HireRight (HRT) 3 Nov 222022 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the HireRight Third Quarter 2022 Conference Call.

Joining today's call is the company's President and Chief Executive Officer, Guy Abramo; and Chief Financial Officer, Tom Spaeth. [Operator Instructions].

I remind everyone that management will refer to certain non-GAAP financial measures. An explanation and reconciliation of these measures to the most comparable GAAP financial measures is included in the press release issued today, which is available in the Investor Relations section of HireRight's website.

revenue management's opportunities, include growth guidance. our customer improvements, flows, to performance, call, to statements expectations, financial international this prospects and macroeconomic strategies market growth uncertainty, and HireRight's retention, increase effects business, during labor remarks sectors XXXX economic forward-looking will related operational for market Also, industry margins, trends, and of and including competitive cash differentiation, future

statements materially. Such predictions results and differ may are actual

actual cause Form results materially information of Results the of concerning that could Additional Risk Forward-Looking statements particular, in that those Operations. document from contained Securities in Factors, Analysis forward-looking Financial of Statements, XX-K to Condition in the Commission, factors differ with sections and and in entitled and and Management's is Exchange filed Discussion

it's turn pleasure go call Guy to to ahead. over Abramo. Please my Now the

everyone. operator, quarter uncertain as us celebrate as and we good you, environment. and Thank another pleased company afternoon, with you an to increasingly today results in public report year have X We're a of solid

For revenue million, USDX of increase year's was over quarter, last this an million solid USDXXX results. fiscal third

in to client customers, our package verticals. reflects and XX%, new and expansion team's end targeted Importantly, increased growing strength logo upsells of retention our core markets, high continued wins our our to existing commitment

the verticals. of quarterly regions call expanding first the last management and QX our across all high-quality relationships existing all normalizing while we new It developing indicated our trends normalized of year-over-year see results results relationships on demand the more just account and Our solutions regions. our the on impact our client that. across go-to-market pandemic teams on expected are global and progressed as for our of I prior reflects and to focused that demonstrates year following is

headwinds. well-known We were with to are macro deliver, notwithstanding growth the able pleased the we

being nearly fall had the For volumes up British XX%, example, dramatic were a in quarter, USDX impact resulting during year-over-year. on order U.K. revenue million EMEA the of the even flat revenue though negative pound the in

Also products the substantial in This increase our our approximately one in million customers largest a of from to suppliers. their one verification U.S., USDX price quarter. of impact the discontinued was due

half our customers seen to hiring a significant pace hiring companies have pipeline slow the remains own in experience first we a Account dialogs reviews noticeable volumes strong from outlook. we decline This the we more time observing continued half. a uncertainty have of ongoing are about pressure pace and some order them the has customers existing customers their back expect we of to on of the with macroenvironment confident volumes, causing quarter business clear, reflect Rather, economic slowed, new many began business be nor Although during and saw with that and nervousness outlook. are starting hiring. of its a our in To of many such very is to of strong. drop-off until our cessation enterprise to the and the genuine be in impacts not a felt

therefore, which will on impact guidance, review This and Tom macro slowdown fourth have minute. quarter, a an the in will our

continued expanded our discuss with in on business that This also core However, clients. execution and technology growing initiatives global growth margins logos, our platform verticals the new new make to and a strong long-term and includes our are our on optimize includes existing through important It bringing continuing rapid enhance to customers, no and same mistake, I'll moment. at fulfillment existing client pace. initiatives relationships upselling

the increase Turning a year EBITDA prior adjusted XX to X% profitability in the point with in basis margin. quarter. delivered increase a adjusted versus in We period EBITDA

selling tend to logos. focus and XX and be thoroughness This points speed, strict automation and improvement key for be markets in innovation continue remain Our precision, to particularly platform more our key differentiators. our adding global adjusted us, role on gains new in these initiatives and our drove discipline single played and efficiency demanding, a significant Quality fiscal in and automation, margin. that improvements, investigations core increased in

distributed Most of logos the new our verticals. importantly, in quarter focus across were all key

none to As repeatedly key that market. said are we anyone willing to thorough in are. are screening and calls, we not I've are previous companies to our background outperform in checks and than the equal, show background solutions prospects that created all prove The clients will and more is

period. over healthcare our more year-over-year. and to the also continued Regarding our growing prior growing showed be year Transportation strength vertical success, during XX% of the XX% has geographic quarter performers, nearly one strongest than

to international British the fluctuations, was revenue in particularly the where by markets, growth pound. weakness currency impacted Turning our foreign

As I strong headwinds, continues with over year. currency volumes the also XX% foreign U.K. grew Canada year growth. said earlier, prior despite XX% its

where in growth investments our similar While leveraging we customers by support international to in has international global leader the global platform. the slowed our our space, us U.S., to to continue unified the positions our be operations

I and Lastly, like an update initiatives. to on would platform technology our provide fulfillment

us number a our background services all reconciliations, screen. leading expanded of and profitability. of As to a industry-leading the full improve of map Leveraging and data continue will identify, with both drive data continued automation global technology a use smart how assets, partnered we search reduces automate the variations specific improvements quality firm through our to technologies and streamline in enabling manual reminder, that to with the learn, back-office to term, and we conduct IT a fulfillment suite processes a of

We we of throughout benefits ramping modest nearly And this a next into benefit have year are with year beginning XXXX. year this previously, through and and only savings competitively journey. XXXX differentiating financial a as I expect said

significant time. underlying over in cross-sell ability to and customers shareholder outlook around we're In gives given backdrop us and broader macroenvironment. uncertainty to results new talent long-term today's pleased confidence with the of significant add closing, for The and our ability the the future create demand value our

for for the of closer year. Tom a and financial to over look the at call our balance quarter third Tom? the turn I'll that, our With outlook performance

with sixth everyone, of million Good Guy. international of decrease quarter consecutive which you, for to macroeconomic the I end in patterns this joining resulting Thank delivered spite we our thank included USDX of today. you of call of million afternoon, revenues USDXXX our pound. impact towards revenues our have am growth in pleased report ordering quarter. Part impact to the from started nearly headwinds, a weakened tail and the

verification similar USDX vendor. we increases other seen case As impact have we employment to Guy our This as a one very from pricing negative also had their from due isolated discontinuing the customers not verification mentioned, leading a of was program actions. customers take million

retention and our to a build is while upsell high pipeline. year-to-date from at benefit while continuing year-to-date. existing ability XX%, strong customers retention to XXX% rates continue sits We retention to Gross net

revenue quarters, growth be disciplined in our And is XXX% M&A previous approach. in we market, actively while evaluating organic. are opportunities in As our to continue we the

from of of and growth that which manufacturing And verticals the while was QX XX%. early some vertical core is during macroeconomic achieved XX% for quarter, a distribution healthcare our the in signs also growth. growing continued slowest us, vertical recover to into double-digit despite excess year-on-year our and deeper grew Diving our the vertical had core focus both been revenue, the Transportation, company outperform not during leading of the quarter. to pandemic, slowdown, and averages industry X

growth. modest showed services Financial

of XX%. banks. tremendous percentage financial hiring transportation, share market to during points was had particular vertical services, among weakened as exposure verticals and core U.K.-based the dipped revenue have as to from declining of a a year-over-year. pound, to we it Technology technology, large few our quarter the Revenue softness, the slightly However, first demonstrate all healthcare, the total

technology and particularly International One as approximately to a the our where our headwinds, in coupled the international significant the with Services, bright markets such continued the grow from continued the distribution, double-digit markets India in to clients presence. have markets many XX% to slightly was of spot manufacturing, which did, of each markets macro FX U.S. rates. revenue during show the underperform led Canada, at represented began U.S. impacts international This, sooner than changes quarter.

margin. of our One of quarter improvement was in the clear the continued highlights

cost resulted vast our basis year being gross the level. of a profit is at productivity in cost adjusted XX or Our of over of improvement improvements and and over improvement XX.X%, The margin service on focus last an driven a point control basis improvement majority point QX. EBITDA XXX

touched We offshore and on continue to earlier, focus in through automation Guy to technology and on onshore addition the driving increased data on managing cost improvements that delivering costs. project the our important of labor optimization focus mix

are cost of transformation multiyear increase enables technology a the from cash margin points future of depreciation processes high increase streamlining prior an the of growth. basis profitability improvements at same XX.X%, market in Year-to-date adjusted margin gross tied period excluding versus that drive XX.X%, in slowing EBITDA note basis any gross structure our to to year of revenue labor important and Also, fulfillment margin points flow. the It's demand. year-to-date to our response XXX XX.X% is and period. our now variable over to flex amortization, XXXX. sits margin, an will not and us The XXX Gross was

in days to response we gross pandemic, allowing As impact early reduced minimize quickly margin. we on the us the in demand, slowing demonstrated the to our of costs direct

to costs USDX public This higher QX, fees. Turning accounting SG&A and however, due by were higher Expenses, QX, for year increase million go-to-market USDX XXXX. excluding largely the to million Personnel-related and teams. million flat insurance SG&A. is versus prior personnel down D&O our from as up by investments QX such reflecting stock-based were higher compensation, relatively costs period, were expenses in USDX.X however, technology company to and our over

of driven the resulted the this benefit in those Adjusted our noncash will of reversal future is reversal TRA rate will meaningful effective in We taxes. largely U.S. payments. a by release not million. the net cash our allowance of increased offset income calculation cash to onetime income timing a million, Further, tax anticipate USDXX current and tax not projected change expense do as USDXXX taxes. transaction to the that a This impact

interest addition In compared we driven reduction operating improved our we year the largely structure performance, to a from capital in in expense, a ago. by improvements our benefited to saw

provide This our year USDXX also another a is balance earlier. million with up area delivered from results million, color cash on of nearly flow sheet. some exceptional would I cash and year-to-date where flow USDXX had like we to operating

was approximately cash transformation our million. USDXX technology more Excluding USDXX cash flow than free flow year-to-date million. project, Year-to-date will operating be

of USDXXX As draws we end, approximately no Lien First had million against revolver and our our outstanding quarter on the loan. had

now USDXXX on X.Xx, of million cash ended with we and the ratio unrestricted leverage quarter at the sheet. balance Our sits

updated Turning outlook XXXX. our to for year full

While the recent softened recession. performance months, uncertainty the has and in any our length of macroenvironment and certainly there around has potential depth remains been year-to-date strong,

is there industry to markets uncertainty this term, we we will believe objectives stand the clear in While today. over as and discussed for and secular softness labor long-term here continue we growth changes the hold continue to our have long

million. in of a revenue With million full million USDXXX mind, million to range new of our a we USDXXX are to range USDXXX that updating year guidance to from USDXXX

We tax inclusive of USDXXX our adjusted of range income from are million USDXXX of updating to USDXXX million, a to guidance million new to a million net USDXXX range the adjustment.

made per USDX.XX adjusted USDXXX and updating million, and of the the of this updating our USDX.XX are a reversal new We diluted guidance include diluted share USDXX to share. million million adjusted range USDXXX million new adjusted USDXXX of a year USDX.XX share we of to allowance EBITDA USDXXX are of range range corresponding to income per guidance to Both quarter. net to range adjusted to earnings the impact our USDX.XX of earnings from per from full a million tax a

another I who also volumes million customer aforementioned verifications, from decline USDX from that remaining FX roughly headwind with note as discontinued implied QX the the USDX guidance approximately to changes the the macroenvironment. lower another million want as the to year-over-year resulting attributed in from well headwinds, reflects

when operating are job demand XXXX will incremental year-end and pent-up talent we we Reserve; actions macro openings, full Finally, headwinds XXXX consideration the internationally; year taking and the , into operating budget, respect potential guidance, XXXX release environment, by available and results. domestically interest of provide guidance with to recessionary our finalizing for Federal our the

through and However, that And our focus will technology volume are on improvement margin with of dependent. much our operations regardless I margin commitment the not taking demand improvement and the continue of are vendor actions comment environment. will we

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

[Operator Instructions].

comes Sachs. Our of Tong the from first Goldman question line with George

is business the well. that mentioned You progressing

seeing You're signs of slowdown. meaningful not any really

in to would watch where leading you look are the there first? and you are at indicators, downturns, the If are the a look any point it What seeing perhaps what past of might that business for? that inflections And you're moderation? KPIs business at early such you see that the would signs

slowdown. seeing mention a did we are George, that of we signs

a projecting is the quarter, started specifically of would to classify can a tell half was guidance mile moved impact in annual In an what -- deep huge hearing down. just perhaps volumes It's through volume, as the But modest volumes the with on are see is rest I macroeconomic saw by It's quarter, volume. making of nervousness the so an today everywhere. move QX, in the in this screening we're said an outlook we of general drop drops a back and why background interesting in our you some fact, is Lyft would you wide, our inch is hiring our right? their in this industry but because which quarter, what drops Amazon modest whole. downward adjust that it's fact, And and announced our in have some for we it's year, that and trend and fourth conditions was it on I it's certainly not clients, -- conversations what as people

mentioned well and like well. really doing And there verticals are lagging in you they're less outperforming Are that and particular are certain healthcare, that performance? doing Right. transportation, any verticals

And So slow there going second that to this even the the them was that in it's QX, after players see were every in not because we third volumes. of technology though our and every you, one I were the was to in slowdown -- media in in the technology. technology started But in the tell seeing reported, had we major quarter of patterns. clients the call in reports I we weren't board, quarter. ordering we as a -- across said -- Again, dips would the volumes all hiring, single on highlighted their ours, one are interesting

Markets. of Sabadra RBC line Our with next the question comes Ashish from Capital

a I annual just to by would want understand, wanted to impact, an that that annual on What right like I USDX the about think is is And it Xx? to impact? that be focus million way multiplying impact. or quarterly the

was Ashish. a That Yes. impact, quarterly

of annualize multiplying a weighted customer necessarily volume particular including the by quarter. little year, can't the because bit it it by has more this X half You the towards second third

So their tends be peak QX. to QX,

of multiply overall it you can't by impact. could multiply you it while X So in necessarily terms by X, probably an

with stop. they well, is some could as And verifications. We're uncertainty solutions. on there alternative this is involved someplace them in not They start ordering Ashish, decided that in It's working clearly to else. that that business going to just

to that So case that's will that be the would difficult quarter. the we why it be fourth moving But that believe in forward. project do

if revenue of take range, of back at my quarter guidance way it... if even the both even million and that USDX slowdown Is Okay. revenue I FX, the if for slowdown -- and high And EBITDA, volume. back about down is talked in, impact of the get math of I of and your I I right the the end on and right? million USDX I But end about that add you revenues in like to think understand X%. being some And the onetime

Yes.

XX.X% excluding. or X%

Okay. would much. on shouldn't just so the mostly that the Is sorry, be would margins the one on million it USDX that weakness seeing it which on that of year margins. And impacted we year. margins revenue margins have get are maybe well? basis as on think as XXX -- then down When pass-through because in, impact revenue, that more points is I I I of margin XX.X%, back

Yes.

just be One, the margins and our work, really to bit softer levels tend based the there's way flow staffing little X holidays, going things the QX a through. there. historically, So volumes on on

what impact QX. we're So clearly second and you're that the the is a that's just on overall there. driver based based QX implied the guidance for of for implied seeing And guidance -- decline the on the forecasting volume

helpful. That's Okay.

the from McVeigh next Credit line Our with comes of question Kevin Suisse.

Great.

like the about the are just there's it potential things know to things there there, So probably just wanted takes? but -- I think fair there up now? how to other any puts call maybe there. screens of not you're for QX I'd about Obviously, USDX a giving think but you've guidance, those we little other client, and some know seasonality imagine -- implied now? are one are FX to is is bit with annualize And a more it about some it's formal is I that, million. but in again, think it or that, a doing we XXXX in what FX As got how the they the But they is guidance, formal range, And if follow out? to is beyond doing XXXX? just, -- the headwind know way to not I client

-- package with doing client, this full Kevin. that they're So so it's a we have

likely so to employment do. doing increase very well-known they're But other And been decided solution and stop verification. us then what anyway. that looking through has it they We're stopping the things still doing an verifying of screening alternative the significant a specifically all because stopped would But is, and run vendor. just doing by we price that background for they're just

right? guidance, six question that it's see leading phenomenon we're a trend is a going to and be right not weeks, it to the out year reason even us half-inch reflected what as difficult guidance, for and right? mile rest months, Your or -- say going why is deep of there's you will reason giving So only five next and trend just line characterize about I long-term several wide to out why the long-term in a -- that's trying on guidance our existed what

clients there with -- the that there is that there there other any and is about other obviously or clients -- there any like particular out vendor, that other this And any the X -- margin, risk clients talked other risk potentially Right. is are okay? million maybe like or anything you

No, question. no, I think verification

Okay, thank you.

Kevin. Thank you,

Needham. Our Kyle question. the Peterson next with of from line with proceed your question comes Please

guys. afternoon, good questions. Thanks for Hey, taking the

areas Just want least in the a to fallout of at is lot of clarity weakness where more holding guys vertical, in broad be or there they of that was guide in get the XQ now? concentrated some XQ seem have be in technology seems where it top lot is to XQ line right implied guide, kind headwind healthcare, in pretty well for a on forecasted the based the transportation the some you like like

Hi, Kyle, question. appreciate the

you drops technology. mile if it's verticals, all at, look it's drops wide, be energy, everybody, there everyone, is industry every financial obviously mean our deep and down, small I and services, some an The that clients and from I up from in go, characterize a manufacturing, are of we're seeing a So as everything some reason almost why and going modest across inch volume as mean is this obviously I an distribution, are it's because but number impact. but industries very right that are to

other to trend quarter, industry, fourth is was a of going course quarter, there no know as from some see doubles, than that in what in the third we're but you quarter. So, third don't specific we the outperform industries quarter-over-quarter the

we're geographically generally well. seeing it as overseas as well, it's And broad-based

Okay, helpful sense. that and makes that's

you screens, one a whether seeing on other guys duration outside purely is kind of the signs headwind? really verification one of of or shorter down a ARPU less type Just are this out growth it's a base in going volumes know the side, any that guys trading lower kind quick client or follow-up, called instance of comprehensive of I you

growth. It's purely based that, it's purely

helpful. guys. that's All right, Thanks

Thanks, Kyle.

Mark with question Marcon the question. Baird. from with next Our proceed your Please of comes line

Andre you is taking Hey, for our Mark on Childress Marcon. for questions. Thank this

and said broad, given a question obviously is, So times but it's my clarify, COVID order comps either throughout want several I that last that saw is sequentially, pretty a by just is drop trends the far? that And thus exacerbated into year. to October assume there or modest year-over-year as first that's you you've rate there was be I rebounded whatever from it to quarter hiring any we incredible way volume may the quantify

the of answer part I'll the talked quarter. I quarter of that the coming so Yes, first so into modest it think question, is drop third about ending sequentially, fourth

is call guidance from into reflected October and our our So so reflects certainly Yeah basis in on earlier a QX and sequential indicated it's into the latest baked through we've the guidance going certainly that what results, we obviously thinking on saw right? that QX.

Great, thank you.

question, I was but some have of around other because how one gave but each perspective of financials in kind going know and we terms so recession. terms tough And varies expenses, obviously is COVID manage it's you this in happened dramatically, historical the be what to you're a only question recessions to going and your unique my over very that a of

it So there the we assuming of longer-lasting maybe we this how COVID or experienced think to recession, that? should into we than and continues kind is should during revenue go do expect be but about would any environment way trend, deep, we less

ask get that's was the Andre say people answers XXXX. great We back one that certainly when one look but So that there when the can't one we bit, at seen back of question XXXX and is in I crisis, to think quite you've correlate COVID, in recession, this certainly a it's right? think seen financial those recession, saw we you've different think we a to business an something extreme. we and very I

shape budgeting have for March time up. certainly XXXX, we're sensitivity around the and going we framework, So we through I provide do we the sometime certainly think our year we'll the think go much insight looking that and forecasting to into we're is going guidance better some how when at to planning by

and top that. context on great one actually just of that's more you, Thank

up-sell more and the you clients of with on your I your a go-to-market macroenvironment? you talked you in from we the but think pipeline, or sales cross-sell, of haven't in that challenged how know would is among about more a but said assuming expense prospects, environment. go-to-market heavily kind seen and enterprise should you an perspective, terms happens about what So lean that bookings the slowdown

very, interesting, very, in in So of very sales not wins we the there's a very us, one that strong the the We've we even pipeline, be that I almost certainly and in good the when we weekly. slowdowns it we've pandemic to made performance during the pandemic robust literally on adding time. wins that strong opportunities pipeline, no are both say have see mean their we is logos, upsells, have an was have. and and new got and that some we proxy seeing I the numbers RPs, front investments there's and it's continue new necessarily in last a slowdown cross-sells, have pipeline year don't grow And over We're slowdowns will those teams impact. no to

Thank you answers. the for Great. all much so

Okay.

the proceed of with with question your comes from Our Nicholas Blair. Please line question. Andrew next William

and you Hi, the in Is if moved good improve? embedding the deterioration you're this about sequentially expecting for there to of that through as accelerate kind are a or the of months afternoon. assuming sense October the just number. were trying that on quarter there wanted the a modest hone anything of conservatism results I what could don't some outlook bit could conditions fourth things guidance, say what's you quarter remaining for get downside for quarter, continued fourth maybe two to or understand to of kind in decline into further you're quarter you

that's typically and of the to anyway, because coming Thanks, see clearly the November impact some slowdown tend people seasonal particularly guidance, real so and in Andrew. up reflected December activities, holiday We year-end hiring. in seasons

and basing but typically kind taking year-over-year and we from that up seasonal and guidance. December, So month-over-month that with kind the that's far what at reflected it off is that, of historically seen we've what extrapolating of it's taking the certainly look see generally so in at are coming that way October the customers trending we're into our done in look really a a we've November, of

slow about of decisions our hiring actual and I with not be their that general their clients, to other to uncertainty side with of conversations The in tell the more that, the business, of performance would business. the associated our pace necessarily Andrew, just nervousness seem you

-- first controllable of in I clients and companies be expense, to uncertain have ultimate be So the as maybe pause but and most doesn't thing the hiring slowdown the uncertainty with lasting. markets classify would our that for necessarily because or people it our it's might pace just long do to is generally quickly the just

way So us it's to trends make used we to we best that say have we don't roundabout a for I guess we but the estimate both know, could. the

some Absolutely, that's you want the given environment want keep schedule macro And allocation for about to has I evolved the if ask my capital to debt at follow-up, rate wondering and just helpful. that just then debt recognizing probably given interest or cushion balances, also the all, headwinds.

at this could Just if That'd time? thinking helpful. Thanks. leverage point in you be update us on about how you're

there. change real no problem, No

investing the be that in -- leverage keep a and of under foresee overall may level three been now looking to keep acquisitive we acquisitions, it ratio, we're to There changing. we would when be cost under terribly very that of that level and mindful obviously, I but for and don't discipline. it going type see we'll can we in expect being you conscious to that we're capital opportunities do of very to the have at, to comes or be are continue haven't time it We of terms pipeline certainly continue

change in allocation. no capital in really of our kind of terms So focus

automation and that going steam our biggest single to right ahead. full is relates technology now capital priority Our program

Thank you.

of with comes question the Andrew proceed line Truist next Jeffrey from your Securities. with Our Please question.

would on Guy, of is question the about Hey, to realizing fair that but we our levels to industry question. is endpoint drivers those the expense say control, this to internally guys. think for need I XX% checks It's the pre-pandemic on will to how revisit some likely Gus on are goal long-term or normalize be appreciate or the like it that to great thing, appreciate liquid appreciate we you for starting you just and X% of parse do kind This it levels margin an taking I growth. want per of color top Andrew, that but out there? elevated of velocity line

Yes, is our none see just talk the so about you points fundamentals industry, from long-term two and of the for the of the view, quit openings in let me still to job to growth have. has that will changed, recession what traditional for forward one impact right, rates to beyond used but big continue we growth the though clearly growth just rates The good those drive it's is think what healthy that this for going and unknown industry be.

we good we change in this our and market that labor we've disrupted clip of for are But the and long-term, five we terms all the people know. about long-term this business prospects, X% in seen think to think the fundamental they're quarters that of who quarter in don't uncertain over industry cycle. be really don't the historically still of be I that the are feel know going additive that nice fundamental the solid quarters Certainly, knows the labor grew and only number before change secular period at growth a we the that to was a next next in view Yes, one as going about or we market. time changes all at outlook

competitors X in coming and to of Great, just -- health X? taking And that it or Tier again on Tier from share some is are larger from there's then and made transportation is coming any appreciate it. seems we care the which mostly here,

we talk industry. We it's coming about business but the from generally don't whole from, where take

Got Thank you. it.

Moore with comes Please question the line from proceed next Jefferies. question. of with your Our Stephanie

kind customer guidance quarter I you. guidance, midpoint with you but the Hi, single-digit of remained the and of break -- headwind, good you has afternoon. cross-sell, some in puts the pretty expected to business number clear that the and out, guess I take to Can takes the baking just of say but think how trying in I'm one implied of line let's that million very of I maybe USDX top logo that's understand of other particularly touching on you think the were just fourth that given and Thank the the kind appreciate kind if here? deteriorated, you also new consistent I decline. and the offset logos, new on base cross-selling the macroenvironment, got terms front high just

Yeah, Stephanie. sure,

of going excited guidance deconstruct not how pipeline we very and terms but algorithm, the quarter-by-quarter comfortable to are growth as going pretty Guy looks into XXXX. actually remarked, we our are in our -- about We

will Some in a QX, close of it's that but and year is go from perspective. pretty a new live strong logo shaping XXXX up,

new upsell So opportunity. that, an excited not from but only a also from logo, about

more, and know you customer a that's one and gears, your switching that's something still we business you an actually recession could acquire bit this the a maybe kind is recession, is contracts, slowdown? good a struggling that positive smaller from we if standpoint, of look Great. view favorable hit M&A potential but you and a continue that could market assets in good a has M&A be And think do be as a slowdown then noted would said I for to into that actually but one opportunity opportunities, opinion you might be

for I expand on negative expect or M&A it's know us. because our or then that for do don't don't purchase I or is or would But buy out of some adjacency terms just at unique fit we where think positive that -- look presence as the to that product the want more us than we activity some better moderate of approach geographic either know right or build less not whether we you market Stephanie, any math businesses slowdown. the it's a M&A, to continue a to we capability in that if of

you. Thank Understood.

next line Capital KeyBanc with comes from of question. Please proceed Devin with Our question Markets. your Au the

in thanks checks.com the seeing what SMB you're for you is in how back SMB here. quarter segment? type same from about on platform that are my Curious and hear market, to taking that Great, performed past nervousness seeing of question customer and

been The we on mentioned of the we're quarters to one frankly ones SMB market recovery slower previous in kind and of mode. had recover as had still

a changed. from has hasn't really still changed last lagging us frankly sector for that nothing So slightly to we our business, been up months, sector what been it's for there, the is the of and are definitely that on pandemic I say slowest recover but it's that the XX would

said live it's pipeline to one you helpful. that go about I seeing other more, development up you than And point? that that to some the ask really want there still that's you're maybe stronger I Okay, you're in just know this XQ, seeing, XXXX certain expect pipeline and for at are maybe shaping industries nicely verticals

-- healthcare. for yeah, focus So spread tech, the core verticals the transportation, pretty evened is Pretty that financial within out. on it most part, services between it's and across wheelhouse, well and we our

Thanks got color. for Okay, it. the

Instructions]. [Operator

line Patnaik Our Please question. Barclays. the proceed Manav comes next with your of question from with

on it fundamentals for actually have Hi, said you this I the -- because has that Can Manav. have... to confirm seems feel that Ronan you don't is happened changed, what's Kennedy actually

get sorry, you're a little... I'm up, can't breaking

better? that is Hi,

Thank better. you. much Yes

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had drivers, You seeing what your the visibility with data within the on what how on from does been see has JOLTS you've industry have you it seen, indicators from your the of we changed regards the have with view reconcile based fundamentals and secular don't said, et Jobs, you changed cetera? and the a think leading kind what to that

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Got it. much. Thank you very

no there to turn further Abramo, you. time, the back call I'll Mr. at are this now questions

All right.

the So thanks months. joining our progress in to to everyone the We additional questions. posted hesitate appreciate out on don't forward operator. look coming with you We call, any please reach keeping

and safe have stay Everybody again. thanks So night. great a

day. lines. call you ask today. have that a participation your you conference you please does Thank thank That your and conclude for the for great We and disconnect