WEBVTT - ICYMI: Your AI Accountant Is Here

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>You're listening to Bloomberg Business Week with Carol Masser and

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<v Speaker 2>Tim Stenoveek on Bloomberg Radio.

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<v Speaker 3>A company that plays in the cloud and data really

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<v Speaker 3>works with small business companies A great read. In fact,

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<v Speaker 3>we're talking about the company Zero. It's an eighteen point

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<v Speaker 3>one billion dollar market cap cloud accounting software and small

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<v Speaker 3>business platform company. So Kinder saying. Cassidy is the chief

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<v Speaker 3>executive officer of Zero, which trades outside the United States,

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<v Speaker 3>is based in Wellington, New Zealand, and she's joining us

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<v Speaker 3>from San Francisco on this Tuesday. So Kinder, good to

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<v Speaker 3>have you here with Tim and myself. Tell us a

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<v Speaker 3>little bit more about your company, the bulk of your business,

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<v Speaker 3>where growth comes from, who your customers really are industry

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<v Speaker 3>wide as well as geographically.

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<v Speaker 1>Sure, well, thank you so much for having me on.

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<v Speaker 4>As you know, Zero is a cloud based accounting platform

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<v Speaker 4>global in nature. We're about two point one billion dollars

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<v Speaker 4>in revenue aud We trade on the ASX. But the

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<v Speaker 4>most important thing is we have over four million customers

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<v Speaker 4>around the world in key geos like the US, the UK, Australia,

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<v Speaker 4>New Zealand and one hundred and eighty other countries providing

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<v Speaker 4>them not just cloud based accounting software to small businesses

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<v Speaker 4>and their accountants, but also providing payroll and payment services

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<v Speaker 4>alongside that. So global footprint many markets, but certainly in

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<v Speaker 4>the US, the UK and Australia are Big three.

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<v Speaker 2>So given what you do, you have an incredible view

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<v Speaker 2>on the economy globally, not just based on who your

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<v Speaker 2>clients are and what they're actually doing with their software,

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<v Speaker 2>but how your software is actually selling. So given the

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<v Speaker 2>data points that you understand, the regions in which you operate,

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<v Speaker 2>how would you characterize the global economy right now?

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<v Speaker 4>You know, I'd see the global economy as almost as

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<v Speaker 4>you all read it, which is, I would say an

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<v Speaker 4>economy of mixed signals versus the data. So, as you noted,

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<v Speaker 4>we operate across many geographies, and you would still see

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<v Speaker 4>relatively strong jobs growth. As an example, you would still

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<v Speaker 4>see relatively strong sales growth across many markets for our

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<v Speaker 4>small business customers. And yet the sentiment in many markets

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<v Speaker 4>is one of uncertainty. You have small businesses in different

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<v Speaker 4>markets looking at different tear pressure that might put pressure

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<v Speaker 4>on their cost of goods sold or imply price increases

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<v Speaker 4>for their customers. They're certainly nervous about cash flow in

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<v Speaker 4>that regard. And then you have some enduring issues for

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<v Speaker 4>small businesses that are despite macro. You know, macrocanoptimes, which

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<v Speaker 4>is the enduring problem of cash flow in managing things

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<v Speaker 4>like late payments. So we see, as I said, relatively

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<v Speaker 4>mixed signals. But I think we can agree that they

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<v Speaker 4>feel uncertain in this environment, and of course we believe

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<v Speaker 4>our software is there to help them manage their cash

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<v Speaker 4>flows in that uncertainty.

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<v Speaker 3>How much of the uncertainty is a result of what's

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<v Speaker 3>going on here in the United States.

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<v Speaker 1>I think a fair amount.

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<v Speaker 4>I mean, look, you know, as you all know, small

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<v Speaker 4>businesses in the US, including in the US. In the

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<v Speaker 4>US as an example of small businesses, we're growing very

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<v Speaker 4>healthily pre COVID, five to six percentage points a year

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<v Speaker 4>according to our data. And then what we saw is

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<v Speaker 4>with COVID, a big disruption. And then of course, just

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<v Speaker 4>as they started to recover from COVID inflationary pressure eleven

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<v Speaker 4>interest rate increases. And this is that we're trying to

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<v Speaker 4>starting to settle from that, and maybe the promise of

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<v Speaker 4>let's say a deregulated environment, well, along comes new uncertainty

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<v Speaker 4>with it, as an example, tariffs, So they are having

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<v Speaker 4>to navigate a lot, and in the last ten years, certainly,

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<v Speaker 4>certainly in the last few months even more so.

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<v Speaker 3>Kid, what are the things too we're worried, not worried,

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<v Speaker 3>curious about. And I know it's something you have been

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<v Speaker 3>working on, and that is to expand your presence in

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<v Speaker 3>North America. And it sounds like the US specifically walk

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<v Speaker 3>us through what you have been doing, the investments you've

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<v Speaker 3>been making, and what kind of growth you are seeing.

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<v Speaker 3>And I'm also just kissous generally about your exposure to

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<v Speaker 3>the US market.

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<v Speaker 4>Yeah, so interestingly, we're probably one of the few, you know,

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<v Speaker 4>native cloud SaaS businesses of very large scale that is

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<v Speaker 4>underweight the US meeting.

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<v Speaker 1>The US was a new market for Zero.

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<v Speaker 4>Obviously, I'm based here in Silicon Valley and have been

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<v Speaker 4>here for the last thirty years. But for Zero, they

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<v Speaker 4>entered the US market maybe a decade ago on the

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<v Speaker 4>promise of bringing cloud based accounting to the market. It

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<v Speaker 4>was largely a desktop market, and over the last ten years,

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<v Speaker 4>i'd say the company's steadily increased its focus and presence

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<v Speaker 4>in the US and is now seeing a nice acceleration

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<v Speaker 4>of those efforts in subscriber growth, very strong subscriber growth.

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<v Speaker 4>We just reported results about a month about a week ago,

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<v Speaker 4>very strong revenue growth here in the US, and what

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<v Speaker 4>we see is very much in.

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<v Speaker 1>A lot of white space.

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<v Speaker 4>There's still a large, large number of small businesses that

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<v Speaker 4>have never digitized their back end accounting here in the US,

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<v Speaker 4>and obviously the opportunity to do so save some time,

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<v Speaker 4>saves some money, and with AI can offer new insights.

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<v Speaker 4>So we see a pretty attractive market landscape her that

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<v Speaker 4>we've been building towards.

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<v Speaker 2>How do you do this at scale with a salesforce

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<v Speaker 2>that you know? Is it cold calling? Because when you're

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<v Speaker 2>calling on these small and medium sized businesses, some of

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<v Speaker 2>them are indeed very small, and those could be pretty

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<v Speaker 2>small accounts. Is it self service? How do you handle

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<v Speaker 2>the incoming or is it outgoing?

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<v Speaker 4>Well, you know, in the US, we have a multi

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<v Speaker 4>channel approach, just because we do everywhere around the world.

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<v Speaker 4>We have a pretty big direct or self service motion

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<v Speaker 4>where small businesses can discover zero online through ads through

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<v Speaker 4>social media. We have large Facebook and LinkedIn engagement and

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<v Speaker 4>can come to the website and sign up directly so

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<v Speaker 4>we have a big direct funnel.

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<v Speaker 1>We have a salesforce, but that salesforce, believe it.

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<v Speaker 4>Or not, calls on accounts and bookkeepers, not some small

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<v Speaker 4>businesses directly, because of course, many of the small businesses

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<v Speaker 4>we have work with an account and bookkeeper for their

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<v Speaker 4>taxes and bookkeeping. And then the third thing is we

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<v Speaker 4>have increasingly new channels and new partnerships working with other

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<v Speaker 4>vertical SaaS providers. You know, people like the neo banks

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<v Speaker 4>around the world where they refer customers into zero as

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<v Speaker 4>an SMB is starting their journey in payroll of payments

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<v Speaker 4>or banking. And so we work across all three channels

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<v Speaker 4>everywhere in the world pretty successfully.

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<v Speaker 2>How are you using AI right now from the not

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<v Speaker 2>just of with your clients, but also when it comes

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<v Speaker 2>to sales.

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<v Speaker 4>Yeah, so look, I think that like many cloud based

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<v Speaker 4>accounting services or cloud based services, our first goals to

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<v Speaker 4>put AI in the hands for our customers. So the

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<v Speaker 4>full focus is on launching Jacks, which we did this

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<v Speaker 4>past year. Jacks's just as zero. It's our sort of

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<v Speaker 4>CampaignOn if you think on the site of your mini

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<v Speaker 4>CFO in a box that helps you use zero. This

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<v Speaker 4>year we're very much focused on the expansion of jacks

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<v Speaker 4>for our customers so we can do more jobs for

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<v Speaker 4>you on our platform. And of course that is the

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<v Speaker 4>promise of AI. Just really give back first and foremost

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<v Speaker 4>time on these tasks, accounting tasks, payment tasks, and then

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<v Speaker 4>to give you more intelligence, more reasoning, and all the

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<v Speaker 4>insights our platform has to offer. To really expand that

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<v Speaker 4>offering through AI. That's the first and foremost focus of

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<v Speaker 4>the company right now.

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<v Speaker 3>You know, it's so funny when earning season we go

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<v Speaker 3>through in the United States and we get to the

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<v Speaker 3>application software part the earning cycle, We're.

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<v Speaker 1>Like, oh, yeah, there's another one.

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<v Speaker 3>There's another one, there's another one. It's not companies we

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<v Speaker 3>talk about all the time. Some of the bigger one were.

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<v Speaker 2>Driving from the San Francisco Airport into San Francisco and

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<v Speaker 2>seeing the billboards.

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<v Speaker 3>Yeah, it's exactly.

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<v Speaker 1>You know, we do not have a billboard on the

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<v Speaker 1>one oh one.

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<v Speaker 4>I will say that we're more targeted in our advertising,

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<v Speaker 4>but I know a lot of tech companies do. Our

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<v Speaker 4>small businesses are all over North America, so we spend

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<v Speaker 4>our dollars or elsewhere outside of just the tech corridor.

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<v Speaker 3>That's what I'm trying to get to like our audience

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<v Speaker 3>or the investment audience, like what is it that they

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<v Speaker 3>need to understand? But you guys specifically amid a space

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<v Speaker 3>that has a lot of players.

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<v Speaker 4>Sure, So first of all, just to note, Zoo was

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<v Speaker 4>one of the you know, highest growing software SaaS platforms

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<v Speaker 4>in the world. You know, we just grew twenty three

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<v Speaker 4>percent year over year. We're profitable, we're rule of forty four.

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<v Speaker 4>Just because we don't trade on Nasdaq does not mean

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<v Speaker 4>we don't have a gold global footprint. We were based

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<v Speaker 4>and launched in from the Australian New Zealand region, so

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<v Speaker 4>that's why we trade there. But the most important thing is,

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<v Speaker 4>you know, we are a strong, growing SaaS player betting

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<v Speaker 4>on the macro digitization of small business software and the

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<v Speaker 4>cloud accounting space still has a lot.

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<v Speaker 1>Of yield in most markets in the world, including the US.

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<v Speaker 4>So excited to play where we do and excited to

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<v Speaker 4>stead this many small businesses.

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<v Speaker 3>Are you looking to list in the United States? Like,

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<v Speaker 3>as you make investments in the US, look to expand

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<v Speaker 3>your business in the US, or you're looking to list

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<v Speaker 3>in the United States, Well, right.

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<v Speaker 4>Now, we're pretty happy on the ASX. We have shareholders

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<v Speaker 4>who are very fundamentally oriented and interested in our longterterm growth.

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<v Speaker 4>We do have US shareholders in the share base. If

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<v Speaker 4>we would ever consider, you know, listing, it would probably

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<v Speaker 4>we'd be thinking about maybe at some point in the

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<v Speaker 4>future of duel listing, no time frame, no commitments, but

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<v Speaker 4>really just to widen the ability for all investors to

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<v Speaker 4>participate easily in the zero story. But pretty contemp right

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<v Speaker 4>now with that ASX listing and a really great shareholder base.

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<v Speaker 2>Hey, very briefly, before we let you go, tariffs in

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<v Speaker 2>the new tariff regime here in the US, where the

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<v Speaker 2>average tariff rate is pretty much increased fivefold over the

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<v Speaker 2>last year, and that's before deals have been signed with

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<v Speaker 2>many different trading partners here in the US. How's it

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<v Speaker 2>affecting the small businesses that make up the North American

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<v Speaker 2>portion of your companies.

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<v Speaker 4>Well, I think you have hit the nail on the head.

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<v Speaker 4>I think what they're trying to forecast is what the

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<v Speaker 4>cost or disruption is to the supply chain. You know,

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<v Speaker 4>let's hope it's not disruption, but rather, you know, the

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<v Speaker 4>management of a lower triff scenario. We will wait and

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<v Speaker 4>see what happens here over the next ninety days. I

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<v Speaker 4>think they're mostly trying to figure out, Hey, what is

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<v Speaker 4>the implication for their cost of good sold, what's the

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<v Speaker 4>implication for availability of supply, and lastly, what's the implication

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<v Speaker 4>for price rises they may need to entertain in order

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<v Speaker 4>to be able to hold margin if their cost of

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<v Speaker 4>good goes up. And again, like we really think of

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<v Speaker 4>our business as trying to help them navigate those changes

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<v Speaker 4>with increasing insight and foresight.

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<v Speaker 3>All right, really appreciate getting some time with you, so Kinder,

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<v Speaker 3>Thank you so much. S Kinder seeing Cassidy, chief executive

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<v Speaker 3>officer of Zero, joining us from San Francisco,