Perficient (PRFT) 31 Oct 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 Perficient Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chairman and CEO, Mr. Davis. Jeff you. Thank sir. ahead, Please go

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the proceed, safe please harbor Paul, we Before read will statement. you

Thanks, and morning, Sure. everyone. Jeff, good

call Actual cause to things information concerning forward-looking will different the additional those the be will refer discussion. SEC than materially contained statements, we forward-looking contemplated will meaning you in in filings adjusted times today's and differ these company of to be future Some to we results that call, statements of these during discuss performance this today's to our the results encourage from the within in we could EPS. At securities refer discussed laws. in concerning may factors

Our in www.perficient.com. earnings most measures our is at of on financial certain directly accepted comparable release, to prepared reconciliation financial posted measures non-GAAP with principles, or the generally website accounting GAAP, including accordance press a

to a prepared We reconciliation comparable directly Investor a Jeff? GAAP under which Relations. accordance slide non-GAAP on guidance have with also measures deck the in of posted includes most certain financial our website

you to again, everyone. morning you excited Thank with once be for XXXX morning, And good We're Paul. our this third results. Thanks, to discuss quarter joining.

their professionalism XXXX. our to again on we by call want and thanking each both throughout for and customers have colleagues begin this I year, our As perseverance

before. about Perficient's Our colleagues are enthusiastic more future than ever optimistic and

feedback seeing today. I been. key received of annual survey our that and ever you're from the Company, as colleague's factor is And satisfaction remarkable response That's completed here employee During which highest mentioned, certainly the the it's in participation we a results our really XX% overall is quarter, rate. the engagement and a

customers their results They're They're canceled many well. harnessing focused steadfastly evolving on of been Our plans that around share and The restarting and but amid key instances, digital. and track, been a we've with Paul in customer with were investments have proprietary and is have important has will a earnings substantial financial utilization develop meaningful more keeping projects making fully growth, on speak and the power again pleased news tool business businesses shortly, and and including a metrics, can we'll great the us thriving some those some deployed delivering and later At is as effectively. as is ABR. proven effectively, capable driving the challenges. and the or time, strong and an efficiently but net details relations delayed win of as as as you are well around operating we strengthen current see. that resilient performance only new with new built well. not helping more Perficient customer even itself

more of the pleased PSL, quarter. team added in second We that late progress are the quarter, made the the XXX than quite integrating with during nearshore colleagues also we

legacy six organic In projects will just accounts. team Perficient have growth and the fact, these we new we've already store expect the end about to of alone. little team accounts the started several existing driven By a members adding from over realized acquisition, proficient X% since year, the months

our in with new our many and more that's the to. we customers I customers growth, about expect enterprise their beyond. the we've that, understanding year. interested to XXXX ones X% of So going end And own with already that they're it driving that progress, added continue we talks to beyond we're the by and and alluded accelerate of in capabilities, but Virtually, nearshore all are in to expect of course,

legacy Our growing teams well. are as rapidly offshore

revenue around. of which of attractive the with In is already of our balance organic years at convertible substantially up we'd and few of retired ago. year-to-date, also notes and professional fact, Team offering of the that all strong converts a XX.X%, quarter a bolstered XX%, well-known couple golfers. private of million number included offshore other Perficient interest offered the announce to We're in A completion excited was notable $XXX the during rate, strong all the that sheet, partnerships quarter, formation developments during three

and for I'll Paul, lead who's the relationships opportunities results in us We grow experiences Paul? call detail brand third share going these for additional more With and globally, to our unique to the help that, to the quarter. turn provide customers awareness ultimately expect wins. relationships, important to most over financial

for Starting expense compared results. XX.X% compared $XX.X XXXX, of reimbursed Thanks, quarter points of period. increased or of third a prior the basis XX.X% quarter comparable as or prior excluding million revenues year XXXX. $XX.X year the Adjusted were XX, third XX million of Gross ended SG&A expenses, period. of to EBITDA quarter million for quarter SG&A third XXXX. comparable million $XXX.X to third revenue Jeff. XX.X% Services to the in the decreased XX.X% over third compared quarter percentage prior $XX.X the of in to margin expense of $XX.X XX.X% for with a revenues, year was the for September revenues the XXXX, the was XXXX to the XX.X% from increase quarter million period.

expense year acquisitions. to included period, third offering. the $X.X as primarily million The year $X.X prior comparable Net of associated increased compared amortization The debt August in primarily XXXX the for result quarter million period. in a of third from quarter the $X.X million the to increase is prior million convertible the of interest expense $X with XXXX

the third a result extinguishment, one to per for $X.XX of the from on XXXX of the in the net debt of of credits Our an of primarily to fair to share increased effective third ended our the from XXXX amortization XX.X% XXXX. tax XXXX Adjusted quarter in quarter XX, tax consideration effective The of GAAP XXXX. primarily as $X.X from increased months quarter third of XXXX, decrease $X.XX September onetime due rate million share to three the XXXX. quarter value Net compared $X.XX share in loss to for of XX% decreased million share decreased per quarter quarter adjustment for acquisitions. quarter $X.XX third compared estimated the and third positions of rate XXXX. the XXXX XX.X% earnings a tax on earnings for for uncertain of income of third the a was of higher quarter to third third in to was the research Diluted $X.X convertible contingent a

through to XXXX, ended XX, XX, nine You revenue XX, of year The Adjusted was to points the or expense million SG&A million the September. SG&A over the compared decreased period. primarily the in XXXX, of period. year XX.X% see to Again, September expenses, months period. comparable prior million related for XXXX, to offering. in ended September full for earnings. increased the compared included year revenue, $X.X the September million interest the to can percentage EBITDA a turn revenues prior million months basis period. the expense the expense I'll comparable X.X% of of XXXX, year-to-date million expense prior margin year nine GAAP as in XXXX, a year September prior comparable million reconciliation the months the $XX.X press $XXX.X were nine the an prior ended for XXXX, for from for comparable release increase year nine in $XXX.X September to for XX.X% prior $XX.X acquisitions. million XX increased a $XXX.X or from revenues debt nine the increased convertible prior in period, Net XX, period. reimbursed the September XX, ended the result million XX, nine to August increase from XXXX ended $XX.X excluding period. amortization to XX.X% XXXX, comparable XX.X% Services months Gross the months the XX.X% to year September for the of is now ended as nine ended compared $XX.X XX, results months $X.X months

value September compensation nine XXXX, rate The rate in share-based was deductions uncertain of decrease tax the higher months as benefits to well primarily ended period. months decreased prior The XX, tax ended XXXX, effective to fair estimated a associated Adjusted per increases share net in related Our to due XX.X% the $X.XX per XXXX. XX, XX, recognized compared months the research XXXX for year share of XX.X% million credits in to the comparable the to from million of months nine as as positions XX.X% $X.XX increased effective nine the increased in XX, GAAP convertible ended in compared earnings September tax in income to September nine and debt period. comparable for period. primarily $X.XX the was $XX.X September the the for tax XXXX, consideration Diluted result to $XX.X adjusted per period, comparable ended with prior the earnings extinguishment, to from decreased year loss on continued prior the share acquisitions. year amortization the a prior from $X.XX comparable year

X,XXX, subcontractors. global XXX XX, global SG&A headcount XXX. Our including at headcount was X,XXX was XXXX, September and Ending consultants

cash million, on also XX, of XXXX, had million of debt capacity borrowing we net unamortized cash our September discount facility. September unused and and $XX issuance $XXX.X and as credit equivalents of XX million debt, outstanding deferred in Our cost $XXX.X as was and of

well execute strategic continues leave to balance Our sheet us to plan. continue against to our positioned very

at Hogan now outstanding the little the of metrics. XX sales XXXX. Tom Tom? on Finally, quarter the the commentary for over the call turn end quarter days accounts of receivable to days I'll to a decreased to third more end XX our compared the of behind at

customers the customers, and XX than bookings, greater Paul, solid good everybody. XXXX. ago of quarter existing XX quarter That morning, year the with to deals another for realized new third period. $XXX,XXX net during large and many compares in We Thanks, existing wins booked

the our I working And really not executing momentum deal market prospects. think anywhere, now. that in XX%. continued how volume almost yet was up we're on-site We large quarter. meet underscores right even and can't customers to and the well that success fourth We're traction into travel has

we've satisfaction strong And the rate customer even scale large economic with financial forms. work closed larger and history, rigorous and proprietary much business figures. to expanding growth new and and to our really company beat relationships highlight client processes recently across delivery is that to Perficient, five-year business person we truly recently to where into and and are existing continue largest and better, and collaboration our services is Perficient's support a further created accounts pursuit clients relationships. work. evolving is several the single This disciplines Perficient for our has that us our we will needs software the its at growth. a platform success institution Winning most workflow the deployed, customer of culture innovation, testament Also digital enabling protections. client we've of And platforms this been tools developed engagement important a the because perficient's excellence. differentiator help the In we'd weren't ultimately be combines deals aiding colleagues accommodate repeat build stronger consumer market. several to bring of in win it's and multiple fact, typical various one to able one of the is long-term heart in was We to including firms will customers in handful net Building of well we this pandemic, which to the the meet win year a of eight contributor

of Instant and foundation project it insights the It's capturing concern a mechanism the not of is respond Obviously, Tuesday teams project and what proper really proprietary is But a many times quickly to of Instant helping things is for individual feedback what satisfaction. the deployed collaborating are is who if verdict platform automate overall positive. that providing later, aware has and But developed shares and all what life and want tools executive of immediately to address throughout and cycles made solicitation Insights the a always reacting this leadership collecting practice, the And at progress, when is our resolve we feedback by to a on leveraged our project. very at five can routinely a commentary this confidential constantly and with designed, feedback. customer the feedback can constantly the on platform. p.m. delivery now if engagement. and a tool been team the X:XX minutes teams. In then and build customers immediately be our grow immediately, strong immediately Instant feedback we already solicits feedback waiting earlier XX our Insights on consulting throughout to us customer is this we means on end there One or the upon receiving the capturing visibility The colleagues. year, the for are actively that executive This whether disseminates issue the year. or we concern. excellence do majority and it of leadership our It a deliverables and We're stakeholders topics, the us, at teams key customer that this of effectiveness of vast we're scale. hundreds solution. does it

the to with of satisfaction those tool able the areas where and to and Instant to implementation react proprietary Insights, been scale. we're and instances to Perficient And Jeff a growing in and concerns differentiator and that, the solve, in relationship earlier, help tools of for issue software the enabling things across the quarters, variety culmination real-time In developing custom rare solving remainder turn those over efficiencies our in competitive year. customer customer confluence to challenge in bottom deploying process us mentioned discuss I and positively of and a those Sights seeing is thousands quickly and back process Being projects accounts we hundreds strengthen And this the recent a tool. designed line. a each advantage the Instant of we're to to become to proprietary addition of have of As I'll improvements rapid we've of address business process. and and with and

Tom. thanks, Well,

the full press be that to in be million. quarter to Perficient turning of per reinstating I'm release that share in to expected we're you $X.XX the million. share $XXX XXXX revenue of for revenue to here, to is quarter the range Perficient $X.XX. saw year expected to $XXX quarter year. in be full quickly earnings sure be million GAAP range per the the its of of expects quarter earnings $XXX fourth to Fourth million And range the Fourth $X.XX to of fourth adjusted XXXX XXXX is Just the guidance $X.XX. in fact revenue, we, in to the XXXX to in range $XXX and full expects $X.XX share be guidance to range share adjusted guidance GAAP $X.XX per earnings earnings be of in the to per and range the $X.XX, XXXX and $X.XX.

open So call operator, that, with can up questions. the for we

Blair. from William Our first Instructions] of Nolan comes line question of the [Operator Maggie

coming that, I'm I'm I going the disaggregate how much the measures to that assuming that may kind ask is versus structural much is strong changes can return addition basically pandemic wanted it structure. cost the how of margins PSL the quarter. from that year. and of next taken gross will in of to you light have about in PSL help And the to of if from the margin is structure you wondering integration cost-cutting

to There's is certainly, They're little XX, over certainly PSL XX%. about margins. gross running a accretive

However, things, in that they're of the overall not large. scheme

contracted growth that to and of throughout have speak return that not actually of. period, any had we're We've thankfully really cost-cutting really some not So to do We is whole contribution. seeing this now.

So a number. that's no, think I sustainable

it's driven to and by think the shift I mostly offshore mix nearshore.

almost quarter, running earlier well. We're in mentioned XX% own over the grew offshore year-to-date. our that organically and it's I XX% So XX% as

consistently. and that the ABR up been And you has around are is those sustained saw major utilization course, contributors. of XX% So

continues. any to think year. think I see don't decline gross going I in we're no, next that margin So

trajectory idea of terms enter but us the the of first Great. then an enough provided. quarters start to good wondering early your maybe provide on confidence of XXXX, ranges it's level there's see And that the the that give of uncertain what to of guidance. we I'm key to you some I know And metrics XXXX? visibility in of some and you least at as couple is can

Yes.

range We and time so a quarter, the the QX, very, confident. good-sized left in we've and There's very not have good there, very right a very strong had now year, a have So of we pipeline. active last bookings visibility. lot out got very pipeline

organic So have on set we election growth our But as look there. But detect so rebounding year. material to able we're to that forward the optimistic to certainly, we'll from have to getting the XXXX, perspective. far, settled, much, impact obviously, we're double-digit dust a back have. anything what be growth going how to early say we're sights remains seems might next not Too to

once settle we've And really think seen just dust the past and that's kind to of that, time things we're since the I So improve. continues me, May to what continue to frame.

about XXXX. So we're optimistic

next Tandon Mayank of line Your question comes from of the Needham.

question to Maggie wanted Jeff, that talk level. EBITDA to just going the back about asked. the I margin

SG&A you any on flow into about line you that cost might through what savings that the So instituted not 'XX.

So in better EBITDA the a next year? margin I want just feel get also for trajectory to

say, It's get target. on been about XX% We're EBITDA, long-standing to Yes. that to to in in past should EBITDA as or adjusted I try closing our goal, about the heard you've XX%. to

slow think certainly the I negative XX% might that But at won't it. either we're a your have that strive for be goal bit a year. little a up next back And for might are SG&A, will impact. I tick we'll seeing be there us that think or expansion don't next question there around reasonable will have, right that think to some a I It to bit. on it year. things little

And obviously, to bit with SG&A, we've think. although actually our travel and go So spend a the But in nonreimbursable. marketing, you might marketing are virtual down working much little we saving most of bit gone be little back expense as there we'll on that's we isn't the activities, a as forward. as toward that,

us which, not when So sure I say that at how a cost is. return the right? norm think, next I I'm year, back long that way, involve alike about accomplish One, And to two in I to we we norm. pre-COVID that don't doing norm think the to virtual what do be realized, suspect a have much of, that alike, by that, back realized travel, a does of lot new were new as happening, lot don't it have and we're whatever won't yes, travel absolutely see new because I tools. need we I people as we using can talk will before customers things. we're remotely

one helpful, here. That's then follow-up Jeff. just And

In And 'XX utilization? that actually more for have How sort is the And we do with growth of having you're you be and that room pricing growth about think should line terms on front? tied like become beyond, then does around how you behind then of 'XX utilization? revenue in more now, and much can't hiring clients, that top into driver key trending? expand would any if conversation how

We've to good. instances, proactively, encourage with forward clients things they some move to of in made kind were decisions on. is Pricing conscious maybe waffling that

some made we've concessions. So

now. You're that seeing

into point. ABR seeing sequentially I still we're not maybe in this of pricing going year-over-year. was And but next think up terms at pressure enormous down year, slightly

temporary. actually I we to, those I way, expect concessions by were made all the So that that, that alluded

didn't permanently in put place. we So anything

have a six like of cases, most them. line on they months in time So

next up back So get. going year. Utilization about probably is best expect will into it's ABR going the that actually, I to tick

the that's think XX% I consistently plus. number, XX%, holding best-of-breed

course, and balance activities. pursuits around. do. people as actively administrative and anybody I well isn't on activities, the actually it's other about education that sitting can of They're think of And as working

I So increase. mix plan for lot growing again, at We nearshore for I can offshore. next can least ABR we're demand really to including we as emphasize, in slight to XX% offshore. some plan We And to think continued And for the more of more our want demand going our think for and offshore year, into even utilization. I nearshore and now, see this applies double environment, well. that a digit. PSL,

mix shift on a of line. drag So will we're be that see bit to continue going a shift. to mix That top

much most not Although is it as too incremental. of

work to So increasing we're that this offshore. today is It's States to our in work that in we're not doing United the addition offshore onshore. that we're incrementally actually business ship doing going the

mentioned the growth Paul XQ housekeeping this I final did. full the item. XQ guide? or implied one organic What know Just Jeff, in and don't is what's if year in and you the

range one It was to point. X about the X. And is QX, I think like

So be guidance midpoint I as we're of wanted improve, we that think conservative well. for there. there's seeing but is QX. one some about hope point And We to the again, upside

question Kinstlinger a have Brian Alliance of We of Global. from line the

rates how customer, services financial ramp, you be is that curious and contracted expect I'm that X-figure years you to large when peak contract expect be? it you that mentioned For to many might when at run

want Tom, that? do you to take

we're Brian, coming be and really a that as ramp starting there Sure. really XXXX of start QX, through probably program. see years to X-year the a before on. late QX, It's probably through continue sustain now. about for from up the program. ramp will will we ramp It there, It couple early QX

quarter stages And maybe bookings discuss you trends of quarter. as Great. fourth in the third the the early of outside as well the can deal this broader if

don't specifics, misinterpretation. I what that double disclose But we will you much Yes. were We, up we we organically year-over-year. now, and digits low subject double too to will know, digits, as is disclose, typically

here QX really happy is really got earlier, as looking we're actually solid. that mentioned a result. strong with good. So October far I And so in And And year-to-date, we've pipeline.

next year. to course, loaded. quarter back-end as itself is there's for convert a always, up year the QX back-end quarter is is of And that. And always clients the the loaded, and of projects bookings are got start big lining we've So

typically December big is bookings month. our So

optimistic. little but that, a on it's So comment early we're to

services smaller, looks, drop. seem dropped while the and obviously, healthcare to Health of be, numbers at are looks while financial and I as to autos your back they care and Great. look the telecom primary also envelope, driver, growth

do this your them see and as pretty large year? any difficult? at your challenges are notwithstanding some that's Or next segments those I'm to you also pipeline, bookings large, one-off services going those make curious, verticals to financial of facing So returning look contract growth you of

No.

think will. we I

think accounts meter strong we're some services, in. I is heavily. what basis. We think there. those revenue appear of more kind improvement do we're shows targeting acquired a down. there we'll much relative $XX million financial I I the you're they're some looking in almost already more And very We've on the a at slightly, cover think little that of that seeing move got due instances, simply And there but those year. to didn't verticals of not probably this some portfolios many dramatically And, acquisitions. but to say of that

Okay.

their about and with about in this consultants in given curious how customer wondering focusing this But not customers from have from you talking on resources home, I resources, new the the I'm are mix the of ago. I'm know consultant past, it. interest Lastly, could on wanted you've working is and offshore you're the deployment some. some impacting them. projects. domestic is your seeing you home, on-site decisions were have fixed-price changing But been mean, the offshore and I years to they that contracts anyway degree working see how or

Yes. now. than about relatively small. round way, It's XX%. price, Fixed is the X% by It's less

I maybe cases, are And would particularly of that interaction lot in acumen, those the I the that, with obviously of opt deliver a think think good there's many etc., critical. where more that client, in but we you're business where certainly, possess skills some high-touch clients' space, I And customer or our nontechnical, would attitude folks digital raising still the control, onshore emphasize a many to our so and from in point, we cultural, offshore. of that total have work instances

And for looking some so clients blend, a seeing we're introducing we're offshore. still exceptions. even With where

to that it's I at earlier, But that as again, think nearshore a grow I combined I it. do like don't but Not maybe but XX% I that think now larger going a over is if offshore basis, out higher say still going That and look and growth, the offshore to in As incremental. on displace think we're is taking we outpace get in onshore the to future, total. good onshore in going fast is at to see again we'd are mentioned as clip. offshore, to on mid-teens or engagements least

Our of question next Jefferies. Surinder Thind comes from

talk maybe of the I past or past, bit hoping you kind Jeff, six about your over evolution in strategy sales the maybe environment was COVID could so in the little of months the a where there's and more your so for forth? look on reliance doing go now a are that's to new and how you clients of what new guys ability lot kind find to and clients? impacting conferences And

doing We're a virtually. lot of field marketing Yes.

up in one as wine vendors of of lot different events, So we're partners. as, And lot work one setting of of a kind our a virtual the that conjunction frankly, both that educational fun tasting, with, certainly, of new sort with activities, vendors. software well with working things the often for and of existing We activity still instances, many do in we clients.

I the that terms there there's sales sales finding safe return to do And to that. that response of once it's and lot forward. The and live to that good comment going can been to area a work I will structure the event think a ask ways of it going now. we're But impressed. time, at he been focus articulate Tom I've done reports that's strategy, in there's an So on think to, been a it. I'm get really to that. and

vendor lot partners. turned We've with Yes. our a

current that. to way brands some we also mentioned lot Insights bringing XXXX they're runway as to customers constantly the of add with the a of partner that there, as big software continue the of amount a have initiative in base, a base. current customers, which more we'll know, customer Instant I a a is customers continue current we current I'll and to And very in for base, our strong say well. have for within But largest growth. bring looking but beholden is we think portfolio. new insights lot lot see competitive and client of but customers, we're our And you'll new I advantage is beyond. leading that's just customer of you into As into in lean our to us And new runway And we with out in and also leverage a not to help, for

a We can from get of and see that a customers, our we XXXX. of current have lot growth in you'll lot

sales has portfolio, buy new customer customers, amount growth a and beyond. team So bringing there's base lot strategy our for of upside can obviously with that's turning current to current so clients cross-selling partners, for where but more that our XXXX vendor tremendous a also in of been working and that us in our of portfolio, internal the

to a arena, Understood. Obviously, And getting bit that you then the or provide part build it bigger Is out that, well as it color trying here? whether more the as related on to strategy of sports Blues little brand you're strategy? within Louis relationships maybe your seems earlier. the can like was St.

tying earlier Or You're audiences where how of the reach should sales a reflection in that scene. scale and you new at this terms of now of of the point? strategy? firm kind is its golf think involved to about the that believe in kind with Is we in ability

that's Go Yes, ahead, Tom. Go ahead, Tom. right. exactly

say, markets. we've the to lot larger presence. was there's as amount a brand, you I within look to It's going well. Well, an though, done getting I also When at think there,

done obviously individual markets. in outside things St. Dallas, those goes done So of And things Louis. we've in that

the golf even to was brand more. amplify the to sponsorship Going

us. think a good that's I demographic for buyer

there, get were it's to beyond about to PGA we think amplification. of our a where going pretty making it's selective for and really, golfers. the global markets. make I'm We that were out wanted to aware really into. that's sure as as presence But a great it's we're success And brand, make about just with the We I But with place it I well. it's to people went think it. brand amplification far doing sure really lean us we of and tying brand where as excited

we want sure amplify make globally. global so that have We presence, to a we brand

bigger the you color around the some rate. the that temporary some kind get hump to willing it take and average you provide Is kind decline over projects, But that kind them on the what Understood. clients a cost of is the shorter provided uncertainty, thinking macro of about color sequentially I'm we be color And election it's helpful. on can think should concessions. to make Obviously, it how an again, idea on the about are then are to the investment? these they're should maybe to follow-up are but billing last would guys obviously, of client projects where was on? how established they're but a client point. this bit where improvement and maybe relative Or kind there's hesitant near-term there's sentiment, is and of assuming quarter? in the Any that being the then we're, there at there budgets an occurring little be

Yes.

the pleasantly of with been outside our know competition. I say the always But rate covered actually running up think surprised competitive really this anyway. I tells throughout in a I to the this very a it kind we've mentioned any as seen better that I've earlier general that guys pressure say, there's so period. pressure of Tom And not currently, what expecting that we're not industry and There's I seeing bookings experiencing I or not And not bottom, should earlier, industry, closing always than which me really expected we're pressure. norm. rate these we're competitors or held lot is you would rate

into don't I so going that expect And year. next

goal hiring to course, to And to adjustments At continue annually, living try the growing going X% taking the employees. I've pyramid. offsetting I and on nice we're as really, cost our engagements. as But of of of there. and our leverage we mentioned we're to basically offshore, of margins able time, And larger onshore, the appreciate hire same increase we're ABR you some well. to for are, think base the are as more experiencing more toward there drive X% really we're these we of about to

there. net on for net is obviously, we've that of margin spend offshore, been then or ultimate our or in of Combined can with payroll increase quarter. got a very and to this to and We're we'll their to time to And get be reset to etc. adjusted some that X% of gross payroll, long gross opportunity the seasonal, increase, close think goal local very QX, right XX%. close be going kind We'll very, has if that one that. margins due ABR margin So we get I the into XXXX, there. X% two only taxes,

I'm in of probably hold margins a to seasonally expand there tick but expecting somewhat down and see we'll as XXXX. So bit a overall, little always,

two some obviously, the in to just, of then normalized out what does again, of like, it client's And perspective, on a under how there three color look condition, relative a step let's from I visibility And, maybe if bookings say, but more was was a at year conditions? take to your good terms out, this kind quarters trends. Understood. point ago was quarters back

think, think because little a It's I I than it's you, predictable, ago. the little a probably sales were less cycles a just less are would don't year they I tell profound.

us. this said impacted bankruptcy I behind worst I bankrupt. a the cancellations. think think, We We as year I by go before, were had client actually is

coming Although bankruptcy, building working with of coming kind of and they're around up. again. back slowly out back we're But it's after them

think So me, feel I the is But to we'll around, does a next would describe or seems delayed and the ago. how to it compared canceled see say many specific climate year in year. your it of half of question, of that it. But back to a coming that are the those impact word were cautious as first maybe to I

about ones it's least of a are in be Tom still Tom as for the meaningful with too, new the year. and talked that ones overall new getting accounts. mentioned, in number close ago, lastly, growth think in lot a specifically clients I'll think model. And are But we year then clients, being deals of these a And some providing I similar And got us. a logos that tend that with come that relationship. That's we've a at new to to earlier, existing second, it small what meaningfully too. that up our next back will ramp runway to start and to the lot was of specifically

mind year, we even serve clients comes the revenue keep before prior over in given it's So any typically, from our of that that. in earlier year XX% than and

visibility. what I think, again, combined, amount And we're we're us of a seeing. pretty things optimistic with those give decent So

the That's kind helpful. pipeline And color then final terms in question of any the on future relative stuff to and deal historical? of the, on

Yes. about M&A? Actually, you're talking

yes. M&A,

brought Yes. glad you actually. up, I'm that

have said, we accomplished a, of rate goal each three had year intentionally plus I a took deals, So a start with revenue. we our, break. four we million run typically Like $XX to of

of So again, we given by the, goal that year exceeded the the of COVID. and backdrop the middle

So took we when in actually that concluded in-flight kind the basically back actively now. we deals but had the pause, up, COVID we a that are hunt came of

in by looking So diligence shop mid the say, it's a sometime QX. our target goal to with the end be year, to close of by,

next from Barrington the line of Your comes of Colicchio Vincent question Research.

healthcare base, going Yes, Jeff, obviously. well the overall client are there, things

and curious, last uncertainty. some industry said there's you on the think I quarter, Just a pressure

cautious concern? your right larger any now are healthcare if clients any cause of for wondering Just and

well based The as empirically interesting. spending. in as is we're actually on It's they're and both anecdotally, no, what short we're hearing how what answer anecdotally

the what industry. those. that that If managed goal it's was they a a five well than and going out-of-hospital of C-level what to pretty We've months we right? all result relationships ago were And to contacts happen, was you space was what that remember and had within or the I think establish saying is hearing They had four and running lot a lot of those we're they anybody planned. that. So established interesting. year That could that better for model actually expected, from

like. are the So returning and electives

few starting others, that. it. the of at right optimism with things opportunities, have, had The frees planning as actually they that I've could they're probably they many are didn't and up optimistic hearing we're So that exactly as and CIOs for and prepared some get were Blues describe of them calls some some now. last how I would bad And their

curve. ahead fact, In the they're even of

yesterday. One was of telling just them

So And could it's, climate I said, much been fact, in remarkably better feared it be. there resilient. I the was than it's as

for themes got of Pre you've lot one Nice COVID, change. to the was, opportunity. hear growth of that a

but You're if are evolving guys by pandemic. adding of curious the stunted some they've of you salespeople. or if been I've completely this new asked before, the sort

they've have up even we the had adjusted, client good client, number side of relationships year. No. opened the including new success. a Actually, this and prospective on People right? So

the anchor accomplished large team. have tend is these of guys being established on. to accounts they lot And that some that of a actually that, or by focus newer The

white success more So there. space achieving little and the good folks, there's newer with they're a

not online So and the with to or recruit. are actually, folks been, we've again, we've doing moving coming ability our been from those and optimistic, happy only along. how or results happily what But surprised they're

ongoing poised into folks great And hired well we still. XXXX. kind So think really I going we've folks. of an actually And really a sales process. of number new again, some It's found

missed many the large How I Tom, that were added the And deals number. quarter? in

$XXX compared XX greater XX. to than million

from line the comes Jack your final question And of of Group. Vander Aarde Maxim

asked. questions have of been Lots

avoid try being redundant. to So I'll

backlog That not we'll weighted strong basis. of with start backlog pipeline, pipeline, and on I orders. question on been M&A has the guess So the but a

can ever dollar if weighted was on a quarter, last maybe guys think speak how maybe at Wondering it's pipeline that have the know backlog in maybe I talked third the but been you largest how describe you, the of mentioned I others or the questions of to pipeline on how pipeline? about the the it context you on it, or ranks a, XQ's basis. you end quarter, ask

They was sure I but think right the We about May during QX. slower we definitely adding But, I you, and tell we've up and a kind built mentioned the of more little, were I I still I had bottom. would to April, of somewhat said, so a in May, got time, think it I'm depleted. it backlog, even as were Bookings the the and bookings we'll QX. be right? solid, But back So contribute that slowed in QX, period that Yes, certainly that up build it's talked the they heart this of mean, had backlog. I hitting, slower that. a little definitely was better. stuff in all

nice down in little would typically bookings than So again, without COVID. QX. a obviously, But more it's had probably we maybe really a be,

And it's building up rapidly. back so

then kind of the so business. think for quarter I rates that I X% growth stats revenue heard overall X%. offshore I you as I did on rough to embedded few a guide, growth somewhere correctly, then for your organic around And is And X% first, is in fourth X% organic hear that said good ballpark? the rate to guess,

Yes.

kind and And you transparent guys in communicating have very upfront been I it your, of was Okay. know XXXX, historically, COVID. during

for and true in your of Would past quarters. your in few You've to revenue you've comments optimism quarter demonstrated feel revenue kind perspective communicating the I of in say that guidance the cautiously fourth quarters? you holds that your cautious the over transparent been recent outlook informal very sort optimistic that

Yes, absolutely. No it. doubt about

But what certainly, there because with I come we quarter, again, more comfortable caution may top also the confident we in an is optimistic the think, be abundance were end. to could now. with we middle about to out convert, we've of have optimistic, feel last I we we opted right again, that guidance of recovering got reinstate have. in there probably not we some even and And The potential near upside certainly out would what business And quickly. it. very

cycles fourth keeping of just Was there that? given other are you year that, then QX? due XQ, to questions strength context the assumption cycles have obviously, follow-up flat price there can maybe as into maybe that of And as just sales well sales are rates Are kind a of assume it and share in do embedded occurred to overall COVID. the quarter revenue same and any level you throughout guide, of of Fantastic. keeping maybe there? conversion you underlying extended embedded extension that Okay. sort your kind of improvement pipeline on the assumptions maybe any in Or of even the the

I upside, point, quarter, The, and client. say like So often that the No. But is much if got range something we've around or In fairly in right? what budget QX downside happens We the additional project tend of probably is things the would fourth with some here. there's that that in this not some bookings. potential do that, is at through I backlog, up canceled Yes. think, baked flush to what mind revenue. a pick all conservative. pretty it's come does actually in there keep gets substantially

So that if anticipate. and experience, downside, come But and more upside a don't normal cautious that happens, from. I also we think that's been then we we've room potential return to the could see which where left for

I remarks. are now would this over like There further time. no turn call Davis closing for questions Jeff at to to the back Mr.

for Well, All you, today. your and everyone, Appreciate right. time here. thank be it, glad to

to forward I'm that wrap our talking up year-end again optimistic with very Looking about.

March. so in to late you we'll Thank And February early talk you. or

This concludes today's conference call.

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