Q2 2020 Information Services Group Inc Earnings Call
<unk> Conference call. Today's conference is being recorded in a replay will be available when I use cheese website within 24 hours.
This time for opening remarks, and then in introduction I would like to turn the conference over to Mr. Barry Holt <unk>. Please go ahead Sir.
Thank you operator, Hello, and good morning, My name is Barry Holt I'm, a senior communications executive it I assume.
You're welcome everyone to ice sheets second quarter conference call I'm joined today by Michael Congress, Chairman, and Chief Executive Officer, and David Berger Executive Vice President and Chief Financial Officer.
Before we begin I would like to read the forward looking statements and it's important to note that the communication may contain certain forward looking statements, which represent the current expectations and beliefs or the management of ice sheet concerning future events and their potential effects.
These statements are not guarantees of future results and subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated.
For more detailed lifting of the risks and other factors that could affect future results. Please refer to the forward looking statement contained in our form 8-K that was first this morning to the FCC and the risk factor section and I ask Jeeves form 10-K, covering full year results.
You should also read eyes, She's annual report on form 10-K, and any other relevant documents, including any amendments or supplements to these documents filed with the FCC, you'll be able to obtain free copies of any advice T. SEC filings on either I assume is website at www dot ice sheet dashed, one dot com well the fccs website at Www Dot S.
See dot Gov.
I see undertakes no obligation to update or revise any forward looking statements to reflect subsequent events or circumstances. During this call. We will discuss certain non-GAAP financial measures, which I see believes improves the comparability of the Companys financial results between periods and provides for greater transparency of key measures used to evaluate the company's performance.
The non-GAAP measures, which we will touch on today include adjusted EBITDA adjusted net earnings and the presentation of selected financial data on a constant currency basis.
Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with gap.
A reconciliation of all non-GAAP measures presented in the most closely applicable GAAP measure. Please refer to our current report on form 8-K, which was filed this morning with the FCC.
And now I'd like to turn the call, but Michael Connors, who will be followed by David Berger.
Mike.
Thank you Barry and good morning, everyone.
Let me start by saying I asked you delivered a very solid second quarter in spite of the pandemic.
Although revenues were down they exceeded our expectations.
And we more than double our EBITDA from the first quarter.
Thanks to our aggressive cost actions and client demand for higher margin pandemic ready services.
Our balance sheet is very strong with our debt leverage ratio down to 2.6 times EBITDA.
And with cash sitting at $32 million.
Boosted by a record operating cash flow up $22 million in Q2.
Over the last 12 months biased she has generated $47 million in cash.
Testament to the cash generating power of our business and our disciplined operating approach.
Let me put these results in perspective.
GDP in the U.S. in Q2 was minus 33%.
And the Euro zone, where I asked you also operates it was worse minus 40%.
Many of our eyes Ci industry segments were significantly affected by the pandemic and economic downturn.
Hospitality.
Banking.
Consumer and manufacturing were all down double digits.
On the flipside client revenues in our insurance.
Public sector retail media and telecom verticals were all up double digits.
And our I asked you research business.
Would you spend a vital source of authoritative inside during the pandemic.
Was also up double digits.
In a world evolving into all things digital and remote everything.
I'm proud to say, we marshaled or exceptional talent.
To help ensure the business continuity of our clients.
While prioritizing the health and wellbeing of our people and continuing to deliver on and exceed our financial commitments.
Through good times and bad I asked she is there for all our clients ready to support them with our diversified recession resilient portfolio of must have services.
That is why we retain 85% of our client base each year.
Our performance this quarter was helped by sales of our high value higher margin products and services.
Especially those in high demand during the pandemic.
These include our rapid cost Takeouts services.
Our highest G govern ex vendor compliance and risk management solutions.
Now with 10000 users up more than doubled since the onset of the pandemic.
Our network services to enable remote working.
Our captive asset Monetizations services.
And of course, our digital services, which now represent 50% of our revenues up from 45% last quarter.
Although some clients are slowing their transformation initiatives.
They continue to invest in digital and with good reason.
Our clients and is cheap both understand that those who continue to expand their digital capability.
Well recover faster and emerge stronger from this crisis.
If there is a bright spot in all of this we see the pandemic as an accelerator of digital transformation.
As clients accelerate their moved to the cloud adopt future workplace technology and upgrade their connectivity.
We expect demand for our digital services to be turbo charged in 2021.
With these market in industry insights as a backdrop, let me detail our financial performance.
To reiterate our revenues and EBITDA for the quarter exceeded our expectations revenues were down 10 million to 57.4 million due to the overall impact a pandemic had on client spending levels.
A couple of other factors came into play.
One or revenues were reduced to $2.4 million from the loss of billable teeny money that was simply not there due to the ban on business travel.
And two we offered reduce rates and extended terms to some of our clients hardest hit by the pandemic.
Including those in travel and hospitality.
From a profit perspective, or adjusted EBITDA of 7.4 million was more than double the prior quarter.
Thanks to our early and aggressive cost actions.
And our higher margin mix of products and services that are helping our clients whether this downturn.
We will likely continue to see revenue pressure in the near term as clients delay spending on major technology initiatives, even as demand remains focused on or a higher margin pandemic ready services.
As a result interactions and our resilient portfolio, our financial position today is significantly stronger.
As I mentioned, we generated a record $22 million in cash flow from operations in the quarter.
And we use $6 million to further pay down our dad now with a leverage ratio of about 2.6 times the lowest since 2016.
Additionally, in the quarter, we served 424 clients.
That's up 4% from Q1.
Our recurring revenues were $90 million for the quarter, representing 34% of our total.
And we ended the quarter with $32 million in cash up from 17 million in Q1.
We recently took another step in our go digital journey with a tuck in acquisition last month of neurology by which gave US 40, new clients.
And a significant new digital platform training capability.
Especially important in today's remote working environment.
As of today, we have now fully integrated this business into I as GE automation.
Our automation business was not immune from the softness in the quarter. However, the size of automation pipeline.
Is building to its highest level since we launched this business a little over three years ago.
That is a direct result of the growing demand for the digital transformation services, we see accelerating growth.
And our broader business as we move into 2021.
Looking at the overall automation industry, the leading robotic process automation company you I pass.
In July announced it closed on its series E investment round, raising $225 million adipose money valuation of $10.2 billion.
We estimate this valuation to be about 30 times revenue.
During the quarter, we also expanded our automation ecosystem by forming a global partnership with nice.
A leading provider of automation solutions.
Now turning to our regions.
The Americas delivered $32 million in revenue in the quarter down 14% sequentially from Q1.
A reduction in poignant billable t. any contributed about 500 basis points of this decline.
As mentioned, we a combination a number of clients in the U.S. on rate reductions.
Extended terms and other areas in some of the harder hit segments like automotive travel and hospitality.
We did see good growth in our higher margin services and cost takeout network and digital.
And in industries, like consumer and insurance, both up double digits sequentially.
He clients in the Americas engagements in the second quarter included Walgreens AG.
So bearing.
Instrument in Wakefield.
Oh this elevator in the state of Louisiana.
Among our significant wins I asked you research has been awarded a wide ranging contract worth more than 2 million dollar for the long term majeski client.
And one of the world's leading professional services companies.
In another win a global leader in retail and wholesale pharmacy awarded I.S.G. $2 million engagement.
Support the transformation of the clients global technology operations.
A Canadian utility company, a long time I as she client also awarded us an engagement totaling $2 million.
To provide a digital target operating model and sourcing strategy.
To enable enterprise agility, and a scalable enterprise platform capable of supporting potential acquisitions.
I asked you also was awarded a 1 million dollar contract with New network in software advisory engagement with a diversified multinational health care enterprise.
New engagement builds on a well received benchmark study completed late last year.
And all of this done in a remote selling environment.
Turning to Europe, our Q2 revenues of $21 million were down 5% from Q1.
Germany, Faired extremely well up 2% sequentially in 8% year over year.
During the quarter Emmy saw a doubling of our network services and almost a doubling of our research business.
Among our industry segments consumer and manufacturing were both up.
Offset by declines in banking insurance public sector and technology.
Key client engagements in Europe in the second quarter included buyer.
BNP Paribas bar.
Munich re.
Ericsson.
Qatar Airways.
Among our wins I asked she has been awarded a 2 million dollar engagement with a German oil and gas company.
To provide a range of technology advisory services, including security.
Sourcing and vendor in contract management.
Finally in Asia Pacific, We reported double digit growth with revenues up 19% to $5 million driven by the public sector, and our energy and life Sciences industry verticals.
Key clients in the quarter included Rio Tinto, the Australian taxation office.
Stray a department of defense.
Ended apartment home Affairs I E. G M P services and aims at banking group.
I asked she has been awarded the new contract for nearly $2 million, but the Australian Department of defense.
I asked you will serve as the technology advisor video de procurement the fifth year, we have done so.
Now, let me turn to guidance the crisis as we all know is far from over.
Although there's been some flattening of the curve in some countries. We continue to see surges and this is impacting our clients decision, making especially those in the consumer facing industries.
This crisis likely only begins to subside with the introduction of vaccines.
Some businesses will have difficulty recovering as witnessed by our $600000 a bad debt write off this quarter.
Others will emerge with entirely new operating models.
We expect our clients will focus on the near term as they cope with the immediate business impacts of the pandemic.
And you and others like I as she will use the situation to emerge stronger.
Apart from the pandemic induced impacts on client demand in Q3, we expect near zero of client TNT Reimbursable expense, which usually runs about 4% to 5% of our revenues.
And though we are planning for alive I SG produced destination events to eventually return.
We're not forecasting any revenue from in person events for the balance of the year.
This any year, when we had expected between five and $10 million up events revenue.
On the upside as mentioned previously we are seeing strong client interest in our rapid cost optimization services supplier and risk management.
Network capability, and resiliency digital workplace solutions and business recovery planning.
Longer term, we think the pandemic will accelerate client demand for and investment in the digital transformation services I SG provides.
Balancing all of this we will continue to provide guidance on a quarterly basis based on assumptions, we are making on a continued volatile environment.
For the third third quarter, we are forecasting revenues of between 53 and $55 million and adjusted EBITDA between six and $7 million as a result of the cost actions, we've taken in anticipation of higher margin services being delivered in the quarter.
So with that let me turn the call over to David Berger, who will summarize our financial results David.
Thanks, Mike and good morning, everyone to reiterate what Mike said, we managed through a difficult operating environment and delivered a solid second quarter.
Revenues for the for for the second quarter were 57.4 billion compared with 67.3 million in the prior year down 10% sequentially and down 14% in constant currency and a decline of 15% on a reported basis.
Currency negatively impacted reported revenues by $700000 versus the prior year.
Reimbursable client travel costs were down $2.4 million accounting for approximately 400 basis points of the decline.
Reported revenues were 31.6 million in the Americas down, 14% sequentially and down 22% versus the prior year.
$21 million in Europe down, 5% sequentially and down 6% in constant currency and 8% on a reported basis versus the prior year.
And $4.8 million in Asia Pacific up 19% in constant currency and 13% on a reported base basis versus the prior year.
Second quarter 2020, <unk> adjusted EBITDA was $7.4 million, which was up more than two times sequentially and compared with $8.1 million in the players second quarter.
Included in adjusted EBITDA for the second quarter 2020 was $600000 in bad debt expense, reflecting a weakening credit position for some of our clients due to the pad Devon.
This compares to $75000 a bad debt expense recorded for the full year of 29 team.
We reported second quarter operating income of $3.5 million compared with an operating loss of $700000 in Q1.
And up 7% from operating income of 3.3 million last years.
Net income for the quarter was $600000.
Paired with a net loss of 1.4 million in Q1.
And up 48% versus net income of $400000 in the prior year.
Reported fully diluted income per share of once said was flat compared with the same period in 2019.
Adjusted net income for the second quarter was $2.9 million or six cents per share on a diluted basis.
Compared with one 1.1 million or two cents a share in Q1, or three and 3.2 million or seven cents per share in the prior years second quarter.
Utilization for the second quarter was 70%.
What a red headcount was 1279 essentially flat with last year.
Our balance sheet continues to have the strain.
And flexibility to support our business over the long term.
Net cash provided by operations for the second quarter was over $22 million, which was a quarterly record and 27 million for the first half.
Just under $1 million in the prior years first half.
As Mike indicated we have generated $47 million of cash flow from operating activities over the last 12 months.
We repurchased $1.4 million of shares in Q2.
And we ended the quarter with $31.6 million of cash which was up from 17 for 17.4 million in Q1, and 10.4 million in 2019 Q2.
We repaid $5.9 million of dead in the quarter, which lowered our debt to 80.9 million, which was down 7% from year end and down 17% from a year ago.
Our average borrowing rate for the quarter was 3%, which is almost half of last year's right.
And we had 48.1 million shares outstanding as of August fit.
Mike will now share concluding remarks, before we go to Q and Ed.
Mike.
Thank you David.
To summarize the global pandemic and economic downturn or impacting our clients as never before.
In spite of this is cheap delivered a very solid Q2, thanks to our early and decisive cost actions in March and improved mix, some higher margin products and services.
Our revenue and EBITDA, both beat our expectations with EBITDA more than doubling from Q1.
Our balance sheet is strong.
Net leverage ratio down to 2.6 times and $32 million in the bank.
After generating a record 22 million of cash in the quarter.
Our liquidity gives us flexibility for both risk and opportunity.
We continue to serve our clients without interruption.
And deliver the higher margin services, they need to contend with the downturn.
And we continue to operate our business with impeccable execution reflected in both our Q2 results in Q3 forecast.
Longer term, we see the pandemic being an accelerator for clients digital transformations.
And demand increasing for our digital services in 2021.
As always we are focused on creating shareholder value for the long term.
And we are steadfast in our mission to deliver operational excellence to our clients.
Well. Thank you very much for calling in this morning, and now let me turn the session over to the operator or your questions.
Thank you at this time, if you would like to ask your question. Please signal by pressing star one on your telephone keypad.
You using a speaker phone. Please make sure you meet function is turned up till now your signaled to reach our equipment.
Again press Star one to ask a question well pause for just a moment hello, everyone and opportunity just signals for questions.
Our first question will come from.
Vince.
Our first question will come from Vince Colicchio with Barrington Research.
Hello, Mike how are you.
Good morning, Vince how are you good so I'm curious as to the a this government sector seems like it had a pretty good quarter are you anticipating in the U.S. Some some pressures in the second half given the financial situation.
So good question.
Public sector has done well here and also down in Australia about away right now we do not because some of the new work that we've signed is multi year.
That will carry us through the back half of the year. So we know that the states.
We'll be under pressure, because clearly because of the whole kind of pandemics situation. However, it does put pressure on potentially reduce costs at a more rapid pace and of course, that's what we help our clients do in terms of their transformation. So you know we've won in the state.
To Louisiana, we won in the state of Florida, and I've said this before we tend to be able to manage in Republican kind of run states, who are more receptive to the cost take out at a more rapid pace.
And so that will play well I think for us in the back half of the or we will watch it but right now we do not anticipate a softening there.
And this strength in Germany does that have legs since the second half.
I think first of all during the second quarter one of the advantages we had there as we have a number of very large anchored clients, including a lot of the manufacturing clients a in a in Germany. So look I think third quarter is always a little more challenge.
Turning in Europe, because despite co bid, they're all planning to take their vacations.
If you will but our pipeline is strong and and I would expect though on the back half of the year not so sure Q3, probably will look closer to Q2, just because of vacations, but we see Germany, holding up pretty well over there.
And a weren't where are we in the and the dealing with you know helping customers on the finance financially we pass that that type of relief or you're still working on some of that.
So it's a combination so we did about 120 days of relief for several clients and really for US was significant somewhere between 25, and 50% reduction and we kept the entire team operating during that time, we do expect for the back.
Half of the year to have a number of clients.
Similar fashion think about hotels think about the cruise lines, which we have all have clients of the major companies, there and we plan to stick with them.
Just as we did back in the recession with general Motors before they just as they would file for bankruptcy and and clearly we know they've been a client for us for over a decade. So yes. There is some relief coming out of the auto side, but not out of the hospitality travel side, we expect to have that suppressed up for the balance of the year as.
We've worked with our clients to help them through this.
Thanks, Mike nice job in the quarter.
Yeah. Thanks Vince.
Thank you emanates question will come from Marco <unk> capital.
Hi, Good morning, guys. Thank you for taking my questions morning Marco.
I was wondering if maybe you could spend a little more time on digital applications, just kind of talk a little bit more in detail. If you can all on the areas. There are pockets of demand that you're seeing perhaps accelerate right now because of the pandemic and then kind of what sort of applications you see really using the word that I think that you had in your prepared remarks.
It's kind of turbo Charger your digital services and 21.
Okay, Great look I think if I was characterized by probably do it in four or five areas one workplace for the future contact centers of the future cloud cloud and networks I double up on cloud because I think what's happened here is a those that were those.
Enterprises that we're on a a decent digital journey.
Our simply accelerating that those that were behind have been exposed.
But I think many companies are looking at remote working for a number of quarters going going forward. So we think about you know where the areas. It's around technology modernization, it's around enterprise agility. It's around all these contact centers of the future where you can.
Can't necessarily be all enough and one room and how do you manage that how does the workplace of the future going to work you need more bandwidth you need more network capability, you need more tools all of those areas or what we call in the eye as chief digital areas. Those areas will be hot we think for the next couple of years.
So as we think about that we think about it in those ways. The one other area Marco that we are seeing in terms of kind of fast relief by fast relief I would say six months.
Is that some clients are now wanting to monetize their datacenters. So we have this area of expertise we call asset monetization.
And what we do as we help for example, one very large top five insurance company, who wants to get out of the physical data Center area. As a result of all of this they will monetize it sell it to one of the very large providers, we're helping through that whole process. They will walk away with billions if you will.
Potential <unk> dollars out with a long term a multi year up kind of Oh payback type agreement with one of these providers. So this is leases big these are very large and that is a quick way for some of these companies to pick up 100 200 $300 million is on.
On the datacenter asset monetization, so those would be the areas Marco.
I've heard very helpful. And then and then how should we kind of think about the digital demand and how that dovetails into your goal of reaching $100 million recurring revenue by the end of fiscal 21.
Yeah.
So the the there's two ways here, we've got recurring revenues and we also have digital revenues our digital revenues as you know now this quarter or 50%. Our objective by the end of 22 is to have two thirds of our firm on digital revenue that's around cloud that's around workplace that's around network.
Everything as it relates to digitizing and enterprise. So we are tracking there. We were you know it wasn't three years ago, we run around 20% we were 45% at the end of last year, we're now at 50% of from revenues.
And on our way I think to the 65% level the $100 million of recurring revenue over the next 12 24 months.
We are trying to drive everything we can to annuity based streams one of the things around the neurology by acquisition is they have the subscription based approach to learning.
It's a digital enablement platform, so fit in perfectly with the world of remote I'm working.
And that's a subscription base. So our research businesses has exploded during this a pandemic.
A lot of that is again subscription base. So we are working on new products as well as expanding what we currently have.
As we are trying to get to a 100 million a bar revenues being recurring overtime Marco.
Got it and then in terms of the quarter on the expense side can you maybe quantify.
With sort of the temporary cost Takeouts and then maybe how should we think about those costs as we progress through the rest of this fiscal year.
So what we've done.
As we took out a lot as you know the discretionary spending we took out a lot of marketing course, all the travel costs all of those thing during the course, what we have done is we have as we move forward I would say most of those costs are permanent.
We are changing our business model I'm as a result with a pandemic we are creating and this will be for future calls, but we are creating what we're calling an integrated delivery platform inside of ions. Jade. This will enable us because we will not need to be on client premises like we've been in the past.
It will enable us to leverage our talent around the globe. So think about someone in Germany, supporting PMC insurance company in United States or a cyber security expert in the U.S. supporting a hmm and manufacturing company, which was not possible in the past where clients insist.
Sit on our folks be on site well the world is changing.
And we Haven, an opportunity, which we are going to seize on and this will change our cost model as we evolve into 2021. So most of our actions will be permanent in nature substituted in some ways some costs coming back in but other costs coming back out. So we expect most all these costs.
To be on a takeout basis to be up close to permanent.
Understood and last quick question, if I might on the cash flows I'm very very well done for the year to date here period for generating cash funds from operation just kind of wondering if maybe you can talk a little bit more about the drivers there how much of the working capital liquidation kind of helped drive that and then how should we think about cash from operations.
The second half of the year.
Well again to reiterate we did $22 million of cash in the quarter 27 million.
For the first half 47 million for the last 12 months Big driver of the a the cash when you see the cash flow will be a accrued expenses.
Magenta generated $8 million.
Of favorability a in the cash flow statement image, the the big driver, where the state government stimulus programs.
That we were able to tap into that we talked about last quarter. So as you know in in the U.S. payroll taxes have been pushed into a later into the year and also in to the next two years, we had similar.
Stimulus programs across the globe mode, and payroll programs and that.
And in addition.
We drove we delivered a more than double EBITDA on lower revenue as you do that you're you're generating a year, but your profit with a lower expense base. So basically the other half of the big driver of Uh Huh.
Close to $19 million in working capital gain a weight was in the receivable area as we 12 down receivables.
Obviously, we're not going to be able to repeat that level of cash flow into second half, but we expect to have a positive cash flow in the second half a year.
Okay. Thank you very much guys appreciate your time.
Thanks Mark.
Thank you. Our next question will come from Joe films with no capital.
Good morning.
Good morning, Joe.
That's just keep on the cash.
Cash flow line. So you you built up a nice little.
While a cash there any particular immediate uses for that or is it something that you know we get now habit and reserve it would be able to capitalize on opportunities you know once we see the.
Hopefully the economy rebounding here in the near term.
Oh, it's it's more the ladder of your answer or we again, we have a you know almost $32 million of cash in the back a you know given the uncertain times you know we think it's prudent to have the cash in the bank gives us the opportunity for for risk or or <unk> or additional opportunity.
It is as we go forward. So you know we're comfortable with our position and we'll continue to evaluate a cash usage.
As we as the economic conditions become clear.
If you.
She said there do you expect to have some positive cash flow in the second half would you expect that to continue to build into cash or to be used to further reduce debt.
You know again, we're well evaluate we you know where we'll we'll definitely pay down a the two and a half million dollars of debt that will that is required and well continue to evaluate how to use our cash in the second half of the here.
Based on economic events.
Okay.
And then you last quarter you talked about.
You guys had been making some investments into.
I see automation business sales team and just trying to get ideas I understand you know that the the environment that we're in what have you seen any progress from there.
Maybe pipeline building, our you know more contacts you know with the fact that you you you doubled that sales team.
Yeah. So good good question. So they were not immune they were also soft in Q2. However.
As I think I indicated in the overall remarks the pipeline as a result about building that sales team is now at the largest level that we've ever had in the three years since we launched this business from scratch.
So the question really will be com is the timing for us to close what is a fairly large.
Oh pipeline and I don't have a good answer for you yet because decision making is still somewhat slow, but we have some very large deals in the pipeline. So whether they materialize in Q3 or four is to be determined.
But we're very pleased with the sales team with the investments that we have there and now with a a very large pipeline that depending on how fast clients will move will benefit us either during the back half of this year or into the early part of 2021.
Okay. Thanks for that and then.
If you could provide a little bit more detail on the neural Fi acquisition I mean, it's gonna have any impact at all.
On second half results, maybe a little more color on how that really helps expand our drives some of the automation business for you guys.
So it will it will be a small impact so not material in the back half of the year. However, but it has done is brought a series of clients 40 that we did not have an I.S.G. automation and so what we are the plan is because we have a relationship there we plan to expire.
Fan the services.
Among those 40 clients as we go forward and that is helping contribute to our larger pipeline. We've already had very good success with neurology by during the month of July.
On deals that were not have happened had it not been for the combination so in a world where you know where your home working.
Trying to find brand new clients from scratch is difficult for business development, but if there is an existing client relationship.
Then we can push much much harder and that's where the sales efforts are being focused on and that is where Europe I will assist us and we think will help.
With the I.S.G. automation business during the back half and as we move into 2021, that's helping build this large pipeline that we are now building and I asked you automation.
Okay. Thanks for that that's it for me nice quarter guys in challenging times Yep. Thanks, Joe.
Thank you. Our next question will come from Marc Riddick would sit anything.
Hi, good morning, gentlemen.
Good morning, Mark.
Oh actually you wanted to touch on follow up on what you just sit there and maybe shifts that over to some of the new business wins that word that you mentioned in your prepared remarks, which we're certainly very encouraging I was wondering if you could touch a little bit on some of those new business wins that were not so what that mix might have looked like as far as.
Is that extension or expansion of existing relationships and versus any new relationships that were part of those announced new business wins and then I have a couple of follow up sometime about yeah. So it was a combination Marco on a markets on on.
On the new business.
And existing expanding businesses, so as I said before the new business development is a little more challenging.
But we've had some great success with though a large retailer around or around their network business. You know a big manufacturer around govern acts which is managing their supply chain, a large retailer in Germany around their transformation.
One of the top two telecom companies in the world around their lifecycle contract management govern acts there.
We had a with a professional services firm a multimillion dollar deal with one of the largest professional services firms in the world I think about that are coming dynasty.
A large insurance companies as they are transforming and trying to digitize their digitize their claims processing around automation and rounds op operations.
And then a number of a public sector wins, both in Australia and the U.S.
Around technology enablement in order to take out costs.
Whether that's what the tax office in Australia, or the state of Louisiana's Department of health. Those are all kind of combination, so 50, 75% or existing clients in that grouping that we talked about 25% new as I said, our number of plants this quarter from Q1.
Somewhat surprisingly is higher in Q2 in Q1, that's good news for US because you start you get a toehold in a and then you build that business as you. As you proceed. So we were up I think around five or 6%, 4%, 4% on clients in the quarter.
That's it certainly encouraging and the challenging environment to to get new a new clients in the sometimes it's pretty good and I. So congratulations on that I did want to touch a little bit on the the utilization level that you mentioned I think you said it was about 70% a is that sort of ballpark. What you were looking for is that close to two.
What you were expecting know how should we maybe think about that going forward as far as the as big as they continue to you know get more experience I suppose working from home and you know get a little closer to two is more implementation projects.
Well 70 print, we expect that to continue to go up or work working at home is not you know.
Definitely impacted it Oh, our advisors are fully engaged.
And learn tab to deliver a you know the product remotely. So you know again, what we will continue to see improvement in utilization is like talked about with the with the new model coming out.
Okay, Great and then I just wanted to make sure I got this the rights or numbers, so basically between D or the travel.
And the the currency impacted that they sort of combined so over $3 million of impacted revenue, even though you got said it really good revenue quarter. It could have been even better not for those is that a right way of looking at it.
Correct.
Okay, Great and then the last thing for me I, just wanted to talk I want a bit about that.
Just I was going to say one other than to keep in mind in the quarter that was different.
For us historically is bad debt.
So you know a number Oh, you know, but Paul I'm in the hospitality travel areas.
Oh, you know I think we had $600000 of bad debt you know I don't know that we've had $600000 a bad debt cumulative over the last several years certainly last year was under 100000. So you know there is there our clients that have been dramatically impacted and so you add that ended the quarter as well so between.
And the travel the T. any topline to your point the currency. So there was some you know unique factors. If you will that are going on.
But that's thanks for the color on bad and I did want to touch just one last thing Mike you mentioned as far as the decision making.
Process kind of moving along maybe a little bit slowly, but it's sort of moving along I was wondering just such a little bit about maybe what you're seeing.
There was some of the enterprises that you're dealing with who are I mean, we're kind of looking at I guess, maybe the.
The process of moving towards implementation, but you kind of to come up with what you're going to do first and that's why did you can touch a little bit about that decision, making process and kind of where your where you're seeing that that that play out and and where your involvement maybe on that as a as a whole.
Yeah, so it varies Joe by.
It varies market by by industry. So.
We saw some very significant growth in areas like retail insurance, we saw the flip of that in places like our travel our hospitality areas. Some automotive during the quarter. If you will the pace then kind of varies you have we kinda have this quadrant box where.
We have groupings now in the bottom left to talk about they need cost out they're not going to look at longer term longer term is 12 months at the moment for some of the harder hit industries. They went cost take out they want network capability, they want workplace and the future now I'm. So those are some of the areas that we looked at from those industries.
Endpoints.
Then you have Ah. So then you have other other areas like healthcare like form a like utilities that we are seeing some shrinks then.
And again of course will see though the reductions probably in retail travel <unk> not retail the travel and hospitality in particular, so it kind of varies by the industry and how deeply they've been impacted with either their supply chain consumer spending consumer behavior.
Business behavior, if you will so it's kind of industry specific as to the speed and pace of decision, making and then the types of services, they're leading right now if you will.
Okay. That's very very helpful. Thank you very much.
Okay. Thanks, Thanks, very much more.
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