Q1 2020 Earnings Call

Thursday

yes.

dead dead dead dead dead

Ladies and gentlemen, thank you for standing by and welcome to the EXL Services first quarter 2020 earnings conference call at this time, all participants lines on a listen-only mode after the speaker presentation. There will be a question-and-answer session to ask a question during the session. You will need to press this one. I'm going to telephone. If you require any further assistance, please press * 0 hour now like to hand the conference to your speaker today Steve in Barlow, please go ahead sir. Hello, and thanks to everyone for joining first quarter 2020 Financial results conference call. I'm Steve Barlow EXL vice president of investor relations with me today by telephone or Ram Kapoor our vice chairman and chief executive officer and Marissa Nicholl our Chief Financial Officer. We hope that you had an opportunity to review our queue 12020 earnings release and 8-k issue.

For the company's periodic reports and other documents filed with the Securities and Exchange Commission from time to time Excel assumes no obligation to update the information presented on this conference call during our call today a reference certain non-gaap Financial measures, which we believe provide useful information for investors reconciliation of these measures to Gap can be found in our press release as well as the investor fact sheet. Now turn the call over to Road Kapoor XL chief executive officer.

Dead dead dead dead.

Thank you Steve. Good morning. Everyone Welcome to our q1 2020 earnings call. I hope all of you and your families are safe and healthy.

As you know covid-19 is causing maximum disruption around the world and is impacting our business as well.

EXO our culture and values are guiding our response to this crisis.

Our top priorities are the health and safety of our employees the continuity of our clients businesses and ensuring the long-term sustainability of our office. We are demonstrating resilience and creativity as we navigate these unprecedented time.

Morning, we have also updated on.

Today, I would like to talk about one our response to the covid-19 crisis including our transition to a global work from home operating model.

Emerging opportunities and risk-free or performance for two 12020 and guidance for the next quarter and for our actions. We have taken to secure our financial position.

Most I want to acknowledge the speed and Ingenuity with which we transitioned to a work-from-home operating model our technology infrastructure and operations team rapidly enabled work from home solutions throughout our Global delivery Network. This was a massive shift from our standard operating model today the vast majority of our employees around the world are working from the safety of their homes.

This is no small achievement. It took hundreds of individuals who programmed computers developed new it processes and mounted a mammoth Logistics exercise to transport equipment to their colleague.

I am deeply grateful for the outstanding commitment and hard work of our employees around the world.

because

This tremendous effort. I am pleased to report that today. We are full filling over 95% of our clients demand and our clients are very much appreciative of our rapid response.

Additionally, this crisis has reaffirmed the extraordinary strength of our partnership with our clients and I want to thank them for their support.

You're working hand-in-hand with our clients to prioritize critical functions and to develop innovative solutions.

Through this we have developed an even People level of trust and urged stronger bonds.

The covid-19 pandemic has introduced many challenges, but it has also created opportunities to develop solutions to help our clients address issues that emerge from this crisis.

For example in our health care business are analytics team has developed a solution that predicts emerging covet hotspots by analyzing data on 2 existing conditions and other health indicators.

A large Healthcare System and a Regional Health Care Bear are already using the solution to anticipate resource needs and better manage patient volume.

We're also supporting a number of our banking clients with the implementation of the small business Authority these paycheck Protection Program or f b a p p p which will grow over 650 billion dollars in loan through US small businesses. The program has led to large volumes of loan applications and lenders need home builder operations quickly.

We have leveraged our small business banking domain knowledge operations expertise and digital tools to setup customize loan processing capabilities for Arthur's.

Solutions Health clients significantly reduce the processing time and the manual effort to deliver timely relief to small businesses.

We are cognizant of the issues that our client space and have built the solutions necessary to support demand surges with accuracy and speed.

Innovation born out of a direct response to covid-19 will deliver immediate value and help our clients address their challenges and take advantage of new opportunities.

Why are we are helping our clients with new Solutions the uncertainty associated with this pandemic is likely to continue.

The global economy is stressed and certain industries are being impacted much more than others.

Governments across the world are actively responding to this crisis and the efforts of those actions on our business are currently unpredictable.

However, this crisis is likely to accentuate the following four Trend. Number one. The digital agenda will become more Central our clients business strategy as end customers migrate to a more touchless and online experience.

Du migration to the cloud for enterprise-wide data and analytics capabilities will accelerate free cost pressures will create a higher demand for Global operation Management Service.

And for the need for diversification to improve operational resiliency will further the demand from Global Partners like EXL.

Well, these Trends have been emerging for some time. The current crisis will significantly accelerate their adoption.

Because we have been investing in these capabilities for the last several years. We feel confident that we are well positioned to capitalize on these Trends in the longer term.

No, I would like to discuss our q1 twenty performance.

Despite the impact from covid-19 in the second half of March. We had a healthy first quarter following the strong momentum. We had built up as we exited 29th.

What the first quarter we generated $246 billion dollars in Revenue which represents an annual growth rate of 5.1% on a constant, basis operations Management Group, 4.2% and analytics Revenue increased by 6.6%

We estimate that around ten million dollars of Revenue in q1 was not realized due to the disruption caused by the pandemic.

Adjusted EPS for the quarter was 81%

despite the loss of Revenue and higher expenses due to our covid-19.

In view of the current business environment. We are not providing guidance for the full year. We expect our Revenue in Q2 to be around 15% lower than q1.

This is due to the anticipated reduction in plant volume and our fulfillment capacity.

We expect an adjusted EPS in the range of 20 to $0.40 for the quarter.

You realize the need to take immediate actions to deal with the uncertainty of the situation and better align our cost base to our Revenue our blog.

This effort today, we announced a temporary reduction of compensation for our Senior Management and non-executive directors these reductions wage effective May 1st.

Do you have all these chosen to contribute to communities that we are a part of during these times? We are working with organized organizations across the world to support healthcare workers wage at the front line and members of dislocated workforces that are facing hardship. You do Southern lockdowns.

We are proud to contribute towards providing fruit and critical supplies in our let's do it together spirit.

Now I would like to comment on our plans to return to office and the role of remote work in our operations going forward as countries. He's restringing we expect a staggered returned to our facility.

Employee health hazard top priority, we will work with employees clients local government and Industry to carefully manage this return home. Why am I dating flexibility Safety and Security over the longer term. We will build on the lessons learned during this time.

The work from home model has significant potential in terms of economic value access to more diverse Talent pools and hire employees of action and retention.

By incorporating remote work as part of an ongoing delivery model. We can ensure greater resilience and flexibility in serving our clients needs.

Our teams are engaged in thoughtful planning towards this objective.

Over the past two decades EXL has successfully navigated formidable challenges.

Each such experience. We have evolved and emerged stronger. We expect this time to be no different.

With that I will turn the call over to Mauricio.

Thank you. And thanks everyone for joining us this morning. I will provide insights into our financial performance for the first quarter of 2020 followed by our outlook for the business as Rohit mentioned. We had a solid quarter through mid-march the first two months were on plan and we were pleased with the outlet or the first order and achievement towards our financial and strategic goals for 2020. Our reported Revenue was $246 Million up 3.4% year-over-year on a constant currency basis and adjusted EPS with 81%

As you are aware.

We announced on our last call in in our 10-K filing we changed our segment reporting before reportable segments Insurance Healthcare analytics off emergency lighting in order to align with certain operational and structural changes inherent in our business. All revenue growth numbers mentioned Hereafter are off on a constant currency basis my discussion of fall year-over-year growth percentages for improvements will be excluding Health Integrated or 2019 for a true comparison with twenty-twenty performance unless mentioned otherwise

With a quarter we generated revenue of 246 million of 5.1% year-over-year for the quarter the impact of covid-19 on our Revenue agent with approximately ten million a headwind of 430 basis points on our growth rate revenue from our operations management business as defined by BAP re reportable segments, excluding analytics was 153.6 million of 4.2% year-over-year this growth was driven off the health care and insurance operating statements Healthcare showed strong improvement with revenue of 27 million increasing 47.1% over the prior year. This growth was driven by the ramp-up of new client wins in 2019, and the expansion of existing client relationships in the area of the club.

Services Insurance had revenue of 83.7 million which amounted to a growth rate of 4.1% over the prior year driven by across an existing client relationships.

Emerging reported revenue of 42.8 million which was a year-over-year decline of 11.9% do to lower volumes.

Analytic continues to perform well with revenue of 92.4 million off 6.6 year-over-year this growth was the result of neuquen in a mansion in existing client analytics revenue from insurance clients adjusted operating margin for the quarter was 14.8% 30 basis points, year-over-year driven by incremental operating leverage, its adjusted operating margin includes a one kind covid-19 sent headwind of 18 at this point, excluding the Covetous headwind. Our adjusted operating margin would have been 15.6%

Our adjusted ebitda for the quarter was 44.7 billion up 15.2% year-over-year on a recorded basis.

Our Gap income tax rate for the quarter was 20.7% excluding the impact of a discrete item related to access tax benefits on stock base Foundation. Our normal life. Income tax rate was 27%

Our adjusted EPS to the quarter was $0.81 a 14.1% year-over-year on a reported basis during this pandemic. Liquidity cash conservation remains our primary focus. We exited the quarter with a very strong balance sheet. We ended march with $367 million cash and short-term Investments and borrowing of $335 million resulting in a net cash position of thirty two million in April. We get paid a hundred million of amount previously drawn from our credit facility in March to address address cash need you to the covid-19 dead. We continue to have two hundred million available from our credit facility.

This facility has a maturity date of November 20-22 as of March 31st our net leverage ratio, which is net debt / month last 12 months of ebitda stand at one point four eight times, which is well within Covenant limit limits, which has a maximum of three times.

Now moving on the outlook for the year the disruption in our business has been felt across all of our business segments and in all delivery location given the uncertainty of this situation including the unknown duration and severity of the pandemic and overall impact to our services. We are not providing actual guidance at this time as the economic environment remains unclear and the responses of our clients to their business challenges continue to evolve we have proactive. We initiated certain cost-saving measures.

While taking these actions we have retained the flexibility to scale up our support to our clients businesses as required this morning. We announced a temporary salaries cut a 50% for our CEO and 30% for other names executive officers. We have significantly reduced hiring across the globe and we are looking to optimize other operational costs including stringent control on discretionary spending.

We have also instituted a program to conserve our cash. We are focusing on client receivable Collections and minimizing our discretionary capital and operational spending. We we repurchased 176000 shares totalling $12 million in the first quarter and have currently suspended buying back our Chef our Capital spending plan at this juncture is expected to be approximately 32 to 38 million, which is significantly less than our previous estimate of forty forty-five million. We expect the effective tax rate to be in the range of 25.5 to 26.5%

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On our current visibility we expect second-quarter revenues to decline approximately 15% compared to the first quarter of 2020 and adjudged GPS between twenty and forty cents.

In conclusion, the EXL operating model has shown tremendous resilience during past crises, and we have not only adapted but grown too significant higher revenue and profitability. We are comfortable with our current financial position as we have a healthy balance sheet, and we are making significant adjustments to change our cost base to better online with our current Revenue outlets now Road in I would be happy to take your questions.

Add reminder to ask a question you press star one on your telephone to withdraw your question, press the pound key in the interest of time. We'd like them to limit yourself to one question one follow-up. Please stand by what we can buy the roster.

And our first question comes from the line of Maggie. No one for more than Blair you may begin.

Thank you. I wanted to talk about that ten million headwind that you saw in the first quarter related to covid-19. Was that primarily related to Faith No difficulties delivering against commitments to your clients as you shifted to work from home. And then is there any heavier weight towards analytics versus operations management when we consider that ten million figure

Sure, Maggie, so that's ten million dollars of Revenue loss for us was entirely driven by our inability to fulfil the demands and from the supply-side wage. In fact it primarily in the last two weeks of March and as you know, there was Boston's imposed in the Philippines and in India, and that's what resulted in the short North Avenue and the impact to our first quarter see split off that was you know, roughly a lot more on the operations management side because we're planning for a fair amount of growth and we had a huge amount of momentum that we had built up in the third quarter and the fourth quarter of 2019. And as we know our operations management business was growing close to double-digits and you know, the drop-off in demand was a drop of Supply was really, you know impacted out their birth.

Our analytics business also had an impact but it was you know a bit less than the operations manager.

And would you say that that was a a kind of a similar impact to what you've been seeing now in April and May and then if you could comment as well on incremental expenses on over that time frame that you incurred in relation to the pandemic and whether or not you know, some of those roll off and what other lovers you may have to manage expenses going forward of all our analytics business in terms of our ability to fulfill demand wage is incredibly resilient and the ability to satisfy the demand is you know, fully in place. So we don't really expect there to be any shortfall in terms of our ability to fulfill Demand on analytics in the second quarter or going forward because we can operate on a work-from-home model pretty seamless off.

As we put as work from home.

In terms of the expenses and the higher expenses that we incurred those expenses pertained to higher amount of bandwidth and Telecom calls Iron Age of Technology costs and higher amount of Hotel expenses that we needed to incur to make sure that we kept our employees safe and secure those higher expenses. Well, you know depend upon how the covid-19 pandemic plays out and how each geography and each country. He's has some of the restrictions that have been imposed.

in terms of the cost structure, we've got multiple laborers in terms of managing those and we've already been very proactive and taking quick action on those levers life, you know, very easy and very flexible for us to be able to influence and then we will take longer term actions as needed and as the situation develops

Thank you.

Operator is a another question.

Stephen can you hear me? We can't hear you. I got a I just have a message here from the operator that his line went down. So I would ask everyone to hold on please. He's trying to establish Thursday again, and then we'll get back to the Q&A.

Yeah, we're still here.

Sorry about the technical difficulties. Ladies and gentlemen.

And our next question comes flying of Australians. You're lucky from City maybe again.

Thank you. Hey, well, first of all good to hear your voice is the question I have is to you know, could you provide maybe a closer look at the kind of weeks in April and heading into May how may sort of your you know, your conversations with clients have evolved are you now able to say for example, you know example the contract that you want. Um, are you talking about New Deals already our clients beginning to refocus on running their business things like that? If you can wage a white some underlying color, that would be great wage.

to fulfill demand in the

Second two weeks of March and we made very rapid progress in terms of bringing up our ability to fulfil demand in the month of April. And as we said we own now at 95% of ability to fulfill demand, so that has been very strong and our expectation is that this will continue to inch upward closer to home a hundred percent.

The conversation with clients also certainly evolved in the first week of March when this all began the conversation was all about the business continuity planning and you know figuring out how we could perform some of the work from home. We were extremely proactive in terms of reaching out to our clients. Well before birth of the advisory announced in the local jurisdiction to help our clients prepare for this eventuality and I think because of that proactive stance that we took off the impact to our clients business and our ability to fulfill the demand was actually, you know, really really helped because of that action that we took there's obviously a much greater level of communication and interaction that we have with our clients at this point of time and the dialogue has shifted from being able to take off.

Some of the emergency actions to fulfil immediate demand to where now the demand is pretty much in a much more stable scenario and we are able to fulfill and pro-life services on a much more stable basis. And therefore the the the conversation has shifted towards new areas of immediate opportunity that our clients based off we gave you the examples of the s p a p p p program that we spoke with some of our banking clients or some of the analytics, you know needs that were there with our Healthcare clients those off immediate opportunities that we are fulfilling right now. And then the last piece is the growth of our business which was already planned and some of the deals that I had one many of those programs were temporarily Put On Hold by our clients because they could no longer send in subject matter experts for training and for coaching job.

Employees on these new programs those conversations have now restarted and we are seeing an an engagement with our clients where we are figuring out how we can leverage remote training and remote learning to onboard more employees and more work be done in a remote location out. So actually we have we've been very positively encouraged by by the shift in conversation that's taking place and there's a lot more Dialogue on an ongoing planning for the future conversation. That's now taking place.

Got it. And as a follow-up as I look at the specific, you know Q2 Outlook. Could you help sort of parse it out by the by the News segment both from a revenue and you know gross margin expectation by segment basis. So first of all, you know, we we expect you to revenues to be down sequentially 15% from q1 this Thursday from two one two, Q to is fundamentally broken up into a reduction in temporary demand from our clients and a slippage of our inability to fulfil a hundred percent of the demand. Like we said, we expect the Fulfillment part of it to be approximately 5% of the total demand birth.

We have and the rest of it is a temporary reduction in demand when we take a look at this across the four segments that we've got which is Insurance Healthcare analytics an emerging the revenue demand shortfall is about the same in Insurance health care and analytics and it's a little bit higher in emerging because we do have clients in the travel industry verticals in the emerging portfolio and that has been impacted a lot more from em and profitability standpoint. The biggest driver is of course the revenue and an adjustment to the cost structure that we have and that's something which you know, I'm giving you a a range in terms of what that CPS might look like in Q2. You're going to see how that plays out and we're trying to best manage and align our cost structure to the new Revenue that wage

affect their

Okay, but on a margin perspective, there isn't anything just let my last question clarification. There isn't anything different you look across segments. Now now that you you're at 95% and from a delivery perspective your kind of evened out, you know life is if you take a look at our q1 margin excluding some of the covid-19 Spencer's that we had to incur which are one-time in nature. Actually our adjusted operating margin moved up quite nicely as per plan. In fact a little bit better than plan. So the margin moved up quite nicely if you take a look at our analytics business as we've been explaining this to you and to the others we have been consciously working on improving the margin profile of our analytics business.

and that was also

So a very good Improvement that we saw in q1. So frankly, the underlying trends of the margin structure of our business were moving exactly as per plan the same as what we had anticipated and and now we are going to best deal with this new situation that we have and the hand that we've been dealt with. Thank you God. Thank you. I had our next question for line Peniche from JPMorgan you may begin with

Hey, thanks for taking my question and good to hear from you guys my first person on demand for this year. So you talked about 10 a.m. And impacting q1 and additional 30 million or so impacting Duke you and understand some of that could be supplied with them. But how should we think about like breakdown of demand impact from a potential pricing pressure from increased offshore delays in transition that you talked about and fewer client transactions.

So, please good to hear your voice as well. And you know, let me try and explain this the best way that we possibly can on it in q1. We lost about ten million dollars of Revenue and that was entirely Supply driven and so approximately 4% of our Revenue fell because of our inability to fulfil the divorce that was there.

In Q2, we are saying that our Revenue will decline by 15% from q1. We think a 5% impact is there due to an inability to fulfil the demand and the balance is because of a temporary reduction in demand. So the temporary reduction and demand is approximately 10% off now at the same time the growth that we had anticipated in Q2 that growth is being deferred and we we expect some of that growth to start resuming over the next few months as we engage with clients and we work out different mechanisms of having a knowledge transfer take place and burn up and support them in in those requirements and you know, in other pieces we'll have to wait and see how the covid-19 pandemic plays out and and then re-engage

With our clients and that's why it's very difficult for us to be able to provide you with any color pertaining to Q3 and Q4. But for Q2 read The Break-Up is 5% on account of Supply constraints and the balance 10% on account of temporary reduction in demand.

Got it. And how should we be excellent positioning in the VP over in the post office environment your offshore base value your services should become more relevant. I think I'd like to hear your thoughts as well on that.

We have a very very healthy portfolio of businesses and I think the impact to our portfolio has been much less than a you know, what it might have been for for others. So the insurance portfolio the healthcare portfolio and the analytics portfolio. I think these held up extremely well, you know for us and and these are stable, you know, Insurance segment is very stable segment. So is and Healthcare is an area where there's going to be a lot more focus in the future and we think the use of data and analytics is really going to increase so actually the segments are are very strong operating segments for us.

I think the big thing for us with our Global delivery Network where we've got on Shore capability as well as offshore capability across multiple jurisdictions is also a very well because as clients seek more diversification and a lower cost structure. They're going to find that our ability to serve them and be a strategic partner to them. It's going to become more and more important. So we think you know Excel is very well positioned or these longer-term trends that are likely to take place greater impact on digital greater use of data and analytics more diversification and much higher focus on the cost basis. All of these are very favorable trends for our bedroom.

Got it. Thank you.

Thank you. And our next question on canceling Brian Bergen from Calvin and we begin.

Hi, good morning. I hope you're all doing well. I wanted to start here on client Behavior, but it will follow up heard the comments on the temporary demand reduction you anticipate so I guess it infers it's more so delay, but I do want to confirm. Are you seeing any canceled pipeline opportunities and then with respect to some of the the you know, the client concession conversations. Can you give us a sense of the duration of some of those agreements?

Sure, Brian, so we haven't seen any cancellations or any you know revocation of the work that our clients had given to us off scene is and the first few weeks. We were focused in on making sure that the current existing business was getting up and on on being on track and now the phone has shifted towards helping our clients best manage, their, you know, medium-term and longer-term needs and so our engagement with them continues to be very active and not looking at different ways in which we can you know, help them and support them security is a deferment of some of the growth opportunities that we have but you know, I think peace will come back and and Thursday to be in a much more gradual format, but it is something which our clients definitely need our help on.

in terms of some of

The commercial Arrangements that we have with our clients, you know, there is an increased cost that we've had to incur because of enabling work from home and we are working through that with our club in terms of you know, how that you know increased cost is to be shared or recovered back, you know with our clients and then we are working through that with them for us but most of our contract renewal, you know, as such was really largely in 2019. So most of that is actually behind us and we've got client contracts which are in place that are there for the next few years and and the renewal cycle is much later. So there hasn't really been much of a conversation around the contract renewal them provide you with the right colors, right? Yeah, that's helpful is uncalled flexibility. So see a good one Q margin results here despite the club.

Pressure can you help us think about the the level of further potential cost reductions that you have versus you know, the Investments That You're still making this is worth. So we have we have a tremendous amount of flexibility just within our cost structure, you know, we've always already started the process or initiated the process to really start to review all of our costs and you'll see what are the levers that we can pull and you're starting to see that come through in our p&l. There's you know, a number of different employee costs related items that are levers that wage now and going into the future and then there's also non-employee cost items that we we can really pull to better align ourselves in the current Revenue Investments that were in and I'll give you some of the examples, you know, just an employee cost area, you know, we've already started the process to reduce our hiring so that we bring down the article just overall go forward. Wow.

You know, we've looked at variable compensation and bringing that more in line with the current Revenue Outlook. And then also just on non-compensation cost items. We've taken a hard look at that also thousands of being a marketing professional fees really going through and scrubbing our p&l and then on top of that we've also looked at Capital spending there and as we indicated, you know, we brought down Guidance just overall for Capital spending going forward having said that there are certain areas that we are still investing in and investing in areas that are really critical to us off the future and one of those areas, you know in particular is digital where we really see a an opportunity to really in the digital area within our business to really Propel ourselves going for wage. And so we're starting to really go through our investments and really prioritize where we should put incremental dollars even in an environment. Whereby we're taking a hard look at costs.

Thank you.

thank you and our next question comes the line just send the Naughty from Wells Fargo May begin

hi thanks for taking my questions the first one I had can you talk a little bit about what percent of your contracts have minimum volume commitments and you know have clients been asking for reductions there and how quickly can that change

So just in we have about a third of our business, which is under transaction-based pricing model or an outcome-based price. We don't provide the percentage of minimum volume commitments within this sort of our business that we have. We will tell you that we are working with all of our clients in terms of what they can give to us as volume and what they can provide to us in certain cases, for example in the travel business certainly, you know, that level has been reached but in other cases, you know, our client volumes haven't really gone down much money. So all of this is included in the reduction of ten million dollars in the first quarter and the 15% drop in the second quarter that we've guided to so dead.

Called provided as part of that.

Got it. And my last question is are you able to judge productivity levels with work from home?

Actually we have

Rise by

the speed

for transition to the work from home be the productivity levels of our employees working from home and see the employee satisfaction and the customer satisfaction that we witnessed as a consequence of moving to the work from home or we are finding that, you know course the attrition rates have come down dramatically off the productivity levels have gone up and we found that particularly for many of our processes which had a time constraint. So for example, some of the work that we do in Finance and Accounting Office where we've got, you know, we went through a quarter of clothes, you know, at the end of March all of our service level metrics were able to we were able to fulfill those were very very nicely and and we did the financial close and the reporting for our clients books on time and in some cases actually ahead of time. So the response from our employees wage

been spectacular and we have

Very impressed with the way in which the entire organization has dealt with this question.

Thanks for the color.

Enter next question will come from line of Moshe Kasher from wedbush. Security May begin. Thanks. I hope you're well. Thanks for taking my question a couple follow-up here given the the man pause that you spoke about. What does it mean to utilization rates on the bench? How down could it be in the June quarter? And then I'm assuming you don't have any plans. I mean you do maybe not for furloughs at least on the temporary basis, and then I have a follow-up thing.

Sure. So first of all, what she the the the demand, you know, also be a thing is it's really there in the second quarter off and what we have is we've got people who are getting trained on processes that we think we'll be able to be needed to support our claim going forward. So what we are doing is investing this time to train our employees that are Surplus on digital Technologies on new Samsung usage as well as becoming a lot more proficient in their existing processes. So frankly, you know, we never used to get the time to be able to invest money in terms of this training and retraining and re-skilling of our Workforce and that's what we are using this available time for and and being able to be absolutely ready dead.

When that demand comes back to be able to support our clients, so that's how we are. We are dealing with with the situation.

In most do to address your second question just on headcount and and furloughs. We really need to see how the rest of the year really plays out there still a lot of uncertainty. There's and we we we haven't made any decisions on any of those types of of action because we really want to see how the rest of the year plays out and and not having having you know and having also, you know, we're going through the rest of the p&l right now. It really dry flexibility within our you know, for all the other costs line items that we're really looking to optimize not going forward.

All right. Thank you. And our next question comes from mayank tendon from Needham maybe again. Hey, good morning. This is actually a calculator cannot from my house. Thanks for taking the question. Just wanted to touch a little bit you guys mentioned some of the demand kind of being deferred the expected or resume resume over the coming months just woke color as to what you guys think, needs to happen for some of that demand to start coming through. Is it just more clarity on kind of where the birth to me is going. Is it thing certain open back up being able to you know meet people is a the economy starting to bounce back just wash thoughts kind of what types of events we should look forward to have some of that demand moving in the right direction.

Sure, so, you know.

If you take a look at the types of areas where the demand is being deferred out, we think it's being deferred out in in terms of some of the month new business and customer acquisition efforts of our insurance plan. That's one area a second area is we're seeing in the personal lines business particularly for auto that the because there are fewer people on the road. There are fewer claims that are coming through and also with the the any adjustments to those games, you know, there's less work to be done this so we think all of that very comes back as the economy and as the laws are lifted and people start to get back on the road and people start to you know, use their cars and vehicles that's going to you know come right back ma'am.

Where we are seeing increased demand at this point of time in again in the insurance World. We're seeing a lot more demand for disability and took more Demand on the life insurance side. So that's you know actually been a net positive for us. So I think some of that needs to get balanced out on the Health site suddenly, you know, the provider side of the business is is currently stretched in terms of just responding to covid-19. And then on the pair side with some of the activities like pre-certification and others don't need to be performed at this point of time because of the drop in elective surgeries, so and also because of some of the wreckage changes by CMS and and and you know, some of the changes that have happened there so as those things start to normalize these are all areas where the demand is going to come wage.

Back because in a normal operating environment, that's that's something which would always be there.

Okay, that that's helpful and then just a quick follow-up a little bit on the on the transmission Revenue in the UK nurseries down quite a bit year-over-year assuming some of that's current month. I just wanted to get a little bit of color on kind of what's going on there. What's the FX impact first any plant project ramp downs and kind of how we should think about that recent years old.

Should have been a significant FX change. Yeah, you really just seen that that Revenue change really happened within the emerging of business as part of the package is really within that segment. It's really just specific to just uh a few few clients within that segment. Nothing nothing significant there.

Okay, that's helpful Xs.

Thank you. Next question comes the line of Vincent from Berrington research, Michigan.

Yeah, Rohit. How would you characterize your top twenty clients? Saw your top ten clients in terms of or any of them are highly leveraged Financial.

Yes, since it's no, you know, I think we have very fortunate that we've got a very healthy customer portfolio. And in fact, you know, it's also a very Diversified portfolio that we've got. I think the credit standings of our clients are these are large global companies and insurance in health care and in Banking and Financial services, so, you know, they they are very well capitalized and very well position. We've also been actually pleasantly surprised with collection on our receivables as we've gone forward into the second quarter. So that's also holding up quite well.

And when you talk about the use of the at home slash remote model over the longer term as a potential change. Does that include, you know working with some more sensitive Industries such as health care or is it, you know, broadly-based.

Yeah.

And I think we have to deal with that as we go along to figure out ways in which we can manage and control that in a lot more proactive and deliberate way Healthcare would also have regulatory issues in terms of allowing for enablement of that and and we'd be looking into that as well.

Thank you. I'll be safe guys.

Thank you. Once again, that's star one for questions * 1.

And I'm not showing any further questions at this time.

Great. Well, I just want to thank everybody for joining the call. Please stay safe and healthy, and we look forward to updating you on the company's performance at the second quarter of all. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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