HireRight (HRT) 9 Mar 232022 Q4 Earnings call transcript

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

Joining us today is the company’s President and Chief Executive Officer, Guy Abramo; Chief Financial Officer, Tom Spaeth; and Andrew Hay, Vice President of Treasury and Investor Relations. At this time, all participants are in a listen-only mode.

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.

cost management’s conditions, include services demand company’s improvement call, related statements, and this technology macroeconomic to for and during remarks forward-looking will including the Also, initiatives. reduction the company’s predictions are may actual Such statements and differ results materially.

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

It’s now my Guy the pleasure go Abramo, call over Abramo. ahead. to please to turn Mr.

quarter I’m we achieved and the on operator, despite the us we you, guidance headwinds, and time very Thank continued XXXX provided quarter macroeconomic with fourth as full earnings To results. and pleased afternoon, everyone year everyone. XXXX exceeded we that call. third begin, I appreciate today strong taking our good in results our share

has during announcing volumes, companies which by nervousness As the data the as we prior the third call economic the driven hiring been versus quarter XX% trend in the workforce fourth showed quarter in many throughout with hiring outlook. on that slowing the reduction announced noted, general delay quarter, primarily fourth reductions, year. continued in confirmed an or well staffing that Since additional which a observed apprehension we with national that reductions, as in call, hires

that majority the for technology just which period. decline. is down versus and from saw year XX% both said, significant X It our million, of of revenue note to government, the With quarter fourth came verticals, $XXX was that XX% decline important prior the

appears and elimination than in last do months. slowdown not of slowing replacement government Technology have the qualified the we’ve press given surprising, applicants more an all finding sector sector, with In case the X difficulty read to the to for is of the hiring positions. layoffs of

year. key Excluding X% QX despite environment, first of also activity, in in clear pace It’s to healthy experienced XXXX. the more a decline be relatively macro the showed verticals, hiring X the much not modest the that we half at this of continues there of these prior relative to just slowing

To As me in investigations for many quality demanding. and times, core you particularly relationships. expanding go-to-market to our have management single markets global remain our continue that leverage client and account continue platform to differentiators. new And be heard to in strengths, global teams automation selling and say developing on thoroughness tend us, and our our initiatives points be these key more focus

we the our which enterprise added During across X of distributed verticals. customers, quarter, core are two-thirds new XX

XX able to million. XXX were basis challenging points of profitability, cost our of to This the providers. automation, management services. points XX.X%. over greater adjusted increasing on initiatives reducing presence the All margin our basis margins Despite adjusted delivering improvement Turning by rebalancing on $XX.X period mix increase to cost EBITDA EBITDA year our we was these environment, demand gross are productivity, prior improved the driven increased increased and our labor offshore of overall workforce our focused data by over

a results, million, revenue XXXX. our $XXX generated from fiscal to XX.X% increase year we Turning of annual

logos and international our points results and new reversal valuation increased to onboard EBITDA expand million. won million existing as ability income to including quarters expand from of $XX packages to effects as These well to previous in to margins. asset increased tax allowance our to adjusted domestic million to continue our upsell, customers, ability reflect margin gross $XXX the net XX% and basis $XXX Our XXX% XXX XX%. the Adjusted deferred grew of

Annually, our despite healthcare, XX%, Transportation growing Our top-tier of and customer core of XX%. pandemic financial continued and QX core XX% rebound technology lows and services its verticals base led trends, grew lower from grew our X%, technology, XXXX verticals performance while respectively. by the which versus the healthcare grew by our collectively transportation. XX% and hiring industry to continues leadership financial be evidenced services,

I to to interactive we regulatory Griffin partnership benefit compliance Form workflows, access solutions that highlight auditing have compliance real requirements. announcement customers reporting, platform and dashboards, rates provider will with and like program self to recent entered would also capabilities, time customized a that help higher our allow meet E-Verify I-X a into service updates from HR, their to I-X

background As looking we to always bolster services our solutions. stated, for ways previously screening innovative we our offer customers are to

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

As validate, improving project office from margin fall fulfillment that began back our XXXX. the of automation results in a benefiting the we of already are processes,

have the out platform of of several key the build We functionality. core and pieces completed

are We U.S. that extending scale our with platform soon to and will continuing new internationally. it customers be

environment. our delivery platform while the costs, to further control us macro measured profitability. continue overall incremental to enhance keeping This improvements will while enable will automation, on We and broader in making an eye quality to a manner,

to the committed continue overall and future. these expansion from foreseeable financial to We margin XXXX this expect in initiatives, year remain benefits modest and in

we run pleased our of will be given as always its positioned demand course. the whether up organization as velocity, next. a more market results efficient In long again, the here drivers strong is hiring underlying with for as yet increased The and the underlying the case, this hiring macro talent backdrop And remains or the environment. cycle believe the for well we’re year term. And we’re broader closing, macro of leaner will picks the we and

existing growing expanding core client relationships, and new through costs. global margins to logos verticals continue our manage while meantime, continuing to customers, the In will upselling to on we new adding focus

dedicated us Our confidence ability shareholder talented our focus in these gives create time. teams principles, long-term and over value on outlook the and significant to

our I’ll that, financial quarter the performance at turn over our XXXX. look a for Tom for closer call outlook With Tom? and to fourth

call our you Thank today. joining afternoon, everyone, Good for you, Guy. thank and

This prior mentioned, as As from decline down government and X% XX% currency, $XXX foreign as our includes was a in million, negative impact revenue quarter Guy well verticals. versus technology fourth a XX% a year. the

down foreign year. Revenue impact partially would revenue X% customers the have upsells customer prior been currency Excluding and exceeded offsetting these quarter, the the verticals existing X in from new declines. versus million $XX and

of more in into a QX and are over which resilient verticals gains the deeper transportation, revenue, quarter the few the modest manufacturing Diving each prior of year. posted

year Healthcare and vertical. our its prior Additionally, hospitality retail healthcare now the with largest and is the only compared growth to reductions should modest strong prior over year.

of revenue. core continue services technology, financial XX% to approximately transportation X Our total verticals and of healthcare, represent

in revenue similar quarter. U.S. decline location, reported largely of clients, by driven America. and India, International a to markets split, applicant the which revenue. our Looking international remained North approximately XX% geographic declined the at based on our technology steady total is multinational XX% at

Our cross continued was XXXX XXX%. be organic. And XXX% customer was retention sell our retention retention upsell and growth the finished to net while strong, revenue year XX%, and at

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

margin multiple QX up basis XX.X%, managing onshore adjusted EBITDA our offshore margin mix, our decline. ongoing For our point XX.X%, and efficiency the QX operating costs, focus data XXXX quarter, we improvement by manage driven demonstrating and ability reported projects. improved optimizing a costs XXXX in on variable despite labor to over a to XX to XXX quarter Fourth improvement XX.X%, revenue basis from gross point the

to slower We the market demand. continue to flex in labor and response rebalance our

and million charge quarter, SG&A the prior Total QX third-party the excluding $X versus of fees fees by million largely approximately compensation year stock-based in XXXX, facility by use and expenses. improved driven lower expenses $X

by was largely increased the Adjusted driven from to allowance quarter valuation $X.XX net our year. gross adjusted quarter, lastly, up for And $X.XX, reversal, including the $XX.X from XX% diluted income prior for million the the margin improvements. tax EPS

Turning vertical, review which the led prior million, $XXX year was revenue our quickly by XX%. healthcare which of XX.X% to full from was up was XX% a the by and followed results, year up transportation, year, up for

vertical margin a at mentioned healthcare year XXX XX% improvement to efficiencies. basis driven is labor primarily approximately our now by revenue. of As operational the Gross showed earlier, for point XX%, largest

consist year $XX Employee costs due higher higher increase were comp full million. related technology due of public $XX.X year expenses benefits. were partially to $XX.X by by facility is and costs million, and higher company well SG&A annual sized This investments our increased costs Public remote in prior the as by as of costs increases in of $X.X million and we go-to-market million. primarily decreases accounting, driven the to of personnel stock environment. audit and offset fees. work legal right as real the insurance, footprint The company increased employee estate For

reversal. million, our TRA including timing adjusted valuation has allowance tax reversal of tax on our We no valuation net of payments. impact the calculations allowance The or $XXX reported income

XXXX, based We paying as our revenues, to do And payment in QX though to change ago. QX XXXX any XXXX, a structure our in interest our our capital primarily make federal the utilize taxes million, rates compared U.S. interest international rate in a we driven expense to tax is first improved tax expect federal the filing on anticipate subject tax reduction from not and significantly market returns. loans. year We our we Even on of $XX mix. of based are largely higher revenue by benefited following than

liquidity color operating capital nearly from some delivered million, This exceptional million XXXX. up also we cash generation, balance where with of in full cash is on another I flow area to year flow allocation like would results and our provide have $XXX sheet. $XX

cash Free of increased flow against end, initiative, operating had to approximately flow increase technology draws an no million $XX was first-lien revolver our on million. we XXX% $XXX XXXX. million and $XX had $XXX from our Excluding outstanding versus loan. million, At quarter cash operations a

year at times end at Our improvement X.XX versus the leverage and times the ended of ratio the XXXX. X.X

in with the ended attention by $XXX unrestricted This improvement. team’s was We revolver working million sheet, on $XXX million. year over increase million driven capital of of driving up When $XXX combined the year our with liquidity. cash availability, balance ended also the our we to from with cash

the currently company our confidence approved and flow. to million use positive generate XXXX, in to $XX.X company’s ability shares allocation million. of Board the XX, We the our period. of up the cash November, Through share continue announced of authorizing cash $XXX options, common program capital reflects to as is repurchase Directors over ongoing repurchased believe December the in excess X.X our our program right stock over we of prospects repurchase and X-year evaluate business a the million repurchase for As

than customers volume ago. almost some steady see defer to primarily may across we anticipate year direction period continue driven of some of the we continue In macro regarding lower the every however, near-term, same vertical, hiring environment. the uncertainty the decisions, ahead, Looking to sustained by a our

we’ve stronger and historically been quarters, with calls, QX previous QX lower on and each in noted QX QX other. seasonally with our As and being have line

in EBITDA the million a range we’re a full $XXX XXXX: of guidance following mind, to a providing a $X.XX, million; in and of for income year in adjusted diluted $XXX range $XXX of earnings million; in this adjusted $XXX million a $XXX of With to to $XXX range million. based net per $X.XX fully in share range on count million $XX share million; adjusted to of revenue diluted

quits to conditions, hires, We engage and actions value. demand, by monitor shareholder will to and environment our vendor the our practices create Reserve costs, job market and the customers adjust monitor openings, continue and manage reflect relationships maximize Federal margins macro long-term with operating and to actively

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

Thank question William question-and-answer coming a Blair. Instructions] from from Nicholas you. We’ll conducting is Our session. today be now [Operator Andrew first

is line Your live. now

Hi, on for Andrew, today. Daniel guys. is Maxwell This

to Just off. start

to XXXX. automation the saving to you cost year? Is in from coming this next that the expect is the as quantify mentioned having realize far savings way as year or cost impact a project there that that any You modest

how We the cost haven’t given guidance. of in out but drive to specific going we’re much savings, guidance it’s relating obviously reflected to

it’s a And, Andrew think big story. been of [ph], I our part

year, going substantial margin declining revenue and continue environment. margin improvement year pretty drive will despite to So into next this we potentially improvement

So will effective. it be

the maybe assumptions on then verticals, level? baked across X any qualitative And basis, give can details you are those that Understood. in core and a across any main verticals that vertical at

decline. biggest terms quoted is a in of sector we’re minutes had the in I just few just Yeah, seeing ago what think overall has what technologies, the we

If talked case And an deep of about just not is the that seeing in to government. I last call, I sort we were its the the you technology remember a seems mile and would volume and that It anymore. you tell impacted inch wide. that’s

for off having hiring; technologies reasons, qualified laying a different not X applicants difficult people, getting For government time sure. just

some The growth. modest decline them – other some show continuing of with more core way to verticals showing

position sort So, obviously, relatively that the but qualified we targets some of by for we year verticals don’t by technology. out the modest split in Hopefully, out this year. and half coming softness next expect continued vertical, we candidates, government of other our in of saw finding vertical the last recovers better them

squeeze can how that the if that Just That’s resiliency over And there the SMB helpful. Okay. as been has business curious the one the of performance strength on past quarters? over in, Backgroundchecks.com, to several timeframe. more given in broader I

Yeah, the recently very macro I and a I latest mixed numbers would have been story, it’s softer say, the really actually jolts actually SMB SMB been for the the seen in reflected. in think was we’ve market,

slightly been be pretty with it’s noticeable but It’s to improving, nothing been So steady honest state. you.

Great. lot, Thanks a guys.

Thanks, Andrew.

you. Thank

Next question Kyle is coming Peterson today Company. & Needham from from

Your line is now live.

cross new Kyle, are off existing this upsell, the the actually here. your in just balancing additions, getting about thinking questions, sell, to year? churn today. you results is about guys, I growth, taking for Thanks and Hey in growth that Thanks. they for client Salvas between start Sam on how XXXX client guys and thoughts wanted nice

follows Sure. exception historically the seen of pattern the we’ve with Yeah. base I the largely growth. what mean,

the from in we’ve and seen buying haven’t new seen when even have Like, customers, markets lines half from soften a second anything upsells. bit, we So, of by clients to able the as change would new logos execute we that our the new logos outlook successfully we XXXX, of similar on upsells. that and indicate in were growth a pattern wouldn’t

same-store base to call be guidance, to meaningful the though, we expect kind continue right? those the level, or obviously, growth driver we to the of the what see decline, biggest overall So is profile, and the the of sales contributors

algorithm, of it’s ended rather always a to client at kind number. growth But consistent. the other year said, pretty X% growth natural with the growth that’ll retention, that’s were There’s than number a negative up that long-term our a be churn, some we’ve number. range, optimistic terms level of going it. new clearly and to level base X% about this attrition That so we we base. XX% modeled gross to And generally in XX% year we numbers all in upsells all in of XX% business, But be growth

pipeline The last that of the building strong we’ve in this seen half year. even

that Tom are of the our one aspects the way same-store by including, business, sales. unknown we shape. pretty The as face all strong in So, mentioned, always progression is,

hiring Just terms clients can’t in are going we what to what in see outlet. control do the of our they

you I the down that’s coming your as a on good it. buyback M&A. to How of you quick mind guys are thinking about talked to just still helpful. M&A? Is know, about And That’s guys the just top pay you this Got well. a then for I Thanks. kind priority the follow-up thoughts here? debt see buyback priority wanted ratio leverage is a the is Or guys? bit, and get of down

rather that we we [ph] strategy did than buybacks it, sort drive – also didn’t, investment I-X in the to them of hasn’t space have of a did ensure Yeah, one the in those [take we [Technical our I solutions part been M&A the development. changed, product felt priority. is you can acquire certainly mean, an can an] that of we very good we accretive very, Difficulty] that company, investment

show pipeline be M&A we geographic but of that now. don’t either of right other as in to based, high we The nothing invest substantial terms capital use that see size, tends

Thanks, Yeah. Got it. right. guys. Awesome. All

Yeah. Thank you.

you. Thank

from coming Suisse. question from McVeigh is Credit Next Kevin

live. now is line Your

with Tom, Hey, is there on to Great. revenue results. Thanks new frame the wins? and much, those congratulations way some potential so associated enterprise any

about year, neighborhood when $XX year-over-year it’s number quoted an logo contribution kind of generally is we in historically, mean, million to $XX to number us. we I customers. average our the new can of year growth of just Yeah. million that the for quote getting you think of a a that think But, that

Or I kind workers of kind in helpful. That’s folks verticals laid-off it there skills terms those government of technologies are laying a kind government. like getting guess, mismatch? I observation you question to, absorbed? across interesting my get mean, of those from skills more then, it hired find And of folks to off, tech it is, or pronounced more broader any kind timing elsewhere? like it’s other expect seeing redeployed is Is is just to that in having get But and is timing seems it’s a can mismatch of and you people. verticals

two Kevin, a kind whether have hiring around Yeah, are precipitous. reason not insight modest anything clients we our why absent or who that folks decline, government don’t verticals, saw of really we are – because moving that. highlighted The into those not is and we like

mean, it’s including in government a a moderate, I picking In other they Thank little you a get we’ve The good workers, couple of been will of one of that where up And advertise fact, have, not. if they’ll time pattern seen growth and having hard strange at the one. verticals sort bit people. areas. some before, look other – sometimes they’ve sometimes for this response, heavily more a a much is we you.

you. Thank

Next from Sachs. question George Goldman from is coming Tong

is now live. line Your

Hi, thanks. afternoon. Good

base about hiring and December? how have you in to You slowdown volume talked a trends in XQ. Can seeing in January relative February performed discuss

you. you QX quarters George, to if just are we guidance and own in be a close, good to gave close; be higher tend from QX we demand they larger said tend about to most quarters. before, QX, historically, Basically, at draw to fairly That’s tell the QX, slower to will also what or level. you And sort and it’ll typically, we can to you. hear will the tend look QX from QX have so so in be close at QX know, be as to conclusions, your of

a thoughts performs on moving year? by basis, margins growth about moving of you how year-over-year while quarters the Okay. your it. through as would how through the cadence the performed are year? revenue growth And around Got And then the think organic what

I expected, a Yeah. the as through always timeframe, slowdown we a September, sales. in seasonal a give middle the summer X Sure. a insight of then of in little slowly lot a and driving we do of we the in to second last would the We season, to expect thing year, patterns typically coming as kind that of the holiday starting again, the Guy into spike tried quarters kind We because summer. October see have bit you of of that in [ph] after don’t QX mentioned. just get bit the quarter, little seasonal and improvement exposure retail then

you a comparison first a very going comparison, Obviously, is strong such at comparison, the a that XXXX. expect look year. favorable to perspective. of challenge our when of get the of half year we But, end of slightly a to year-over-year be first the first be comp had half because a year certainly bit the a tough half of We by the from will do

Great. And margins?

sitting not can two driving there’s gross margin margins, margin, to we evidenced by QX, to it year. at – we’re for that, Yeah, back level. and to sitting attacking gross margin continue not the things, improvement the as profit expect gross what back across really drive we demand waiting We’ll did across but leverage and in we’re operating see

Very Thank helpful. it. Got you.

Thanks.

Thank you.

Jefferies. Next from Moore Stephanie is coming question from

live. Your line is now Hi,

question, for taking results. and Stephanie. is this Thanks Hoffman on Hans my congrats the Hi, on for

touch guidance underlying Just on wanted of assumptions sort there. and to the

from broader any assuming point hiring in recovery kind just sort of you of XXXX, environment? a Just at are any curious, guys

I assumed of environment. say from the macro layered the state kind just see our into to we minute environment. would say, start purely just get next macro I then We typical see year, to there. last prior a a of And October, expect the from comparable we steady to we’ve reiterated is which to perspective, expect some I I said a favorability comparison November because then when And George September, what really of in regardless No, seasonality, of would a thing as year. growth to ago

really from macro environment again, an would in steady the second kind I quarter. what overall assuming change [any to max, So in baking not – of X [ph] state real] the it’s

you what to expansion, then, and guys Okay. of sort you tech you come? Understood. follow-up, levers of if you the of than and have kind margin expect. worse your on what’s kind And and top-line terms And just of at guys wondering, just where to drive guys cost it’s pull my kind deteriorates could touch behind of automation to just for and what’s in overall cuts journey are still you briefly

Yeah.

it – mean, we’re sort I we into break down areas, Hans. of a So, few

in yielding systems. first all, both we’ve improvements our and from So, is in productivity XXXX the efforts the can employee growth particular, see, prospects with drive automation that of well work done to as started we new you that benefits underway in efficient [ph] through fall

the we is is labor existing to pace the can that. results, also automation the offshoring of two second is sort productivity for continue for ensure of elimination we one work employees. always So, labor labor; of from standpoints: of that looking of arbitrage increase as the That to yielding advantage take

efforts the And then, make And margins we’ve SG&A. at way. And looking cost that good made well. just headway some improve we’ll structure to to continue as some overall there on

why we a terms even to committing comfortable it’s revenue. that’s more, year, So continued down if of in feel

it. you. Got Thank

you. Thank

Manav Next coming question Barclays. is Patnaik from from

now line Your live. is

on new you I the you? are what competitive provide for This region? you by core from you verticals? dynamic Thank added Could across distribution for questions. comments color May from how possibly that my is enterprise the on were also some a standpoint a you’re the distributed indicated the XX And Kennedy clients Ronan and of seeing X you ask then Manav. taking competitor on industry? within size on the Hi, they your

right. client, those Yes, at couple We a level of the comment enterprise don’t detail, that definition a of one. is take in client by I’ll large

we to share, and or core clients ability take which that out scale not very and by did things as break our really it be our industry, someone from expertise our competitive two-thirds given of came unusual, verticals, region we sectors of X one ability So was, X is to those those hiring, don’t well. at but say in

it technology continuing from else? tell standpoint, lot competitive are the to a a would comes an the the needs of regional investments enterprise. who from that players, up And, I can’t keep pace I share, we’re of take just players to of required satisfy smaller some of Anything you think, with dynamic

you. for costs, you in the can the Any large pricing trend customer trend stopped data the be screen please. verifications third outlook update that? who I – and of for And the doing third-party also Yes, then on quarter, $X Thank back was fourth? think on your the the in an million of and confirm outlook economics the reconfirm U.S. third in impact to for it quarter? the it was the anticipated

of latter the take I’ll part first. that question

had the much And customer being people employ. quoted part finding that’s reasons question? So not so to – client just that we But, that the of question? the first the Ronan, that sector, as down. of your of first part again, having tech one why as difficulty the

of The economics? trends pricing your data kind and costs, third and outlook for screen party

Yeah.

XXXX. looking continue focus big think, again, item us, for the there, drive the of it’s on percentage do P&L the year, pretty made course down in same We we an to XXXX P&L. point to that that. meaningful to us, has big over and as expect the line We’ll we’re of overall on we continue revenue. I focus And, mean, XX mean, on I to a the a improvement in for basis impact a modest So improvement a improvements number

Thank you.

you. Thank

Baird. from Marcon Mark from coming is question Next

now live. is line Your

and afternoon, Tom. Guy Good

we’re we help and to to this that basically reasonable got QX seasonality an you ended is just visibility, just you’ve open lay quarter, month seeing, so suggest is you broadly Just pretty just had, call. the to the discussion Would expectations. in and to out regards here basically that going us speaking, that similar conference up the at third good the be with QX

So…

then right, about in seasonal and why be other, that That’s and refereeing in QX something Yeah. to comp with line Mark. we would tend QX unless QX. peak we’re the drastically and each And expect QX that’s with to changes,

outside well? verticals seeing sectors terms you hiring those Or the of that trends in in terms other then, Okay. the X chugging cited, state staying Great. basically And you were along? hiring terms in this were the in of right steady this of as moderation the

is moderating. No, it

of said the government. backed have sorry, and one we think, of business things rest would I transportation still The X out points. if just technology about been that is, – you down

It’s be there there there’s are trends board. to moderating definitely not one So [new that markets, [ph] hiring up the sectors time. some transportation a are from that and be happened well to filled the as industries just and others in across slowest the couple year-over-year, the ways] tended were

We’re to environment. robust than rather of some prior comp, extent, weaker growth from a because overall showing more hiring an

If you take it, out verticals moderately those about, still down. of X characterize the as I rest talked I would

vertical, to with your rate Got tech it. know, gave retention you technology, And retention the then with regards us? in as was consistent the overall stat you that

get. can technology close XXX% you to as in as retention is The actually. almost Higher,

that, mean, little happened big global big And what the all watching seems, the in of quarter clients. are of bit a surprise. a names it I Just our was

year, remember, X% back in the down if when – down third If last sector that, technology, they like was quarter. year-over-year was we you you to go third were quarter the and one

down witnessed, big in pretty down drop quarter, quarter. hiring you solid. X% in it’s in XX% the but So take That’s third Yeah. the a retention that fourth we extremely

Okay. side, Why about government there? big in one we the would having earth be of the qualified issues just of client this know candidate? rest issues that finding that’s terms on having And government all is that it on the

from much daily before, sector jobs. of sector major are just longstanding to can a fill people a sort Difficulty] the it’s so there, before. know, job having the that as did you We’ve a time might that you is how what client. they’re government of openings be [Technical seen a getting mean, interaction I from seen it’s this difficult We’ve large that this For conclude client, we but

see think, anomaly. I it is that, how But, So just few months. goes we’ll next this an

performed just actually okay. Yeah, of And our a where regarding I good primarily another would We tidbit of that have includes government we pretty also higher segment information sector segment. education, sector, footprint. education, that our

softness So the head, kind coming of from. hitting the Mark, you’re on nail where the is

overall slow Okay. deteriorates the margins that revenue the to job regards Great. the then If, expanding you based down. we think should here? just assumption is obviously environment staying trying Feds with great say, bit How talk indicated your say, a terms the a And the as of Can about let’s levers, environment you in same? like little did margins? economic roughly for to environment the on about let’s worsens, the things

They’re doing best. their

we demand that to we’ll at is say margin to So And than feel we’re gross we now what focus the would we our the on if we gross at margin confident, or line be not margin whether regardless it – the about that, that’s of sales right? currently model SG&A drive very we is the we’re at that expenses, overhead generate demand how that is margins on the were you better lot what trickier softer at to looking when have able even out to I cost I a of the regardless about variable to environment, profit the margins line, as where is will overhead. talk But or have level. gross take gross some make said, will get going cost that Before, kind decisions continue when level, of and into focus becomes

line, we that improved and efforts both is the our offshore labor, think labor right? productivity, eliminate of in labor, make – well, everybody Yeah, the continue then that to just remembers, much will in then out, aggressive, SG&A fulfill that are So to have we as there’s that sure used regarding risk… use and I services systems improvement cost we that have the pointed and that will to as and been get and that margin. is then, continue take Tom automation have so out not we’ll environment work too course, And deliver

worsens? buybacks, And, to I the M&A any thinking regards I allocation, table. to like just the relative mean, regards about thoughts with repayment if mean, debt with capital environment But is off to

Of repurchase. it’s M&A, honest, on course, to you be we a repurchase, and between share basis, something board I our discuss with with debt monthly tradeoff mean,

next time, But the the all margin business, mind, long-term, we top go, return. So, can shares uncertainty about deliver right company handful today about certainly is that outlook ultimately the in feel for investment of that’ll now, of value. the over And we margin in that’s confident the we we in think quarters. [ph] where where attractive an is shareholder the our industry, think think [the position] this long-term

Thank you. Right.

you. Thank

Next today from Rosenbaum question is coming from Stifel. Shlomo

Your line live. is now

alternatives like my the for we because Is to any were you for the industry? main employment customer thank do little not of provider, Hi, I a deciding to reports, you want for Lastly, that customers? bit in questions. from history your about be and alternatives the that offer costs there history talked of over you employment can skyrocketing large to looking terms taking going that then was reports? you said there progress follow-up

hear to from Good absolutely. Yeah, you, Shlomo.

previous employment, lot in well. So manually out ways and But that one of a happen to supplier. lot a employment, including verifying and that volume own of our of for data a a and they clients for is supplier, high and supplier are there using implemented roll right, as employment that us, alternatives be number current fairly

about it’s options their understands and are So options. their evaluating

to vendor. I I major data since a think, they pretty were they mentioned this previously, upset as supplier had were

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and work. of and I it particular, use think, means obviously. stop So, we was, this we carry doing also them other impacted vendor sources That customer, the talked the that margin decided this for the about those employment with to quarter impacted it in last verification some in call

it. Thank Okay. Got you.

bet. You

Thank you.

coming Next from Jeffrey Andrew question from is Truist.

now line Your live. is

on Hey, taking Thank Gus, you questions. for guys, stepping our it’s for Andrew.

talk first can have any about the or…? screening, The the And of competitive little are seen the X? amongst kind we’ve you my clients, to sourcing, one. your environment bit maybe customers question shift big first a That’s is, a I single

chat, slot and We’ll with competitive in than well to our say, environment. been. outlook where or of take market change taking technology see, take in we playing in to multi next of the the that, do our Hey, continue clients performance platforms, the to message say it’s aggressive sort the I Other be the We advantage emphasis, unchanged with any continue and and of and share quarter the is clients quality again. the best with year fourth to moment. reflects Gus, is the that would we’ll for that that for continue do our of good in proven prospects. the same thoroughness businesses one things wins wouldn’t country new I platform. as enterprise in particular,

terms this opening, what is, in bit my and that applicants is of of a general? we Got opening, think last you’re we for in And employment what elevated saw question in it. Yeah. you going XXXX? can XXXX Perfect. Do for jobs remain velocity about seeing little to talk still kind

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guys. Got time, it. helpful. That’s Appreciate the

You bet.

Thank you.

Ashish from Sabadra from RBC coming is question Markets. Capital Next

line Your now is live.

question. my taking for Thanks

Just changes seen a package customers question wondering on increasing have front. density of that there package any quick Thanks. Is and that adoption on pricing. more I existing density? services you was

and focus our is upsells on upsell – package right we big we it, a that’s piece can call on upselling of Yeah, clients, what expansion.

Some the those people are thing. say same

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when quote our million the both that those combined those. $XX of kind includes of in script We we number

do to team you, all XXXX. that’s can continue responsible that for for their good tell We I the a exceeded really job, goals

fact, softening despite – focus macro to continue In We’ll that. very kind we of were the environment. on

over high specific We focus XXXX, drive but it it’s of continue numbers, I’m as value. order and in package going to well. to XXXX, not kind quote higher on try XXXX in higher driving we And, give to a

that that is part the pitch competitive screening on better pitch cost. color. then background follow-up a screening? data of to that, also all of a edge helpful a the very you employment the or quick in the managing customers in new cost Does lowering That’s – maybe sense gives And that just total

products our know be. to the examples, that of customers costs costs. not them of costs, New do are lower cost give to data clients, we’re state and pretty want our And in think going being Yeah, drive definitely. they less expensive to trying clients I kind their out offer incremental mean, there certain I’m certain data that programs you total U.S. but of solution. what to drive other I understand data certain products the to in geographies, in York higher one our them, surcharge or going

Thanks color. helpful very That’s again.

You bet.

Thank you.

coming Next Celino KeyBanc. commission Jason from from is

line Your now is live.

Hey, a my about environment, question. to activity is, willing Backgroundchecks.com. business is switch? as guys, less in the Guy, more new thanks willing for I does question environment business or to macro we change decision think my impact a typical customer’s guess, customer taking tougher the

question. and great interesting a it’s Jason,

a were you basic tell business, can negotiating I I liquidity we know great business healthy I what on really the and we pandemic. seeing that closing. a just have pipeline change also when did focused is, and still mean, don’t were staying that companies we So environment opportunities during of really, the activity. were in

of to out just conscious, RFP, program us it that an sometimes gives a new win business. they’re Now, and or go to put wanting could because piece to cost opportunity a be procurement

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you, of pipeline business, a and we environment. don’t just now during macro the in closed pipeline have lot new we But I So, tell strong done a strong a even us I and We can front know we sitting pandemic that correlation. a direct the have despite a haven’t strong had pipeline. of

Very helpful. Perfect. Okay. Thanks.

You bet.

you. Thank

question-and-answer of I’ll closing any We for reached over session, back to our end the management floor have comments. turn further

the attracted you’ve with our I operator. and from Thanks, and us. drivers ability we everybody approach gathered had new share. appreciate very And, solid to call, logos take joining demand as a underlying I quality think, year, by our apparent

as the move environment. Look don’t great you very any we year and XXXX, what’s with ahead we’re hesitate expansion evening, everybody. please making questions. through to good what on and us despite We’re the out margin in is think about and macro Thanks to initiatives progress initiatives. to we posted our reach forward again, automation And excited

webcast today’s conclude does and teleconference. That you. Thank

thank day. We lines your your you participation disconnect this have wonderful and for at may a today. You time