@jcmleng can't argue with a lot of what you said, a relatively bullish take. i am not a shareholder, but listened to the call. An acquisition or something was to be expected as the aim is to make XRO a broader platform that is as relevant as it was before--everyone wants this, similar to attempts by INTU, which has gone down a different path, with variable results.

IMO the easy part is done, cut costs, scrap the old approach to creating a platform, price hikes, to get profitability and SP higher, and that has worked, now the real action starts.

Is Melio the answer? We will not know for a while, but with the XRO SP where it is, there is a weapon to use. The deal is large but not breathtakingly so, given XRO's market cap. 13% deal. also, i note that Melio management has largely cashed out, although im not sure what shareholding they had, but about 14% scrip/86% cash mix. the lack of dilution is surprised me, and XRO are using their SP well.

the guidance is odd, 2X revenues by 2028, and breakeven (Melio is loss-making) and back to rule of 40 by 2028. all these don't make a lot of sense to me, they look underdone, i had XRO revenues almost there without the Melio growth, so it was a bit odd, they should do a lot better, are they being conservative or Melio will take a long time to get to b/e. idk

i think the target of SMB market is reasonable as INTU is a fierce competitor, and a frontal assault may be unwise. Melio looks to be the main driver in the US and is a lot bigger than the XRO biz, so outsourcing the main thrust, backing Melio management here. interesting but not silly

In conclusion, using an expensive share price for growth isn't a bad move, expensive for expensive, the strategy execution is what matters now.

@Solvetheriddle , won't say my view is a bullish one, more like a "Its not stupid and does makes sense, BUT ..." view! But agree with your thoughts.

This is a Livewire Markets piece which describes the "OK, but ..." feeling.

Listened to the Webcast last night and there is clearly more to the deal which I don't quite understand and needs a deeper look::

• fiserv - which is the integration to the banks and it feels like the fixerv payments platform uses Melio as a white label A/P solution via a "syndication agreement (I don't understand what this all means!)
• Melio has invested big and completed the integration to fiserv to ensure connectivity to the banks. There is then mention of the fiserv Cash Central solution replacing the old "BILL" solution and customers of banks who are on the BILL solution will eventually migrate over to fiserv. But this pipe to fiserv is valuable as this provides access to the ~18m SMB's that use fiserv for payments
• Melio has a ~80,000 user base - not big, but very attractive to XRO as they may not have any accounting-related capability
• Melio has 2 customer bases - (1) Monthly Subscription paying customers - these are customers who want the efficiencies of a Payments system and who may or may not do payment trasactions as well and (2) pure Payment customers who do not pay a monthly subscription fee, but instead pay a transaction fee for each payments made. A new customer can pay either a monthly subscription or payment transaction fees, or both
• Melio will bring pure payment transactions revenue into XRO's revenue base
• Profile of Melio customer is very much aligned to that of XRO in terms of company and employee size
• Melio capabilities are also very much suited to large businesses - this will provide opportunities for XRO to open up the medium sized business market
• Not sure if I understood correctly, but Intuit has also exited the BILL solution to build their own payments capability
• Given the deal will take 6M to close, then a few more months to integrate, the financial impact will only be felt in FY26 onwards

The merger is thus not a straightforward Melio-into-XRO, but rather the integration of 2 quite separate platforms, each with their own ecosystems, but which XRO can absolutely leverage on to grow the US market.

@jcmleng yes i think looking at it as two businesses is best. Melio appears to be a a/payable specialist. Being white label for Fiserv means that the Melio product is good but Fiserv dont want them taking control of the customer relationship. so it's a profit stream for Melio, not sure if it develops into anything else? Melio is much bigger than XRO US, so it looks like it could be an accounts payable or payments solution offering with an accounting piggyback. That's ok.

If I was an XRO s/h, i would be looking for the Melio ebitda losses to reduce quickly, and some progress on cross-sell at some point so + revenue impact on the XRO biz. The payments market is ferociously competitive so you have to watch closely. usually, initial progress or not, can be extrapolated, so early positive signs are important. i think the real game starts now for XRO in the US.