Q1 2020 Earnings Call

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Welcome to the Hockey Group first quarter earnings Conference call your launch of in place to listen only mode and so the question answer session. Please be advised the conference is being recorded posting tonight's call are Mr., Ted Fernandez, Chairman and CEO and Mr., Bob Ordinariness, Chief Financial Officer, Mr. mirrors, you may be.

Yes.

Good afternoon, everyone and thank you for joining us to discuss the Hackett group's first quarter results.

Speaking on the call today in here to answer your questions or Ted Fernandez, Chairman and CEO of the Hackett group and myself, Rob Ramirez CFO.

A press announcement was released over the wires at four or five PM Eastern time.

For a copy of the release please visit our website www dot the Hackett group Dot com.

Also placed any additional financial or statistical data discussed on this call that it's not continuing to release on the Investor Relations page of our website.

Before we begin I would like to remind you got in the following comments and in the question and answer session, we'll be making statements about expected future results, which maybe forward looking statements for the purposes on the federal Securities laws.

These statements relate to our current current expectations estimates and projections and are not guarantees of future performance. They involve risks uncertainties assumptions are difficult to predict which may not be accurate, especially in light of covance. Thank team.

Actual results may vary.

Forward looking statements should be considered only in conjunction with the detailed information, particularly the risk factors contained in our FCC filings.

His point I would like to turn it over to Ted.

Thank you, Rob and welcome everyone to our first quarter earnings call.

As we normally do I'll open the call with some overview comments on the quarter turn it back order Rob to comment on detailed operating results cash flow and also comment on outlook. We will then review our marketing strategy related comments, and then move onto Q anyway.

Please allow me to start the call by acknowledging the Kravitz incredible bravery and commitment of our health care providers first responders and those dedicated individuals who have continued to work nonstop and under very dangerous circumstances to support all of us during this tragic pandemic.

Eagerly waiting for the conditions to exist, where all of us around the globe, we're able to return to our normal lives wherever that is ultimately defined.

I would also like to acknowledge our associates and clients that quickly and successfully adapted to the remote delivery requirements around the globe.

In spite of the limited notice and Barry and circumstances, I commend their dedication and commitment to their respective client initiatives.

Following substantially all of our engagements to continue.

Now on to operating results. This afternoon, we reported net revenues of 65.2 million in pro forma earnings per share of 24 cents, which were both within our guidance range. In spite of some disruption from the pandemic in March We report reported solid us revenue growth, which was partially offset by weak European.

Formats as expected.

What I hope Doesnt go unnoticed, what's the long awaited revenue growth from our E group not only did Oracle cloud growth clearly outstripped our year on year revenue decline from our legacy Oracle on premise business, but we also saw very strong growth from our S&P and one scream groups overall Q1 us revenues were up.

11% with EPA up 20% more impressive is that the Oracle ERP revenues are expected to be up sequentially from Q1 to Q2 in spite of the current environment.

Our strategy and business transformation activity continued to be solid around digital transformation initiatives. However, This group was most quick it was.

What's the group, which most quickly felt the impact of the pandemic in March at some expected sales decisions were deferred.

On the international from Europe continued to be challenging.

It is a shame that as the UK January election results started to provide the clarity needed to allow business demand to return.

We see some of the same to thought decision delays emerge, but now due to the pandemic.

On the investment side, we strongly believe that the strategic investments we have made to fully digitized all of our IP. The development of our two next generation platforms quantum leap our state of the our global global leading benchmark platform in our proprietary Hackett digital transformation platform or DTP are highly differentiating our.

Offerings and will be important drivers of our growth for many years to come.

Additionally, our investments with rapidly growing E procurement, Evan RP a software providers also continue to be key to our strategy and digital transformation momentum and are also important future drivers of our growth.

On the balance sheet side, our ability to be highly profitable and generate strong cash flow from operation has allowed us to increase our dividend buyback stock fund acquisitions, while continuing to invest in our business I cannot tell you how important it wants to start the year and finished the first quarter with a solid cash position and no outstanding.

Net which provides us the ability to manage our future during this volatile economic period.

Before I turn it over to Rob to provide our detailed operating results and more perspective on the second quarter I'd like to share some of the operating guidelines that we are using to manage our second quarter.

We started the year by aggressively adding associates and strategic hires consistent with our 2020 growth prospects as we started to feel the effects of the pandemic in early to mid March and knowing we were entering the period with a strong cash position, we quickly decided to make the safety and well being of our associates our top.

Priority.

Matt not only making sure that they were taking all necessary safety precautions to ensure their safety, but to avoid any layoffs directly resulting from the pandemic at least through the end of our second quarter. We believe this would provide our associates with very important peace of mind to weather the storm, while we gain critical market information.

From which to make any further decisions on our first weekly Corona virus global update call on March Twentyth, we shared our commitment with our associates, we shared our commitment with our associates and we communicated that we were prepared to forego profitability in the second quarter as long as we did not weaken our solid cash.

Cash position and without needing to use our credit facility.

We also informed our associates that we would update our employee related decisions as we better understood the impact of the disruption on our client decision, making and on existing and proposed initiatives and address any required changes prior to the beginning of the third quarter.

With that said, let me ask Rob to provide details on our operating results cash flow and also comment on outlook I will make additional comments on strategy and market condition conditions. Following robs comments, Rob. Thank you Ted So typically do I'll cover the following topics during this portion of the call.

Okay.

We'll have an overview of our 2021st quarter results along with an overview of related key operating statistics I'll provide an over your cash flow activities. During the quarter ill then conclude with a discussion on our financial outlook for the second quarter of 2020.

For purposes of this call I comment separately regarding the financial results of our strategy and business transformation group or us and beauty.

Our ERP EPM and analytics group or EA.

Our international group and the total company.

Our SMB to group includes the results of our North America IP as a service offerings, which include our executive advisory programs and benchmarking services and our business transformation practices.

Our ERP solutions group includes the results of our North America, Oracle SXC solutions and one stream practices.

Our International group includes the results of our SMBC and our E groups that are based primarily in Europe.

In addition, please note that all references to net revenues represent revenues, excluding reimbursable expenses.

During our call today, we will reference certain non-GAAP financial measures, which we believe provides useful information to investors. We include reconciliations of non-GAAP financial measures to GAAP in our press release filed earlier today.

Additionally, my comments today are based on results from continuing operations.

For the first quarter of 2020, our net revenues increased by 5% to 65.2 million when compared to the prior year and which is in line with our revenue guidance range.

The Q1 2020 Reimbursable expense ratio on net revenues was 6.7% as compared to 7.7% for Q1 of the prior year.

Revenues and Reimbursable expenses were both affected in March as economic disruption from stay at home orders increased throughout the us in Europe.

Reimbursable expenses are primarily project travel related expenses past due to our clients and have no associated impact to our margin or profitability.

Including Reimbursable expenses company gross revenues from continuing operations were 69.5 million in the first quarter of 2020.

Net revenues for our East solutions group were 33 million in the first quarter of 22000, an increase of 20% on a year over year basis.

This was driven by strong growth from our S&P S. Four Honda implementation practice, which also benefited from strong software sales activity and the strong growth from our cloud ERP and wondering practices.

Specific to our US Oracle practice with 88, our cloud revenue growth was in excess of 50% on a year over year basis, resulting in the improved mix of cloud on premise implementation revenue, which is approximately 75%.

Net revenues for our Aesynt BG group were 24.7 million in the first quarter 2020.

Essentially flat when compared to the prior year.

This groups business transformation practice is where nearly nearly all of our March disruption impact was felt.

Net revenues for our International group were 7.5 million in the first quarter of 2020 a.

A decrease of 27% on a year over year basis.

As expected and discussed in the previous quarter.

Total company International net revenues accounted for 12% of total company net revenues in the first quarter of 2020.

Compared to 17% in the first quarter over the prior year.

Our recurring revenues, which include our executive and best practices Advisory Amex groups accounted for approximately 20% of our total company net revenues and approximately 30% of our total company pretax practices profitability in the first quarter of 2020.

Total company pro forma cost of sales, excluding reimbursable expenses totaled 41.1 million or 63.1% of net revenues in the first quarter of 2020 as compared to 38.9 million or 62.4% of net revenues for the same period for the prior.

A year.

Total company consultant headcount was 1026 at the end of the first quarter as compared to 982 in the previous quarter and 979 at the end of the first quarter of 2019.

Total company pro forma gross margin was 36.9% of net revenues from the first quarter 2020.

As compared to 37.6% in the first quarter of 2019, primarily due to hiring activities as we exited the fourth quarter and into the first quarter and anticipation of revenue growth.

SMB gross margins on net revenues was 44.1% in the first quarter of 2020 as compared to 46.8% in the first quarter of the prior year.

The margin decrease was primarily driven by revenues that were tempered by the emerging pandemic disruption in March and by increasing headcount related costs.

He eight gross margins on net revenues was 32.9% in the first quarter of both 2020 and 2019.

International gross margins on net revenues was 31% in the first quarter of 2020.

As compared to 27.8% in the first quarter of the prior year.

Primarily driven by the restructuring actions that were discussed in the previous quarter, which reduced head count related costs.

Pro forma as Gionee was 13.9 million in the first quarter of 2020.

Compared to $14 million in the previous year and represented 21 and 23% of net revenues.

Respectively.

Pro forma EBITDA in the first quarter of 2020 was 11 million as compared to 10 million in the same period of the prior year and represented 17 and 16% of net revenues respectively.

Total company pro forma net income for the first quarter of 2020 totaled 7.6 million.

Or 24 cents per diluted share, which was at the midpoint of our first quarter's guidance.

This compares to pro forma net income of 7 million or 22 cents per diluted share in the first quarter of 2018.

Pro forma return on equity was 24% for the first quarter of 2020.

GAAP diluted earnings per share was 17 cents in the first quarter of 2020.

As compared to 22 cents in the first quarter of the previous year.

GAAP results for the first quarter of 2019 included.

1.1 million dollar benefit due to adjustments to contingent earn out liabilities relating to acquisitions and lower GAAP income tax expenses, both of which benefited GAAP earnings by approximately five cents when compared to the first quarter of 2020.

The company's cash balances were 23.3 million at the end of the first quarter of 2020 as compared to 26 million at the end of the previous quarter.

Net cash provided by operating activities in the first quarter of 2020 was 6.5 million.

Which was primarily driven by the income adjusted for noncash items.

Partially offset by increases in accounts receivable.

Our DSO or days sales outstanding Thats in the first quarter 2020 was 70 days.

As compared to 66 days at the end of the previous quarter.

During the first quarter of 2020, the company paid 5.8 million for its second semi annual dividend, which was declared in 2019.

During the first quarter of 2020, we repurchased 198000 shares of the company stock at a total cost of approximately 3 million.

Including purchases from employees to satisfy income tax withholding triggered by the vesting of restricted shares.

Our remaining stock purchase authorization at the ended the quarter.

<unk> was 5.6 million.

Now moving to the second quarter of 2020.

As Ted mentioned in his comments due to economic uncertainty, we are limiting our comments on outlook.

Current estimates suggest sequential revenue declines of 15% to 20% from Q1 Q2.

And given our decision to maintain current staffing levels for the balance on the second quarter, we expect to forgo a significant level of profitability.

However, we do not expect our net cash balances to decrease during the second quarter.

As prudent measures, we also intend to draw down on a portion of our credit facility during the second quarter.

In addition to board of directors have also deferred our dividend declaration decision until closer to quarter ends.

At this point I would look to turn it back over to Ted to review our market outlook in strategic priorities for the coming months.

Thank you Rob.

As we look forward, let me share our thoughts on the short term and long term demand environment and the growth opportunity. It offers our organization.

It goes without saying that we have entered an unprecedented period, where demand destruction necessitated to ensure our safety has required extreme measures.

But as we deal with the current environment.

I believe it is equally important to remind ourselves of the environment, we had and should be able to regain once we're able to wrestle this tragic endemic to the ground.

The digital transformation of our society is just beginning with the transformative innovation in emerging enterprise cloud applications workflow automation process mining and artificial intelligence dramatically influencing the way businesses compete and deliver their services as I've repeated.

Over the last several years traditional sequential and linear been business base business models are changing to fully digital and dynamic automated workflows and invest with enhanced intelligence digital transformation is redefining entire industries at an accelerated pace, forcing organizations the board.

Fundamentally changed and adopt these new capabilities in order to remain competitive.

On the demand side, we see the short term environment is highly volatile and unpredictable. So I believe that it's better to wait and see how quickly we can address the healthcare concerns and also protect our economy I will not try to do this on this call and wait for further information.

For now.

What we now know is that client activity remained solid and it's only been deferred because of the current circumstances, we will have to wait to see how it impacts client priorities and investments, but we know that the agility and intelligence. They require our best delivered by the emerging emerging technologies that we help them evaluate and.

Implement.

In the financial crisis, if the financial crisis at any indication, we expect the U.S. marketplace to be most aggressive and addressing the health concerns as well as returning to normalcy as expedient as possible. We contrast that with Europe, which we expect will be more measured and take longer to return to normalcy with.

That said it is clear that all markets in clients that we serve will be increasingly reliant on digital transformation to remain competitive.

Strategically our focus will remain the same which is to continue to build our brand with our new offerings and capabilities focus on digital transformation around our fully digitized an unmatched benchmarking and best practices intellectual capital.

This should allow us to serve our clients strategically increasingly remotely and whenever possible continuously.

Specifically, we will continue to redefine our global benchmarking leadership.

Through additional enhancements in quantum leap, our digital benchmark benchmarking software as a service solution.

As I always say this platform allows us to deliver more information would significantly less clienttell client effort. It also allows us our clients to leverage our IP and track transformation initiatives over the respective life of their efforts. We believed that there is no comparable platform in the market and we believe.

Just starting to see the benefits from this state of the art benchmarking platform.

We will also continue to refine and improve our digital transformation platform to further differentiate our unique IP and related capabilities.

DTP allowed us to fully digitize, our IP and aligned proven software configuration and organization solutions to help clients drive transformational change.

As a core asset to both our business transformation in cloud implementation offerings.

Given the success of our existing IP as a service initiative and given the improved functionality, we continue to add to our quantum leap and digital transformation platforms. We believe we will attract other global Black brand strategic partners to similar programs, we expect to launch a pilot initiatives with new partners that will further demonstrate our unique.

Capability and unmatched credibility that our brand brings to digital transformation business case assessments as well as implementations lastly.

Even though we have the client base and the offerings to grow our business. We continue to look for acquisitions and alliances that strategically leverage our IP to add scope scale and capability, which can accelerate our growth.

In summary, we continue to build our momentum in the US which has allowed us which allowed us to resume our growth even though we're now entering a challenging period. This progress demonstrates that the investments we were we are making it our digital.

Platforms as well as expanded cloud applications capability and software partners as well as the investments in our IP as a service offerings provide us with highly differentiated offerings and strategic access to most of the leading global company.

As always let me close by thanking our associates by asking them to remain safe for their tireless efforts and always argenta say highly focused on our clients and our people regardless of the short term challenges we encounter.

And remind them that we will emerge stronger than ever.

Does conclude my comments, let me turn it over to our operator, and let's move over to the Q and a section of our call.

Operator.

So in London open for questions. If you like to ask a question over the phone. Please press star one and record your name.

I'd like to withdraw your question Mr too.

First question the cues from George Sutton of Craig Hallum. Your line is.

Thank you Ted I know entering Q1 Youre activity pipeline was the highest that has ever been and.

Obviously, the world's change so im wondering if you could give us a little bit better sense of what's happened to that pipeline. You did mentioned deferrals on the call, but how much of that has been deferred in your view.

And for how long if you have any sense and how much of that just simply wont happen or or was lost competitively.

All well first of all activity was high throughout the quarter and in fact activity continues to be high even though our clients. Obviously are distracted with some of these new priorities.

With that said.

It's important to understand the the growth that we achieved in that EA group, which you know George.

That really hampered and.

Our growth over the last three years so.

We've converted and continue to convert a significant amount of that of the.

Technology related activity and as you also know.

On the strategy and business transformation side, which has a both our benchmarking and executive advisory business up both which have a multi year.

Contract component in their effort are those those businesses are expected to remain.

Relatively stable during this period as well, where we saw the increased what we saw the that the deferral of decisions were around some of the business transformation engagements where the.

Interaction with key client personnel and Solutioning that it entails.

Okay just.

Is where we saw some of the deferral of decisions.

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They I'm thinking of the top 10 opportunities that we have we're tracking both through March and April.

Those opportunities which are not starting.

None have been.

I'll call it.

Cancel.

But we're seeing clients that hey, listen we need a little bit more time before we make a decision given what's happening so to us impact the uncertainty and the reason for limiting our comments relative to outlook, where around that that is exactly that opportunity. We know that were highly engaged with clients on many issues in that.

When you look at some of the decisions the clients need in May which is we're estimating that clients are gonna have to make 15% to 30%.

A cost reductions to deal with some of the.

Demand erosion that that they will experience through the balance of 2020.

They are directly aligned with the nature of the work, we do which is strategic cost reduction.

Working capital management and in many cases the way the clients are using some of the cloud implementations to affect that transformation. So.

It's really going to be up to the clients up how will they deal with the demand erosion do they have we seen some clients I mean totally continued through and continue with their commitment.

And we've seen some that said lets just change the scope somewhat but as we said on the technology side boy. It has been the the the left the level of revenue growth that we expect is considered to be minor.

On the business transformation side, especially if you take off some of the recurring.

Revenue that we havent that strategy and business transformation side that is what we're expecting to see.

Or have seen more deferral or delay in decision making.

But with that said most of that work is strategic cost reduction dealing with agility.

So will the clients decide to do these things on their own.

Best efforts guess or will those clients require the type of information that we provide to basically assessed and define the art of the possible and allow them to be a lot more efficient with the decisions that they're having to make.

That will vary by client and by industry and Thats the volatility that that we're experiencing and we said we wanted to continue to monitor to monitor through the end of the quarter.

Now if we look back to prior cycles.

And your consulting operations and strategic transformation piece were a bigger component of your total back then and I would broaden the discussion to say, okay strategic cost reduction working capital management also supply chain in those are areas that are clearly going to be a need.

In this environment the differences the prior cycles, my senses took longer to evolve so the decisions.

We're able to happen over a period of time. This is all happened in such a condensed period is that that part of the issue and that ultimately those customers are going to realize their needs.

At some point in the relative near future is that a fair way to think of it.

I think it is George I mean look.

Their needs have changed and in fact.

In most cases, there David there.

Significantly greater especially when you think of some of the productivity and cost related issues, they're going to have to deal with through the balance of the year.

So what's the biggest impediment well the one we know.

We got to allow people.

To be able to return to work and do that in a matter of they feel safely.

And allow the engagement and the support and the interaction around those activities to happen as they normally would so.

I will improve as.

Along with what many of the industries are expecting which is the.

The elimination or reduction of the Lockdown guidelines, which I think our inhibiting.

Some of the priorities and and some of the requirement.

But I do agree with you the requirements one are not going away, they're only going to be enhance to the cycle can be shorter. If we are able to open in return and engage clients across the board and where the client priority allow for those decisions to happen. So.

I think we are well suited to help clients with these issues.

And that's why we remain very optimistic and I wanted to make sure that our comments reminded everyone about the demand first the structural demand coming from digital transformation, but also the demand that we.

I have been experiencing and expect to be able to resume.

As some of the activities return to some level of normalcy.

Got you said, Rob. Thank you Stacy Thank you George Likewise.

Next question is from Andrew Nicholas from William Blair. Your line is now open.

Hi, Good evening this actually Trevor Romeo entry Andrew Thank you for taking my call here.

First just wanted to touch on the cost side a bit more like could you mentioned that you plan to maintain current staffing levels throughout the second quarter.

Any sense of how severe how long these decision deferrals would need to last for you to reevaluate that stands and are there any other levers within the opening comments one of we made that decision to.

Basically limit.

Any lay off of that were directly driven by the pandemic.

To make sure that we were providing our associated with as much peace of mind.

Especially as the level of uncertainty was really not not really I think was barely understood. I think we now have a much better idea all of us collectively have a much better idea of what the health versus economic challenge is.

We made that commitment through the second quarter, we did that by modeling a series of scenarios.

Which.

Which allowed us to.

Make that commitment to our people.

Could we have easily.

Taking I will call it a normal unsafe route anticipated the disruption like many would and made some of those decisions much earlier. The answers. We just believe that's the right thing for our organization was too to protect our associates and not make any of those decisions until we had better information.

We have to find that we said that those decisions.

Would be re evaluated as we were exiting the second quarter I think once we see the client decision, making in May and June.

That will then tell us what decisions that any we need to make and.

As we said on the call.

We would like to be able to do that before we start to see.

The third quarter, but still maintain any commitment to our associates to eliminate the layout through the balance of the quarter. So.

Just to kind of summarize.

We've made a significant investment in this quarter.

And we expect that invest we first we expect business.

Business.

Dynamics to improve but we all we also expect to regain a certain level of profitability in Q3 and to continue to improve that into Q4 and hope that we can be of fully backed up.

By the beginning of 2021, and but that will be determined by our client decision, making could that happen earlier, if things open up into clients seek our assistance with some of the things that we just mentioned on the previous question. We're very suited to do the answer is clearly those opportunities are there.

What we also know is that.

We think we can do all of that from operating cash flow and the drawdown in that.

Credit line will simply be.

As a prudent measure so we've always run the business conservatively and profitably and we expect to do that but we believe these circumstances were unusual required a lot more clarity before we made any decisions and we thought our associates deserved.

The protection at least through the first 90 days of this pandemic.

Okay, great. Thank you that's helpful and then just to follow up.

As you mentioned you came into the pandemic environment with.

A very strong balance sheet.

I would imagine your focus on weathering the storm at the moment, but could you just go over kind of your updated capital deployment plans for once the dust settles any kind of touched on M&A still being an option towards the end there.

And you talked about the deferral of dividend decision, just wondering kind of where the dividends sits in your priority list and would you for go with that said right M&A opportunities that made sense.

I will believe it or not we see those a separate.

If we if we did an acquisition that that was up any scale that to us would clearly be a reason to use our credit facility.

So.

We separate those two and in fact.

We continue to evaluate and look at.

The opportunities to acquire as we had previously mentioned.

Relative to then the other priorities.

Look we want to be able to take care of all of our constituencies to our current goal is to be able to address them all but we also thought that the simply.

Declare instead of deferred that dividend decision without having better information.

What's not the most prudent way to go so both are we're basically buying.

60 days of additional.

Market, if you want to call it that better understand the market decision, making how quickly our clients fully reengaged with us and how they continue to reengage with us and then.

We will then address profitability and dividend decisions.

For both the third and fourth quarter.

Okay understood the way that just to answer that were fully since I now realize we were solid.

We would not expect to continue any buyback.

Activity the buyback.

The majority of the buybacks that you saw the first quarter were primarily related to net besting activities that normally happen in the first quarter. So we don't expect any a cash expenditure for that so if were correct.

And we finished the second quarter with stronger better cash position as we are today than it will be entirely then.

What kind of profitability levels, we want to achieve and how we want to address the dividends I think we'll have several options.

Okay understood. Thank you very much.

Next question is from Jeff Martin with Roth Capital Partners. Your line is an open.

Thanks, Hi, Rob I'd said generally well.

Could you touch on.

What youre doing to stay engaged with clients and how you.

You know how you've experienced their level of engagement has it been more difficult to keep staying in front of them.

And what what your strategy is for we're staying engaged.

First of all its obviously changed so the answer is that a harder no it's harder to.

Connect with their client and discuss.

Their priorities.

So I really believe that that it's really more about how they prioritize their decisions and our ability to assist them. So I think it's different so our engagement with the clients remain high in fact.

Important.

Mentioned that the transition from what we would call a significant remote delivery model because of the cloud implementation work, we do to virtually all remote delivery today is very very significant and we did that.

Very successfully so that.

The I think again that decision makings relative to our offering if youve seen some of our recent press.

Not only have we've gone out with very very specific if we want to call. It.

Initiatives and research and approaches to the different issues that our client are facing the way one of the analysts may I mentioned the previous call specific feedback around some of the supply chain disruptions and some of that decision. They can they should be taking and how.

We could provide that help strategic cost decisions not only with the by utilizing quantum leap, but we've really recently announced a brand new offerings that allows clients to.

Do data capture in less than a day and allowed us to submit the results at less than a week. So it was a quick way up helping clients identify.

Priorities and.

Size the prize.

Doing by doing so just a slightly different level and with a little bit less information and with a very efficient tool that we built.

So we think we've look across.

Managing talent.

Managing IP supply chain.

All strategic cost reductions align them to our initiatives.

Then very aggressive with our campaigns with our research alerts and engage meat and engaging and talking to clients.

So the only inhibitor will be clients prioritization, and an ability to determine what and how they want to accelerate their spend.

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But were obviously also very type with the level expand that they have continued through the end of April.

Okay. That's helpful.

Are there any noticeable trends in terms of of client behavior between say the started April in the end of April.

No I think some of the marks decisions swear got this new and.

So we saw a little bit in the.

A little bit more of those deferral of some of the business transformation initiative, where we felt a little bit more of that I'll call. It in in March.

Where the technology, obviously continued very strong.

Through the ended the quarter with limited disruption.

No I would say that.

The differences one was.

Merely on hold.

Brazil is is it was we consider an assessment and prioritization and now we'll is going to get a chance to see how these priorities and these discussions we've had with clients actually launch and that will be that will be the information we want to be able to better understand in may and June before.

We make.

Any personnel or.

Or capital deployment decisions.

Okay, and then Rob I wasn't able to discern whether you said 15, one five or 55 zero for the cloud revenue growth in the quarter.

I said.

50 is one five.

In the Oracle oil in the Oracle cloud coming off an increasing number we actually had higher growth in the.

In this quarter, we actually had had a higher growth and the as for hot area and obviously, our emerging once great group is working off a smaller number though so.

They are good but don't count.

In some normalized level.

Okay.

Did you give a total cloud growth.

Number for the quarter.

We did not but if.

If he may.

It was up in total up 20, 20%, 20% EBITDA was up 20%.

The on Prem drag from it was very little.

Those are all those were virtually all of that growth was driven by.

You know what I'll call. It cloud next generation implementation of S&P Oracle in one strain.

So very strong very very strong okay. Okay, and then Ted I have to think that.

Robotic process automation is going to be an increasing theme as we come out of the are you seeing increased interest there and what do you see as the opportunity we see increased interest and we see clients continuing to.

I don't want to call dabbled, because that's the understating it.

Deploy in more narrow applications I believe that the broad and opportunity for our PPA will be when those software providers are able to articulate the ability to.

Dress or the ability for their software offering to address broader enterprise issue, yes issues. We believe that still continue to be going to market too narrowly in tactically and have not really broadened out that on that relative to software and thats relative to the implementation initiative, but when you can.

And sit or the.

Opportunity for further workflow automation, whether that ends up being emerging directly from the large enterprise ERP providers or whether that ends up emerging through.

Functional application providers or.

For Standalone RPX software providers that war have started so when you speak to RPH just understand that that broad workflow automation opportunity that was being defined by rpj is being consumed across all enterprise applications. So it's meaningful but you're seeing more emerge.

It's through an oracle on S&P or workday and others. Then you would have expected to see from the point solution software providers that you may know that are very narrow into space.

Thanks for your time and well wishes tivo.

Thank you Jeff Likewise, so your team Jeff. Thank you.

And again, if you would like to ask a question over the phone. Please press star one and record your name.

Next question is from Vincent.

Barrington Research your line is now open.

Yeah, Hi, Ted.

To what extent is the sequential weakness.

Tied to certain verticals as it is a broad based or certain verticals that are the issue.

No the answer to it really was broad based business.

It really what clients specific.

In fact in some of the more volatile verticals of our activity has been relatively neutral.

We are some have had to stop some initiatives, but some have proceeded an increase their initiative so no.

I think this is.

Broad base.

No different the way you're going to see.

The impact.

As the S&P 500 companies continue to report.

And how would you characterize.

Are you seeing I guess.

Trying to say is are you seeing a meaningful amount of clients looking for better financial terms, maybe in terms of payment lens.

Or a better pricing I mean, some have come in and mentioned pricing.

But no I think the real.

The real key for them is your is being to being able to efficiently.

The liver and outcome as quickly as you can so there are more focused on your ability to.

To deliver the outcome then too.

Try to directly attribute that to overall cost or rate.

And then Rob what was capital spending in the quarter.

533000, Vince Okay.

That's it for me thank you.

At this time I show no further questions I'd like now like to turn the call back over to Mr. Fernandez I'd like to thank everyone for participating in our first quarter call and look forward.

Updating everyone again, when we report the second quarter. Thank you.

This concludes today's call. Thank you for your participation you may disconnect at this.