Q3 2020 Earnings Call
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Ladies and gentlemen, you're currently on hold for the DMC fiscal year, 23rd quarter results conference at this time.
All participants will be under way shortly.
Thank you for your patience today now please continue to standby.
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Please standby.
Good day, ladies and gentlemen, and welcome to the XC fiscal year, 23rd quarter results Conference call. Today's call is being recorded at this time I would like to hand things over to Mr. Shailesh Murali. Please go ahead Sir.
Thank you.
Good afternoon, everyone.
Joining us you actually technologies third quarter systems point.
Oh, you go to introduce Paul maybe like so no president and Chief Executive Officer, and Pennsylvania, <unk> Chief Financial Officer.
This call is being webcast.
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Active and most directly comparable GAAP measures.
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Today's earnings.
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I would like to the mortgage I mentioned that you see technologies assumes no obligation to update you mentioned presented on the call except as required by law.
Now I'd like to introduce do you see that was used president and CEO like something like.
You should wash.
Everyone joining the call today.
I mentioned on my first earnings call lifestyle is one of focusing clarity and our comments today and certainly the quarter will follow that direction.
Okay.
We outlined the agenda for todays call I'm Lucky you on the progress against the priorities discussed during our Q2 earnings call.
These priorities are running the business and unlocking value represent the transformational journey.
We're on a D C.
All this or focused strategy.
Well then take you through the financial details of our third quarter results.
Business outlook for the fourth quarter and falls to school.
Yeah.
Make some closing remarks concerning what's next on the transformational journey before we take questions.
Turning to turning to our third quarter I'm pleased with the initial progress we've made on the priorities are running the business and unlocking value.
Reported financial results.
In line with our plan simply put we did what we said we're going to do and we are executing nicely again, starting to focus strategy.
Revenue was up 3% sequentially in constant currency, we also delivered on our profitability expectations.
Good to bill ratio of 1.0.
Euro six was our best in three quarters.
I've ever discussed with you before this transformation will not be a quick fix but I am confident at our new focused strategy will position Dx you get from me any IP services space.
Let me give you a little color now around the progress we are making.
Customers people operational execution and unlocking value.
As I continue to meet customers I am most impressed with the types of services, our customers have entrusted us with for years.
Okay trends in infrastructure, we are running for at the heart of our customers business.
I've used the phrase inside of you see that we have the courage to deliver the critical for our customers. This is truly unique him Yankee services space.
The work that our people do every day for our customers planes don't fly hospitals don't operate and Black Friday.
Those are not completed.
During our last call I mentioned that we needed to leverage our IPO business and make investments to improve our delivery and regained trust with some of our customers.
Fundamental belief that by running our customers critical system smoothly, we will earn the right.
The when additional business.
This is one of the key tenets of our focus strategy, leveraging our IPO business to grow DMC.
We had been focusing on account management and delivery capabilities and we're making good progress.
Original assessment had 20 to 30 accounts image.
Challenge category, meaning we were not meeting service levels for customers were and I'm pleased with our performance.
We started doing indepth reviews, and saw some partial terminations into accounts that terminated completely.
During this quarter, we establish a very focused.
That includes 40 accounts to address these issues.
These accounts represent about a quarter about revenue.
Overall this program is off to a good start which seven accounts graduating out of this program. We expect a majority of these accounts to be turned around by the end of Q4 and the program.
Completed in the first half of fiscal 21.
I've been receiving positive comments during my checking calls I've done 92 in total this program has clearly created positive momentum with our customers. In fact, we've already been awarded over 500 million.
The business from several of these accounts in the form of renewals and new work.
Some of this new work was previously put on hold and some of the new work has any analytics, which is at the top of the enterprise technology stack.
This is solid evidence that leveraging the IPO business and focusing on our.
People and operational execution, the right strategy to grow Dx thing.
Turning now to our people we have held town halls in every region. This past quarter and we have completed a global employee survey.
Received over 140000 comments representing.
That our people are engaged they're telling us that they're seeing positive changes in our feeling optimistic.
Our current focus areas for our people are learning opportunities career prospects and compensation.
During this quarter a great example of our action in investment was implementing.
Salary increases for India delivery centers ahead of our typical salary review cycle.
Another area, where we're making progress is attracting new talent.
Q3, we added roughly 50 leaders to exceed any areas of account management delivery and corporate functions.
We also added two more senior leaders to our leadership team phone call when Chris haven't Packable resumes broad experience and play broader played broader roles and their prior companies would join Dx seems to be a part of the transformation journey.
Our lives, our chief risk officer and leads physical.
Virtual security ethics, and compliance and overall enterprise risk management, and Chris will be our CIO and will lead our IP transformation to deliver tools to our people to better serve our customers.
We've also made a couple of key leadership changes the node is now leading global.
A little delivery and speed as accountable for our business in UK Amir.
All of these hires are integrating well with the existing team and the total team is making an immediate and positive impact.
Our book to Bill of 1.06 for this quarter is evidence that we are working well.
Team.
We're also seeing a positive shift in the market about VX. The brand perception. This is evidenced by Dx the alumni read joining us and others, reaching out to join the transformation journey.
I'm thrilled that you can read the retired chairman and CEO fives or will be joining.
Yes, as our new chairman.
Brings a wealth of experience, particularly in the area of leading large public companies through transformations.
All of this gives me confidence that we can attract integrate and retain top talent to execute on our focus strategy.
Another key component to running the business is operational execution.
We are taking steps to improve delivery execution.
Noted and his team are examining our delivery footprint.
Utilization and talent to improve our quality speed and costa delivery ultimately.
Our goal is to consolidate and further scale or delivery operations.
We're now also moving toward regionally focused operating model with a tighter management system designed to speed up decision, making and increase accountability.
From an industry perspective, we are bringing together our automotive in.
Kim capabilities with what with Luxoft under Dimitri leadership to take advantage of the opportunities and those two industries.
As I previously previously mentioned, we're leveraging our IPO business to begin to grow vmc.
Give me a little bit more detail on the plan.
We are using our unique.
The industry capability of virtual clarity to assess the state of.
Of our top 200 accounts.
These assessments will allow us to have fact based dialogue with our customers concerning the migration of their Ikea state to the cloud.
And these discussions we talked about technical.
Feasibility risk the value proposition and the ability of our customers to execute set your migration along with their need for assistance.
In the fourth quarter will we will complete Eaton assessments for 30 of our top accounts and we will be in the market engaging with our customers.
This work will allow us to have productive and proactive role discussions with our customers and give us hard numbers concerning how fast are IPO business, which has a large amount of mission critical applications and infrastructure and it will move to the cloud.
Now, let me turn my comments to the areas of area of unlocking value.
The clarity of our strategy to focus on the enterprise technology stack has given us an opportunity to engage with our customers and better aligned with their needs.
We are introducing our customers to the Brett.
Of our offerings across the enterprise.
Price technology stack and customers are reacting positively by community communicating to us and industry players that they have an interest in trying or services.
We're also executing.
We're also executing well and pursuing strategic alternatives for three businesses.
And are on track to hit the timeline, we set for ourselves we have retained several world class advisors to help us with this effort and our plan is to be in the market. This month.
The comment briefly on the three three businesses.
State and local health and human services, it's been business as usual and we are.
In the final stage of adding one new state to our portfolio.
And the other two business horizontal bps in workplace in mobility results were mixed but they were in line with our expectations on the positive side. Some customers have awarded us new work or have renewed existing.
However, there has been a few cases, where customers are pushing out renewals in sourcing the work already indicated their intent not to renew with us.
No I'm going to hand, the call over to Paul to take you through third quarter results in our business outlook for the fourth and full year.
Do you mind reading.
Hi, everyone as usual I'll start by covering some items that are excluded from our non-GAAP results in this quarter.
In the current corner, we haven't restructuring cost up $74 million pretax or 25 cents per diluted share.
These costs are primarily related to workforce optimization system.
Weapons rationalization.
Also during the quarter, we had $68 million pretax or 20 cents per diluted share of integration and transaction and separation related costs.
Year to date restructuring transaction separation and integration costs.
Relative to $474 million pretax or $1.49.
Diluted share.
In the third quarter amortization of acquired intangibles was $146 million pretax or 44 cents per diluted share.
Now in the corner, we recorded an out of tax adjustment.
$53 million related to the goodwill impairment, we took in the second quarter.
No. This non cash adjustments does not impact income from continuing operations net.
Our earnings per share.
However in connection with other theaters adjustment.
Determined that we have a material weakness in our internal control over financial reporting.
And this is primarily relating to complex transactions and processes.
This material.
Weakness does not involve any of restatement of prior issued financials.
More information about our remediation plan is included in our form 10-Q, which we expect to file after the close of business Tomorrow.
Excluding all of these special items our non-GAAP.
Income from before taxes from continuing operations was $468 million and our non-GAAP EPS was $1.25 cents.
Ill now move onto our third quarter results in more detail.
GAAP revenue in two to three.
What is.
$5.02 billion.
As always all revenue comparisons I will discuss well be in constant currency.
Our Q3 revenues represented a sequential increase up 3%.
Well, we typically experience I pick up and activities in two or three compared with Q2.
Our revenue growth this quarter also reflects in part.
On a project work from customers.
Obviously part of business with us on.
Now these are encouraging size.
Investment, we're making to turn around challenge accounts are starting to pay off.
Adjusted EBITDA in the corner was $528 million.
Adjusted EBIT margin was 10.5% in line with a plan we shared with you on our last earnings call.
Our EBIT margin was down 40 basis points sequentially.
That's reflect the moderation of our cost.
Account activities as well as additional investment and the business.
Consistent with our latest priorities of customers people and operational execution.
And that's.
The quarter, our non-GAAP tax rate of 29.9% slightly better than our.
Turns up 32% to 33%.
Okay, though in the quarter was 1.0 next time.
We were able to pass a few deals that slipped from Q1 into June and convert new business opportunities across every layer of the enterprise technology stack.
This book to Bill.
Reflects the collaboration among all other members of the senior leadership team.
Year to date.
Menu was $14.76 billion.
EBIT was $1.7 billion.
Margin was 11.6% and bookings were 13.
Our $3 billion for a book to Bill of 0.9 times.
Turning now to our segment results.
Our global business services segments.
Thats me I'll turn layers of the enterprise technology stock.
Also includes fund.
The state and local health.
Okay Human services business.
And the horizontal vps business, which are under strategic review.
GBS revenue was $2.36 billion at the quarter up 3% sequentially and up close to 10% year over year.
Excluding what Saab GBS revenue was down 0.5% year over year, primarily due to the completion up a few application transformation projects and the in sourcing off remarks bps contract earlier this year.
In this third quarter TPS segment.
Thanks.
$53 million and profit margin of 15%.
Sequentially, our margins were down 70 basis points, reflecting the investment were making and digital talent as well as a slower pace of cost takeout.
Yes, okay with the quarter was one point.
Seven times.
Offering posting a book to bill in excess of one time.
In particular, we saw strength.
Data analytics and engineering services business.
Year to date GBS revenue was $6.8 billion segment profit was.
$1.1 billion margin was 15.8% and booking were $6.8 billion for our book to Bill.
One next.
Now that you're trying to Archie I guess segments.
Yes.
Thats consists of the IPO cloud and security layers of the enterprise.
Hi technology stack.
I guess also includes four no workplace and mobility business, which is under strategic review.
I know its revenue was $2.66 billion in the quarter.
Up 3.1% sequentially.
Year over year have anyway.
Thanks, 0.6%, primarily due to the roll off and sourcing off work and select accounts.
Segment profit in the third quarter was $232 million and profit margins was 8.7%.
Sequentially, our profit margin was about.
80 basis points, reflecting the slowdown and all that delivery cost takeout actions.
Investment, we're making and turning around the challenge accounts.
Yeah, I ask book to Bill in the quarter was 1.06 times, reflecting the conversion of pipeline opportunities.
Our previously delayed.
As was the award up add on and project work from challenge accounts.
Year to date Giants revenue of $8 billion segment profit was $815 million.
Margin was 10.2% and bookings were six point.
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Now, let me briefly comment on the performance of the layers within the enterprise technology stack.
Total revenue was up 2.4% sequentially, but down 16.1% in year over year.
The year over year decline is primarily due to roll off of previously terminated work on select accounts.
Price concessions made earlier in the year to help customers with their digital transformation efforts.
Book to Bill at 0.9 times.
Well I don't and security revenue was up one point.
9% sequentially and 9.9% year over year.
Bill has 1.5 times.
The best book to Bill we've had since Q3 up last year.
Moving up the stock application on industry IP was up 3%.
Sequentially and up 0.4% year over year.
Sales for this layer of the stock was 1.1 time.
This is the first time and four quarters that our application business, excluding our enterprise cloud applications grew sequentially.
Data analytics engineering services business revenue, there was up 3.5% sequentially.
And off year over year by two fault.
Suiting Luxoft data analytics and engineering services group, 0.9%.
On a year over year.
Basis.
Book to Bill was 1.5 times with solid performance across the board.
Lastly, I advisory revenue was up nearly 5% sequentially, but down 8.5% year over year against a strong prior year performance.
Book to Bill that's.
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Turning now to the three businesses under strategic review.
Those businesses are collectively up 3.9% sequentially.
Down 7.2% year over year.
The year over year decline was driven primarily by the ship.
From traditional to digital in the workplace and mobility does that.
We are moving that pace that tracking the timeline for the strategic review as for all three businesses.
We plan to be in the market in the coming weeks and are still confident that we will be able to realize.
5 billion.
In dollars up net proceeds from this effort.
As previously stated.
Turning to our financial highlights.
Additional three adjusted free cash flow in the third quarter was $397 million.
124% adjusted net income.
Acting improved working capital management.
And the expanded use of our receivables facility by $110 million.
Year to date, adjusted free cash flow as $1.21 billion or 106% of adjusted net income.
For the full year.
Our targets free cash flow as a percentage of adjusted net income remains unchanged at 80% or more.
Hey, guys, who in the fourth quarter will reflect two large cash outflows once a cover our annual for one K Max and the second Tory contract settlement payment that we expect to Rick.
Cover in fiscal 2001 from insurance coverage.
Great cash flow also reflects more conservative working capital assumptions for the fourth quarter.
Capex in the quarter was $310 million or 6.2% of revenue.
And on a year to date basements Capex was one.
0.0, $1 billion are 6.8% of revenue.
During the quarter, we've returned $140 million have capital to shareholders in the form up $54 million and dividends.
And $86 million in share repurchases.
Year to date with paid 100.
Q1 million dollars and dividends and repurchased $736 million in shares.
For a total $897 million.
Cash at the end of the corner was $2.6 billion total debt was 8.9 billion.
Including capitalized leases.
Net debt to total capital ratio was 35.2%.
Following our second quarter earnings call all three agencies rating agencies issued updated credit reports on CXC.
And Thats on pizza.
And our ratings.
If I look to negative.
Moody's indicated that the xcedes rating at outlook work on affect that.
I thought the pursuit of strategic alternatives, what's credit negative.
Now, we remain committed to a balanced capital allocation, including.
Reinvestment into business, making strategic tuck in acquisitions, and returning capital to shareholders, while protecting our investment grade credit profile.
In closing we.
We continue to target revenue in the range up $19.5 billion to $19.8 billion.
Sequentially, we expect revenue to be slightly style.
Hi, mainly due to softness in the UK as we no longer expects the typical seasonal uptick in revenue from certain key accounts.
We expect profit margins to be lower sequentially, reflecting the full corner.
Of the investment we're making.
These investments include salary increases, particularly in our delivery centers.
The acquisition, including the addition of senior leaders ongoing investment to turn around challenge accounts additional resources deployed to assess the IPO as state apart.
Talk 200 accounts and finally.
Additional investments not previously contemplated to shore up our support functions, particularly in HR finance risk management.
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With a full year, we're targeting non-GAAP EPS to remain in the range of five.
Turning to five to $575 per share, although we are trending towards towards the lower ad.
That range.
I'll turn now to call back to buy for his closing remarks.
Thanks, Paul our third quarter results or a decent first step on our transformation journey.
We've done a good job of executing against our new focused strategy as I said in our last earnings call. We had significant scope and scale of services, a reduced cost structure and customers need our services to support their IP transformation means although our transformation will.
Maybe a quick fix I'm confident that our focus strategy will position dfc in the future because we have proven this quarter. We can win in the market and we are building a very strong team to execute.
In Q in Q4, our priorities are as follows with customers. Our plan is to turn around.
The majority of the challenge accounts by the end of this quarter and we also expect to complete the virtual clarity IP as state plans with the first 30 accounts and be in the market engaging with our customers.
On the people front, we plan to continue to address the feedback of our global employee survey.
Hi, implement our employee value proposition and continue attracting high talent to deicing.
In the area of operational execution, we will complete the rollout of our operating model in support of our regional structure.
Also plan to streamline our offering portfolio.
To better align with the enterprise technology stack and we will be conducting detailed regional business reviews focused at the account level to develop our plan and investments for fiscal 2021.
Finally, we expect to make progress on unlocking value as.
As we move that pays along our stated timeline for the three businesses.
Thank you again for joining the call and we will now open the line up for questions.
Thank you, Sir ladies and gentlemen, if he would like to ask a question. Please press star one on your telephone keypad.
If you're using.
Please make sure your mute button is turned off I like your signals return.
We ask that you. Please limit yourself to one question today and you were more than welcome to rejoin the queue for anything further.
Again, everyone Star one for questions. My first question will come from Jason Kupferberg Bank of America.
Hey, Thanks, good afternoon guys.
Really nice progress out of the gate here so congrats on that.
I just wanted to ask 'em is going to combine a couple of quick one peering into one question. If you will but first off do you think the book to Bill of back to one Dato plus is sustainable and are you still comfortable with the fiscal 22 targets you had given.
Enough last quarter, and then just last and then any thoughts on when we potentially see the first.
Of the strategic review announcements.
So Jason Thanks for your comments first of all on the other strategic alternatives.
But we're moving that pace.
We said that.
The the alternatives would be looked upon and we'd execute them across the next 12 months and that's what we're going to continue to do.
As it relates to 2022 and the sustainability of the book to Bill look I've been very.
It's about the progress we've made over the last three three months the receptivity of our transformation programs.
By customers people in the market have been and been very good.
And when I think about a 2021 right that'll be a transitional.
The year for us and we're going to continue to invest in our customers people and operational execution.
What I plan to do is discussed that 2021 plan on our next earnings call and then I also plan to provide any additional updates.
On our expectations for 2022 at that time.
So I won't be and Paul won't be commenting further on that other than the outlook.
We gave on on 2020.
Just on the book to Bill.
Look on book to Bill we made a good start right I mean, what I expect.
Is that we will.
We'll continue to make good progress in in Q4, but we're going to be in and around.
I think that you know that one oh, maybe a little bit slightly lower.
But you know me the bottom line as we.
Have you know a motion in the market that you know that is winning.
Terrific. Thank you.
Next step is Darrin Peller Wolfe research.
Hey, nice job guys and good bookings, let me just started off I mean I appreciate the color on the 40 clients that.
Can you just talked about it seems like a meaningful portion of the headwinds in the IPO piece I assume thats the case maybe.
Maybe just talk just touch on how clients are reacting to your refocused emphasis on nights yield now and I guess I'd like to figure out your clients are reacting to that.
But also how the internal organizational culture feels about the one bxc.
We have decided to focus on kind of one company investing in all parts of it.
Do you feel that theres been.
Reenergized there'll be a employee base thanks, guys.
Okay. Thanks for that.
First of all on the comment that the 40 clients are not just within that that what I call the green layer.
The IPO, where it's also in the orange in the EMEA apps layers. So it's it's those two layers.
And when I talked about an in depth to review I mean, I took a very stringent lying on what went into those clients and it wasn't like I said just to service levels because that's the easiest thing right you here in the marketplace.
You know the watermelon effect right on the inside and then read on meter or green on the outside rent on the inside what that means is guided listened to the voice of the customer. So when I said I'd made 92 or I'm up to 92 calls now I'm talking to these customers to make sure that our performance is where it needs.
Leads to be.
And if it wasn't where it needs to be I put him in the program I mean do it was as simple as that alright, and moving out of the program. The only way you get out of the program is if I hear get a note or heavy call.
That said decline as happy and we've seen that performance over.
For a month so.
So when I said seven have gotten out you would have expected sort of that framework you know as it relates to.
The progression.
The second part of your call was the one dfc.
Look our people are definitely engage.
All right and you know not only did they like the town halls.
And the openness and transparency that we're talking about in terms of the transfer transformation, but they route they really responded well to the global employee survey.
Not only from taking if they.
Good to see the results.
What I would say is.
That that whole energy believes into the market because our people sit side by side with our customers and what are people are happy right. Our customers here that and then that tends to get out of market. So the reason I highlighted.
What I call you know Bxc alumni rejoining is that's a new movement alright meeting people want to come back and join the plays.
And then it goes without saying right I am I'm honored a long ways I'm very impressed with the with the talent that we.
We've been able to attract so I would tell you that the receptivity it's been it's been very good.
Thanks, guys.
Next we'll hear from Lisa Ellis Moffettnathanson.
Hi, good afternoon guys.
Good start here.
I got one for Mike maybe in one for Paul and Mike.
Can you just elaborate a little bit on any changes you're making to this sales and go to market model to support the sort of update its strategy for Galaxy and then Paul just one for you I mean, I think restructuring into this separation costs are running.
You know about a third or so of the adjusted free cash flow and then that's kind of an important driver of the longer term outlook could you see that as you look into 2021 2022.
Hi, coming down or are they going to be kind of a big piece of your free cash flow for the foreseeable future. Thank you.
So we sell.
First.
In terms of changes on the sales model.
What I would say is.
You will hear this word a lot is focus so when I when I went into the detail about the virtual clarity IP estate plan.
I'll tell you I was I was getting a little tired of people.
Saying that our IPO business was just going to run to the cloud. So the reason I started to do analysis around what that business and you know entails and the critical nature of that.
Most of the stuff that's going to the cloud so far has been the easier stuff right. It's gone to the public cloud.
The stake that we have now being of more critical nature that will take a little bit a time and when it goes it will usually go to a private cloud. So the reason I I went into such detail on the states. Lisa is we're literally handing right that road map to our.
As force and myself and the leadership team is getting involved in those conversations with those accounts because when I did check in with the customers. You know they were asking us to be more curious so as part of you know sort of the new mindset here, we're showing up and we're going to.
Not only show up with a point of view, but we're going to show up with you know a detailed plan of what can happen on their state. So that's the main change up made so far is I want to see these detailed plans sorry.
For the existing accounts and when we have a new account right that we're competing with I also want.
To see that detailed plan because we can do you know how high level analysis before we walk into a into the the conversation with a new client. So that's the main thing I would highlight for you.
At least on the restructuring it's been just merely this quarter.
Well, we had a.
Some.
Structuring and more related to some of the complex countries.
Look into the near term and particularly as fiscal 21 as Mike mentioned this is going to be a transitional year for US importantly, they had a restructuring is going to being a little bit tolls are more targeted stranded costs coming.
The three businesses over another.
Reviewing.
The option from since from a strategic perspective.
And then as we had indicated that previously our fiscal by fiscal 22, we start to expect.
Restructuring to moderate.
We will start to take a little bit more about.
Providing a little bit more granularity in terms of our expectations on restructuring.
In the coming quarters.
Excellent. Thank you thanks guys.
Rockers Rossum. Besides equity research has the next question.
Okay guys.
Nice initial step in the December quarter, it looks like.
It seems that you've made some positive.
Progress on some of the turnaround in the December quarter, and you're you're still though juggling multiple turnaround initiatives and you're working to sell these three assets and it seems that those multiple efforts.
That are still in process could create some near term disruption to particularly to revenues. So what I'd like to ask what is your experience so far with the business disruption that might be occurring.
And I'm, assuming fiscal 21 is starting really before your.
Around work can really drive full pay off while you still have potential disruption to deal with so essentially as we approach the fiscal 21 period I'm trying to weigh potential for some turnaround progress again risks of revenue disruption and we'd like to hear what your.
Experiences so far in how you're thinking about that.
Okay right I'll take that the first of all thanks to the question D.
When I when I think about the business right.
You know obviously, it's one business, but if you look at industry strategic alternatives.
Saved local health and human services business as usual in fact, the you know the once they were adding I'm very happy about that the.
Horizontal bps and now we're placing mobility businesses.
You know have held up in line right with what we bought we thought we'd Winston.
Stuff when we thought that you know some stuff would go away so revenue disruption to the strategic alternatives.
You know, we're not seeing so we'll put that to one side the rest of the business in terms of revenue disruption.
Look.
You know this business is a balancing act of you know of decisions that have been made in the past in terms of term contracts that will now flowed into 2021 and also new bringing on new business. That's why the such the focus on the delivery because that new business has got to come online.
Right. So that we can you know we can bounce out so the way I looked at 2021 will be still that transitional year right, we will be dealing with some other stuff in the past alright, but but you know I'm, hoping with fees I see a state plans that were doing I'm, hoping with.
Unlocking some of the work from the.
Challenge account right that we will have you know a motion in 2021.
You know that will obviously be positive I look at 2021 is at three additional you're right. We are still going to deal with some of the stuff, but also invest in our customers people and operational execution.
Look I mean, the bottom line is I'm seeing progress across the board.
In our client meetings.
And the thing I guess I would highlight right is the fact that when our clients talk to US. It is not just about the work that we have very curious about.
The rest of the stack and this is where I'm looking forward to getting to the top of the stack in the Blue I mentioned about bringing.
Automotive in banking together with Luxoft, we've got to make sure that we're combining the capabilities that we have to compete in the market and walked.
Cost has a really really nice agile workforce that we should be able to.
The liver and the top of the stack very nicely. So now right. That's the way I think about it.
Hi, Thanks, that's helpful color.
Our next question today comes from Bryan Bergin Cowen.
I guess, it's actually care living on for brining, So Mike where do you stand with the makeup of your Direc hires obviously a lot of announcements a short period since September to solve a lot to do at the senior rank to really put your plane into action.
You know, but right now you know my focus is they continue to implement what I call you know our regional operating model and you know the reason I highlighted in my comments that the new hires or integrating well with the folks that are of years, because we didn't have it down and team is is.
What about just all bringing new hires into you know the place where I've seen you know places that are really you know when it take a step up.
That's typically when I've gone you know for a new hire Carlos a perfect example, about all right you know in the sense that you know for a wrist standpoint, you know I won a a lower level of detail on that you know so you know we were able to to a attract a really talented person.
You know I T. is another one.
Right I mean, as you can imagine with E.D.S.C.H.V. along with the the the back end of our systems right. We need to continue to do more with all right and when I think about controls and and so forth. That's why we went after I got Chris I mean, you know Chris knows how to deal with complex and by.
Fireman's being Gee, so very pleased with the hires but I also don't want to you know despair the existing team because the existing team was incredibly pounded.
The thing that I want to highlight for people is they've come together well, we don't have a series of has been have nots here.
And like I said the results and Q3 proved together that we could come together you know as a team very quickly and start you know making impact so that would be my comment there.
Great. Thanks for the color.
Next from people here from Ashwin servant car.
I think hi, Mike Hi, Paul It's a good first step to appreciated.
My question is on the stronger bookings performance, how much Oh that was because it laid looking from private quarters No I know that's.
And then expect to do they booking has occurred in both the German September quarters, and I'll do they made contact still outstanding and in that context. If he can talk also about how the pipeline is building.
There'd be delayed contact calming him his motor function off when it was it yet and they include process. You put then what's causing the context and Malcolm.
Okay. So let me let me I'll start with the bottom and then go back. So you know v. individual details.
So in terms of what happened if it wasn't year end type things alright, and it also you know.
You know wasn't something where you know, we we did something miraculous right because when I when I talk to you guys on November 11th and my first call I mean, the things I'm, putting in place are just getting into place, but I will tell you the focus on making sure that we dealt with each client.
We were front and center right, we came up and showed up with a new attitude along with we care.
Along with what I call the groundswell from our people, saying, Hey, there's something new going on here that online stuff, alright, and I'll, let Paul gets to the details numbers on what was put on hold and so forth. The only other comment I would make is with the challenges accounts you know there's still more more work to be at all.
Right.
And it's not work to be had it was just put on hold it's also was sitting with those clients and finally being curious with them you know and and I made my comments around the operational execution is the fact that what we're out in the marketplace talking about as the enterprise technologies that which means we're not just in the I.T.O. business.
But we're also not in this thing that we you know that we used to call digital right. We have a very focused approach about what we're selling I.P.O. cloud apps, you know and then analytics in inside so that's the motion that we're putting out in the market and I would tell you decent first.
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Answering your first question founder than $16 million around $50 million from.
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Oh, Yeah, that's still another thought.
So are up for grabs a fourth quarter or into this is supposed to only one and then not have maybe a this is <unk>, okay and then.
Another thing like mentioned already.
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More likely to be on the side of it even less thing that that's tied about passing the content Masters.
I'm Gonna you know the the bottom line is you know party said, we're going to keep the capital you know balance right.
In terms of our capital allocation, we're paying attention you know to the rating agencies and we obviously you know I I totally understand my job is shareholder value. So we're going to keep that bounce.
I think.
Hi, next question will confirm brain huh.
Hi, guys, Mike just wanting to clarify on fiscal year 22, the revenue range of 50 million plus and.
He bit margin non gap I think was 12% plus and $7 in earnings plots are that bad all still hold or should we now put that to the side and kind of wait till fiscal year 21, and see how things progress.
Ryan you know again, thanks for the the question and like I said I'm not gonna concept and you know comment along.
You know outside of 2020.
You know my plan right. Now is is to go and do the detailed account reviews for 2021 I plan to discuss 2021 or index call and our next call provide any updates around those expectations for 2022.
Okay got it that's all I had thanks.
And that is all the time, we have for questions. Yeah, I'd like to have things back to show last morality for any additional are closing remarks.
Oh, Thank you everyone to joining a us and stuff.
Thank you.
Ladies and gentlemen that does concrete today's conference we would like to thank you all for your participation today you mean.
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