 12 months. You want to know what the response was? 75% likely or very likely to take a working capital loan.

Hemmo Bosscher - 00:23:10: Wow. In which markets?

Justin Forsythe - 00:23:11: That's in Europe.

Hemmo Bosscher - 00:23:12:In Europe. Wow. 

Justin Forsythe - 00:26:13: It was way higher. But so like the thing is, if I'm a merchant and I need a loan, like, do I care where it comes from? I guess maybe that's the better way to think about it. But also it shows that, well, I'm already getting stuff from my software platform. And so, and maybe I think we were skewed on verticals, right? So we were looking more at restaurants and retail. And so are there certain verticals where maybe the response rate would be much lower? I think that's certainly possible.

Hemmo Bosscher - 00:23:24: Yeah, probably. Yeah.

Justin Forsythe - 00:23:35: And so the question is, well, is the demand being met by the SaaS platforms, are the SaaS platforms building in functionality? Maybe you have your embedded provider that's already kind of providing X number of pre-approved loans and the SaaS platform is just not pushing them out actively. And so, like, again, what it says, we asked, is embedded capital available to you as a sub-merchant? And 60% globally said yes. And so maybe that delta talks to a little bit the fact that the offers aren't being pushed out as actively. But genuinely, I think, I guess the key here is that there's, I think, a really huge opportunity for capital.

Hemmo Bosscher - 00:24:12: And do you think looking at capital and looking at the space and how it previously moved from referral traffic to embedded payments traffic, that this will again separate the winners from the losers? Like, should these software platforms be in a hurry to crack this?

Justin Forsythe - 00:24:24: Yeah, that's a good question. And I guess following on from, kind of, the earlier part of your prior question, like a lot of software platforms are almost making this an opt out now. Or you have the opportunity to do it. So, hey, you're just saying we're going to do it this way. We're going to settle the payments into your software platform X bank account.

Hemmo Bosscher - 00:24:42: Yeah, they're mandating it essentially. Yeah, absolutely.

Justin Forsythe - 00:24:45: And then that's what they're doing with payments as well. And so I think the challenge has been for some of the players that existed in the space historically is saying converting the back book, if you will. Hey, I've been using software platform X for 15 years. Like, do I risk churn to go back and say, hey, we need you to do this now? I think most are saying no. They're kind of actively pushing it. But if I'm taking down a new software proposition, it's just going to be this way unless you ask it not to be this way. So you're going to be creating friction around actually not doing it, even more than there already is. And so I do think, look, is there a convenience to going to a bank? Are all merchants going to say, I do not need a banking relationship, right? The larger and larger you get in size, the more sophisticated your life is going to be. Perhaps the ability to do more complicated things on the borrowing side needs to be there. Maybe you have cross-border needs and there's like a treasury aspect to this that requires, maybe, a more sophisticated approach, if you will. But holistically, in my view, I think it's something that will happen over time. And, you know, could it be that one outage that puts you over the edge and says, all right, like I'm done or that one loan that you don't get. I think is a type of stuff that starts to kind of, it just eats away over time.

Hemmo Bosscher - 00:25:59: If you stick to restaurants, you think you can get quite near 100% penetration for software in the end.

Justin Forsythe - 00:26:04: We don't have any particular estimate, but I think that is one of the most obvious verticals and you're seeing incredibly high penetration levels there. And so it's the other ones where it's not as obvious, maybe it's more B2B focus, you know, maybe like medical, or other things where you have a super complex backend infrastructure to settle payments, request reimbursement, et cetera. More bespoke things become more challenging and require more backend providers to enable it. And maybe those types of verticals, petrol. Like you can think of certain ones that maybe take a little bit longer and have a lower ending point, if you will.

Hemmo Bosscher - 00:26:38: Can I touch on something you said previously, which is that the embedded finance still has a lot of unaccounted for upside that you don't see necessarily reflected in Share prices currently. If I were an operator building a company in software, what are some needles I could, or some tiles I could turn to inspire that investor confidence in my embedded finance strategy? Like, what do you think are good leading indicators for success in this space?

Justin Forsythe - 00:27:01: This is a good question. I mean, I'm not going to say anything groundbreaking. If you're growing a SaaS platform, right? Anybody that's looking at a SaaS platform is going to be looking at locations, ARPU, which is revenue per location or revenue per unit as indicators of broader success. I think as you move forward, the easiest way to measure this is penetration rate. So of your volume, how much of it is embedded. Of your attach rates of capital issuing, et cetera, what is your attach rate? And comparing that against industry benchmarking, right? So if I told you before that, what is viewed, at least currently, and I think it could go higher, but as the kind of industry benchmark or the highest level of people are seeing is 25% adoption of capital. And so benchmarking yourself against what is seen to be the industry standard and the pace versus when you initiated doing it, all of that stuff. But I don't think there's any magic bullet to doing it. It's just increasing adoption rates over time.

Hemmo Bosscher - 00:27:52: Yeah. It's simple in theory and difficult to practice. I think that we're all finding. Have you seen a shift in the last five, six years, in or an evolution perhaps in how embedded finance is seen by the investment community?

Justin Forsythe - 00:28:03: I think what I would say is there's a little bit of a debate here. I think, and maybe this is an obvious thing to say, if I am an investor valuing a bank or a financial services company, the multiple, shorthand for valuation, for those of you that aren't financially inclined, is lower for financial services companies. There's a lot of reasons for that. A big one is volatility tied to the underlying rate environment, and again, there are a lot of reasons, and I am not a bank expert. I have amazing colleagues who look at that sector. But when we start to see an over-indexation to bank-like revenue streams, i.e. Interest income, you will start to see kind of a desire, potentially, to think about that stream of revenue in a different light, and so conversely, if it becomes something closer to an origination model where there is less balance sheet involved, and that's one of the other things.

Hemmo Bosscher - 00:28:53: This is just fee-based.

Justin Forsythe - 00:28:54: Yeah, exactly. Much more capital to perpetuate the program. There's a different perception of that program. We've seen publicly traded players in the past that I built a credit card program over time. It's becoming of meaningful size. Investors start asking questions. Then that gets sold to a third party, or you create securitizations or forward flow arrangements, meaning I'm taking these loans and shifting them to a third party. I might retain a little bit of the risk. I'm going to retain the origination unit economics. I'm still doing the underwriting, and I have some skin in the game because I am retaining a portion of the risk. But I think that's, for a lot of companies, that's the business model going forward. Because does any technology provider in the payment space desire to be a bank or want to be viewed as a bank? I think not. And I think that reflects itself in the valuation as well. And so in my view, it certainly is a pretty stark dichotomy when you look at those that are kind of focusing on bank-like activities and kind of more of an origination technology-driven model.

Hemmo Bosscher - 00:29:51: And you would suggest that's the right strategy. You would advise them to stay on that track.

Justin Forsythe - 00:29:55: I think it depends what you want to do. I don't think there's anything wrong with, say, managing all of this risk, balance sheet risk, if you will, yourself. It's just, if your objective is to be viewed as a technology platform, you would just begin being viewed as a bank. There's nothing wrong with being a bank, in my view. So, and it's just more complicated to do. Like I have to have an entire capital markets, what you would do anyway, probably, but an entire capital markets infrastructure that's supporting the growth of this business in the managing of the balance sheet. Well, once I have the balance sheet, what do I do with the balance sheet? You've got a whole asset liability management team that sits on top of that, that figures out how to make these things offset, how to manage duration risk. It gets very complicated, very quick. And so I think probably the removal of some...

Hemmo Bosscher - 00:30:38: Might not be what you're best at.

Justin Forsythe - 00:30:39: The removal of some of that operational onus to somebody else, investors, another bank, a securitization vehicle might be the optimal strategy for those that are technology focused.

Hemmo Bosscher - 00:30:51: Absolutely. Justin, you've been a fantastic guest so far. I want to ask one last question.

Justin Forsythe - 00:30:55: Oh, make it easy.

Hemmo Bosscher - 00:30:37: You can make it as easy or as hard as you'd like. But you've analyzed a lot of the biggest players and a lot of the winners and losers in this space. And at Adyen, I personally also often encounter founders with a fantastically quick-growing company with ambitions in the space of embedded finance, embedded payments, and then the financial products. What advice would you give them roughly? Maybe about sequencing of products, the things to focus on first. Do you quickly expand into different geos within Europe or do you stay in one market? Do you have any sort of foundational principles or pillars of success that you see are sort of shared among the winners?

Justin Forsythe - 00:31:32: It's a great question. Look, and I think founders know their business best as well, right? And so there will be so many people out there offering unsolicited advice.

Hemmo Bosscher - 00:31:41: Well, this is very much solicited.

Justin Forsythe - 00:31:43: Yes, exactly. I want to caveat this with like, you're the founder, oftentimes, you know, your business incredibly well. And so take everything with a grain of salt against every single talking head of advice that gets thrown out to you. I think my personal view from talking to a lot of players in the space, and we do a lot of networking with private companies in this industry, many of whom may even end up listening to this podcast. I think right now, think about the future state of your business. And so payments, this isn't specific to merchant acquiring. This is a broad FinTech point, which is to think about the future revenue model. And if we have a base case right now, which says, okay, well, this is, I'm selling something because this is the cheapest way to do things. It's cheaper than what the current players in the market are charging. But like, what if the business model needs to evolve to represent something that's more similar to the current way it exists? And if that business model needs to evolve, then I need to charge more to make this commercially viable. And if I need to charge more to make it commercially viable, does it then end up looking very similar to what the current thing looks like and the current fee structure looks like? And so I think a future proof, a viable business model tied to the way regulation and the way the market is structured has to be an imperative part of your strategy and a potential profitability path. We've gone through a phase where there was cheap capital. I don't think that means that there were bad companies built during that time. It's just the focus was different.

Hemmo Bosscher - 00:33:05: Absolutely. There were, Justin, come on. This is a straight talking podcast. The money was free. It was a ton of bad ideas at the time. I remember it well.

Justin Forsythe - 00:33:13: Hemmo, you're right, but there's always bad ideas. That's not tied to the times. I think it's just tied to the-

Hemmo Bosscher - 00:33:16: But they're not always funded is my point.

Justin Forsythe - 00:33:19: Maybe. You're right. But I think, these were things that were, I think in a way had to be built and, you know, you go through market cycles. There's going to be an overemphasis on any given thing, right? And I'm not going to call out specific trends on that. But I think, again, we need to think of things that are solutions-oriented, problems-oriented, rather than a solution in search of a problem and tying that into this viable revenue model point. And so, do I have a really good idea? Well, does that really good idea have product market fit? I'm not saying anything groundbreaking here, but I think this world is littered with, particularly FinTech, with a requirement for multi-sided adoption oftentimes. I need consumer uptake and I need merchant, business, whatever uptake as well to create this multi-sided network of flywheels. And if I'm someone building in this space, I need to think, what problem am I solving for consumers? What's going to cause me to adopt this? Is it going to drastically reduce my time to check out? Is it going to drastically save me money? Answer these questions in your head. I mean, I'm sure many of you have, but again, like sometimes you get focused on building this incredibly slick thing that's been enabled by regulation or what have you. And then all of a sudden it's like, well, wait, what am I solving here? And so-

Hemmo Bosscher - 00:34:30: There's no use case, yeah.

Justin Forsythe - 00:34:31: And it's not that there's not a use case. It's that, you know, how, why would a consumer or a merchant or a business adopt this thing over what they're using currently? Because people, inherently there's inertia in life. You know, is it challenging to change my integration to my checkout page or painful to change the addresses within my Rolodex of card payment methods. All these things, these inertias, like we've got day-to-day lives to live. So how do I solve these problems and make it incredibly obvious what the value proposition is? And so that's one point. I think the other thing is international expansion is very hard. I think nine times out of 10, like it's very good to put it on a slide deck, but I think it also has to be well thought out and it can be incredibly challenging. And it kind of goes back to one of the points we were talking about with the preponderance of software across Europe is a not so well thought out international expansion can be, I don't want to say crippling, but just very challenged. And so, yes, international expansion is important if you want to grow your business. Absolutely. There are going to be, in talking to founders, there's so many things that we're not going to say, oh, we built this for this purpose in this country. And now we're going into country Y and we're like, wow, okay, things are really different here. We've got to talk to all the regulators here. Like there's different regulations. There's different regulators, there's different people to be connected with. The payment system itself works a little bit differently. And so it does require a degree of nuance. Obviously, you need to move fast and break things in the starter landscape. But also, I think you just need to be prudent in thinking through those couple of things. But overall, I think the FinTech space as a whole has done a very good job of a lot of these things. And there have been plenty of incredibly successful businesses out there. So excited to see what comes in the coming five to 10 years. I think there's a lot of growth for Europe as a FinTech ecosystem as a whole.

Hemmo Bosscher - 00:36:17: Absolutely. Let's end on that. I know- Thank you very much, Justin. And good luck with everything. I hope you see your son again soon.

Justin Forsythe - 00:36:24: Thank you so much for having me. I really appreciate it.

Hemmo Bosscher - 00:36:26: Bye-bye. Absolutely.

Justin Forsythe - 00:36:27: Very good.

Hemmo Bosscher - 00:36:29: With the big picture in mind, let's shift to the platform perspective. Welcome back to Adyen Presents: Embedded Finance. We are joined today by the CEO of RMS, Adam Seskis. Adam, welcome. Thank you so much for coming on the show all the way from Australia. Can you take a few minutes, please, to introduce yourself and also RMS and what you're trying to change in the world?

Adam Seskis - 00:36:51: Yeah, thanks for having me on, Hemmo. It's a real pleasure. You've got it, Adam Seskis. I recently joined RMS as their CEO in December of last year. I've spent 25 years in SaaS, technology companies, primarily in the governance, risk and compliance space. Lived in New York for 15 years, spent time in, again, public companies, private equity owned, joined RMS to take them really through the next phase of growth. RMS has been around for 40 years in Australia. We're a property management software company. We provide software that helps everywhere from caravan parks, campgrounds, three to five-star resorts, really run their business. So we're connecting the guests to the room, managing the staff, basically ERP for accommodation providers. And we've recently added a billing capability through embedded payments in the last 24 months.

Hemmo Bosscher - 00:37:46: Okay. Did you say 40 years? Four zero?

Adam Seskis - 00:37:48: Four zero, yes.

Hemmo Bosscher - 00:37:49: That's an impressively long time to have built a software company. So what is that, 1985?

Adam Seskis - 00:37:55: Correct. Yeah. Our founder, Peter Buttigieg, saw an opportunity in the market. And one thing he's done exceptionally well is listen to our customers, which is really the theme for how we're delivering our software today.

Hemmo Bosscher - 00:38:04: Right. And when did payments become a part of that journey? How far into the 40 years?

Adam Seskis - 00:38:08: Look, it's really been over the last five to six years that we've had some type of payment capability, whether it's integrating with a payment gateway, but we've really focused on embedding payments into our software in the last 12 months. 

Hemmo Bosscher - 00:38:21: And was that a decision that originated from your customers or from you strategically and the rest of the management board or investor pressure? Why did you go for that?

Adam Seskis - 00:38:30: Listening to our customers, it's kind of the core tenant of the business. Our customers were frustrated with reconciling all of the payments every night. If you've been at a retail,  and wonder what happens from like 8 p.m. to 4 in the morning, they're generally doing paperwork. And we saw a real opportunity to simplify.

Hemmo Bosscher - 00:38:47: Okay. And what's the uptake been like?

Adam Seskis - 00:38:49: It's been great. So we are now, we have about 7,000 properties in 70 countries. We launched last year with our full add-in for platform capability. We've got to about 10% penetrated in our existing property base. And we're basically through the platform processing close to a hundred million dollars of transactions every month.

Hemmo Bosscher - 00:39:09: Very impressive. So 10% penetration, is it your goal to get to a hundred or you think that's a pipe dream that you'll never really achieve?

Adam Seskis - 00:39:16: We'd love to get there. I think getting to 50, 60% over the course of the next 12 to 18 months is a realistic goal for us.

Hemmo Bosscher - 00:39:23: And if you, let's say you get to 50% penetrated, would that then drastically change the revenue mix in your business or has it already with the 10%?

Adam Seskis - 00:39:31: Look, it is doing that for sure. And I think one of the topics of certainly your interview series is around how do we create value for shareholders and investors? So one of the challenges is balancing that core subscription revenue with the transaction volume. So what we're doing is integrating more of the payment processing as part of the core platform to make sure that when we do kind of blow it up from a revenue perspective, that we're also creating value along the way. But it will be a significant part of our revenue going forward.

Hemmo Bosscher - 00:40:00: Good to hear. And let's talk a bit about your geographic spread. You're obviously headquartered in Australia. Can you talk a bit about sort of the footprint that RMS has today and maybe your ambitions for the next few stages?

Adam Seskis - 00:44:10: Yeah, our core markets, Australia is where we started. So Australia and New Zealand represent the majority of our property base. We've got a significant presence in North America, as well as the UK. And then in Asia, I kind of really headquartered out of Singapore, but in a lot of Asian countries, but Singapore is where the majority of our Asian businesses are.

Hemmo Bosscher - 00:40:28: Oh, thank you. And then let's switch gears for a minute to the topic of today's conversation. Investors and their involvement in SaaS platforms. If you think about the geographic spread of RMS, are your backers, your investors, are they from the same sort of regions or an altogether different space?

Adam Seskis - 00:40:43: No. So investor Adyen Partners is a Melbourne-based private equity firm, middle market, and they focused on investing across Australia, not really industry specific, but they see the opportunity in North America, as well as in Asia with this offering, not just on the core platform, but also on the payments piece of the business as well.

Hemmo Bosscher - 00:41:02: And you as the sort of the CEO and the main operator of the business, is that a helpful relationship for you? Like what gains do you get from that relationship other than the sort of the stake they take in the business?

Adam Seskis - 00:41:11: Look, I've been in public company environments as well as private equity. And I think private equity is the perfect mix of a group of aligned shareholders or working towards a shared vision. We're all stakeholders. We have a short timeframe, clear objectives. We get the investment that we need and we can deliver on a timeframe that isn't tied to producing a quarterly earnings report to the market. So Adyen is a great partner. They're committed to growing the business, make investments. And of all of the investment types, I think one of the most quality capital partners you can have.

Hemmo Bosscher - 00:41:43: Yeah. Perhaps one of the more dependable. That's an interesting point you made on quarterly earnings. Do you think in some public company environments that it's detrimental to have that of a quite natural quarterly cadence?

Adam Seskis - 00:41:54: It is. I've seen it in real time where you might choose to make an investment decision that might not pay off until 12 to 18 months down the road. Balanced against driving to a EBITDA or earnings per Share number in a quarter, it can shift the focus.

Hemmo Bosscher - 00:42:08: So if you were giving advice to a CEO of a much smaller software platform with embedded payments ambitions, then for their exit or for their sort of monetization for their own stake, you would say find a private equity partner, find maybe a stable VC, don't necessarily go list.

Adam Seskis - 00:42:23: Look, I think go list can sometimes deliver unnatural returns, if I can put it that way. I think private equity is more of a market value buyer. However, we'll buy into growth objectives and growth numbers. It depends.

Hemmo Bosscher - 00:42:37: Do you want to keep running it to make it successful or do you want to go to the beach for the rest of your life?

Adam Seskis - 00:42:42: Yeah. Do you want to be there, for like, the next phase? And sometimes it just unlocks the value. You kind of need a little bit more investment, a bit of more patience. And that's where private equity can be a good fit.

Hemmo Bosscher - 00:42:51: Yeah. Let's keep that audience in mind. So let's say we're co-founders of a smaller platform. And what advice would you give yourself?, like, in the investment community, what do you think they want to see from software platforms? Is it growth, early profitability, key team? What are some of the key ingredients?

Adam Seskis - 00:43:07: Yeah, look, I think management teams are often forgotten about, but core, particularly for private equity, they're generally back management teams and spend a lot of time focused on them. When you think about the financial metrics, I think it used to be growth at all costs.

Hemmo Bosscher - 00:43:22: Yeah, I remember.

Adam Seskis - 00:43:23: Yeah. Fun times, you know, business growing. Oh, no cashflow.

Hemmo Bosscher - 00:43:27: Okay. Well, when we listed in 2018, I remember distinctly that it was very much the growth at all costs age. And the fact that we were profitable was seen as like, well, why don't you just grow more? Forget about the profit.

Adam Seskis - 00:43:38: Exactly. But I think, certainly, in the private equity space where there might be some leverage involved, you've got to be generating cashflow. But certainly, The Rule of 40, is an often quoted metric out there to make sure there's a balance of growth and profitability and kind of how you might.

Hemmo Bosscher - 00:43:52: Can you talk through that a little bit just for everyone in the audience?

Adam Seskis - 00:43:54: Yeah, sure. So, The Rule of 40, is one of these kinds of investing principles that provided that the growth rate and the profitability margin add up to 40, you're doing well. So you might have 30% growth, 10% margin or 20% margin, 20% growth was a kind of quality.

Hemmo Bosscher - 00:44:12: You provide over 40, you're good.

Adam Seskis - 00:44:13: Yeah. But look, still, it's different for different businesses. Certainly with PE and strong venture investors, they are going to be looking at the quality of your customer base. And a lot of the SaaS contracts are moving more to monthly. What are the switching costs like? Length, you know, total lifetime value of the customer. What's the cost to acquire churn rates? They're going to really dig into the quality of the customers. So I think you've got to be thinking about that as you grow the business. You know, what can I do to retain, reduce my cost of acquisition is really, really key. And build a great team.

Hemmo Bosscher - 00:44:43: Okay. So, a good team, like management first, then the rest of the business, you want a healthy “economics” and a solid early customer base.

Adam Seskis - 00:44:51: Yeah. Cash flow is good too. But I'm a bit old school like that. I like to, you know, you should always be thinking about, even if you're not generating at the rate you want now, you need a path to be able to put some money in the bank.

Hemmo Bosscher - 00:45:03: Absolutely. Thank you, Adam. So we've talked a bit about what's needed to be appealing to the investor community. If you are just starting out with the software platform, just on RMS, back to RMS, do you think it's changed the, not the nature of the business, but do you think it's changed the way that your private equity backer and also the investment community at large look at RMS now that you've been able to successfully embed payments, albeit at a 10% penetration rate, that's still significant on your portfolio. Has that changed the appeal at all? What do you think?

Adam Seskis - 00:45:32: Yeah, I think it certainly created more appeal for a couple of reasons. One, is the revenue is growing faster, although the margin quality of that revenue differs from our software business. The gross profit from that part of the business is significantly higher. However, Top Line is growing very fast, which is great. I think that the second piece, though, which is probably more important, is we're really solving a customer problem and creating stickiness with our customers, which is probably the most important thing. As I talked about earlier, churn, the lifetime value of customers, we can reduce churn, and increase the value of the customer to RMS. We are going to be meeting our investor needs. And the way I think about it just personally is if I'm delighting our customers and I've got a highly engaged workforce, the numbers generally take care of themselves. And we're seeing that at the moment with significant savings. There's up to 10 hours a week most of our properties are saving just from the reconciliation time, let alone the reduction in fraud and the simplification of payments for the guest. There's real savings here and it's driving a lot of value.

Hemmo Bosscher - 00:46:34: Yeah. Happy customer, happy team. In the end, it's quite simple. The business we're in.

Adam Seskis - 00:46:37: Very simple.

Hemmo Bosscher - 00:46:38: Yeah. Back to embedded payments and the appeal to investors. Maybe you can touch a bit on RMS's own ambitions around embedded finance, sort of anything beyond embedded payments, maybe, I don't know, factoring. Maybe you want to give capital or loans to a hotel or a property with urgent need to remodel or expand. Is that something you're playing around with? Have you had any conversations with your investor on that? I mean, obviously it's happening all around us in this space. I'm just curious where you stand on that.

Adam Seskis - 00:47:05: Yeah. Look, we're earlier on our journey, but we see that in our future, particularly things like invoice factoring, short-term lending, all off the back of the credit worthiness of our customers that we have deep insight into now that we've been delivering payments for them. So I think that the nascent opportunity for us today is leveraging the incredible data that we have and collect on behalf of our customers. So we've just come out of our, I'm three months in, we've gone through the strategy planning process. There's a big number next to that, alternative finance, we'll get after it, but don't know exactly what that looks like now, but we know it's an opportunity for us down the road.

Hemmo Bosscher - 00:47:42: I think you just described, I think, the state of most of the industry. Like it's quite early days to what it can become. Like there's a big number on the horizon, but everyone's trying to find their way.

Adam Seskis - 00:47:51: Yeah, I think that's right. And I think the whole lending game beyond obviously what we're doing here is around risk. And the better information you have around the quality of your customers or your counterparty, the better we can deliver services, minimize our risk, create value on both sides, whether it's revenue or greater stickiness is only obvious. And we just need to start taking advantage of that.

Hemmo Bosscher - 00:48:14: Absolutely. Well, I mean, you also just described what I might say to our team here at Adyen.

Adam Seskis - 00:48:18: Yeah.

Hemmo Bosscher - 00:48:19: Thank you for that.

Adam Seskis - 00:48:20: My pleasure.

Hemmo Bosscher - 00:48:21: So you've been doing this for three months now. Are there any metrics that your investor looks at that sort of surprised you with your, you know, you've got ample experience elsewhere. You come in, there's some things that they find interesting. You go, huh? Why on earth would we be looking at that?

Adam Seskis - 00:48:33: Again, not coming from the payments industry, I've learned more than I need about the banking rails and the blend of cards and 3D Secure, you know, how much is going 3D Secure 3DS security, how much is not. Look, the surprise for us has really been just the explosion of revenues that's been driven by this part of our business. So that's been a nice surprise. However, we are really digging into the profitability of this part of the business as well, because it does fluctuate from month to month, particularly around our pricing model and how to think about pricing this in the marketplace. Obviously, more sophisticated markets will be an IC++ pricing model. Obviously, we'd like to deliver a simpler blended pricing model. How do you get that price together? How do you make sure it reflects what's going on in a particular market? So for us, it's really been digging into the data that you guys collect in the Adyen platform, which has been incredible for us, as a kind of business decision-making tool. I tell my team, we're flying a plane and we need the best instrumentation possible. And I think the Adyen for platforms component of that has been very instructive for us as we think about where to take pricing, what's going on with our business is very powerful.

Hemmo Bosscher - 00:49:40: That's really cool to hear that it's really helping you on the ground. Yeah. Thank you for sharing that perspective. Let's switch back to this entrepreneur. If they're just thinking about changing their software business into a software business that has payments integrated in an embedded payments fashion, is there any sort of key advice or learnings that you would share with them, noting that you've been in the job for three months? So I'm not expecting you to have all the truths.

Adam Seskis - 00:50:02: No, I won't have all the answers yet. But I mean, I'd say a couple of things which do kind of relate to being in the business for only three months. One is like, get smart on payments. I am literally talking to anybody I can find about payments, about how they're implementing it, what problems they're facing, how they're dealing with some of the challenges we're seeing. You've just got to get smart. It's a complex environment. It's one of these systems that's grown up. And if you had to design it today on a fresh sheet of paper, you probably wouldn't design it the way it is today. So it's not intuitive. I think I'll describe it that way. So get smart. And then second, find out how your customer is dealing with money today. Like, are they using a third-party gateway? What are they doing in that? How can I deliver some operational efficiency or reduction in fraud or increase in revenue through an embedded payment solution? And let that be your guide on the next capability to deliver on the payment side. If you're not connected to your customers and not connected to people that know what they're doing in payments, you may have a few misses if you just try and launch it thinking, hey, I want to get into payments and start somewhere. Give Adyen a call. Like, seriously.

Hemmo Bosscher - 00:51:12: Thank you for the shout out. But I think it's also a good sort of caution there. Words of caution, I mean, because in the last few years, anything to do with embedded payments or embedded finance has seen a lot of sort of money flood into the space. And I fear that there also might be some overly ambitious founders who forget that payments is an ecosystem all of its own. And obviously, I work for Adyen, so I would say you need a really good partner. But I'm sure you can attest to the fact that it takes three months to even learn the lingo before you can join the conversation to learn what you're supposed to be talking about. At least when I started my own journey in payments, it was very much that. Like, I thought a bin was something other than, well, you know what I mean?

Adam Seskis - 00:51:47: I have a little, it's very kind, one of my team provided me with, like, a little map of like payments and what happens and who the acquirer is, merchant, the submerchant.

Hemmo Bosscher - 00:51:55: Send us that. Maybe we can use it here in our onboarding.

Adam Seskis - 00:51:58: And it sits on my desk next to me. In addition to, like, a market map of all the competitors, the two most referred to documents in my office. It's a little embarrassing sometimes, but I'm getting there.

Hemmo Bosscher - 00:52:08: Hey, thank you so much for this chat. I'd like to give you an opportunity. And I'm also just really curious. You took on this position, I'm sure with great ambition and optimism. Can you talk a bit about what's next for RMS and what you're looking to do over the rest of this decade, perhaps? Roughly, don't give us any insider information, of course, but just to, you know, excite the crowd.

Adam Seskis - 00:52:26: Yeah. No, look, we are, we're excited. There's a lot of investment coming into the Hospitality technology space. As I said, I spent a bunch of time in the governance risk compliance space around law firms and legal departments, which I thought was laggard as it relates to the adoption of technology. Hospitality is also a laggard. So there's, you know, plenty of opportunity there. But the good news is the problems have been solved before. It's not, you know, yes, there's complexity, but the problem itself is not complex. It's really about what would be like the optimal state for this industry. And that's where we're going to go based on the technology available to us today. And for us, it's taking our customers on that journey. And really this concept around technology being siloed, you need to be a platform player. And that's really our model right now is moving more towards a platform, high level of integration with partners like Adyen, as an example, and making sure that we're really following our customer and helping them do three things: optimize their revenue, increase their efficiency, and then delight their customers. If we do those three things well, we'll be successful. And we're kind of doubling down on our software development, our payment solutions. And yes, we've got embedded payments today. What are those other financial products? This industry is really starting to take off and we're really excited about it.

Hemmo Bosscher - 00:53:39: Well said. Thank you so much, Adam. Thank you for joining us today.

Adam Seskis - 00:53:42: It's my pleasure. Thank you for the time.

Hemmo Bosscher - 00:53:44: Thank you to our guests for sharing their insights. There's lots to digest from today's conversations. But if you take away one thing, let it be this. Investors see embedded finance as a very interesting opportunity. And platforms that integrate these products most effectively and most quickly stand to unlock great growth opportunities. Thank you for listening.