Q2 2020 Mastech Digital Inc Earnings Call
Greetings and welcome to got stuck digital Q2 2020 earnings call.
This time, all participants already listen only mode. A question answer session will follow the formal presentation.
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As a reminder, discounts is being recorded.
It is now my pleasure to turn the conference so but to your hosts Jennifer fourth Lacey manager of legal affairs. Thank you you may begin.
Thank you operator, and welcome to Mastech digital second quarter 2020 conference call.
If you have not yet received a copy of our earnings announcement. It can be obtained from our website at www Dot Mastech digital dot com.
With me on the call today after that good.
I took digital Chief Executive Officer, Jack Cronin, our Chief Financial Officer at whole Burton Chief Executive of our data and analytics business segment.
I would like to remind everyone that statements made during this call that are not historical facts are forward looking statements.
These forward looking statements include our financial growth and liquidity projections as well statements about our plans strategies intentions and beliefs concerning our business cash flows cost and the market to which we operate.
Without limiting the foregoing the words believe anticipate plans expects and similar expressions are intended to identify certain forward looking statements.
These statements are based on information currently available to us and we assume no obligation to update these statements as circumstances change.
There are risks and uncertainties that could cause actual events to differ materially from these forward looking statements, including those listed in the Companys 2019th annual report on form 10-K filed with the Securities and Exchange Commission and available on its website at Www Dot FCC.
Dotcom.
Additionally, management has elected to provide certain non-GAAP financial measures to supplement our financial results presented on a GAAP basis.
Specifically, we will not provide non-GAAP net income and non-GAAP diluted earnings per share data.
Which we believe will provide greater transparency with respect to the key metrics used by management in operating our business.
Reconciliations of these non-GAAP financial measures to their comparable.
GAAP measures are included in our earnings announcement, which can be obtained from our website at www Dot Mastech digital dotcom.
As a reminder, we will not be providing guidance. During this call nor will we provide guidance in any subsequent one on one meetings or calls.
I will now turn the call over to Jack for a review of our second quarter 2020 results.
Thanks, Jen and good morning, everyone.
Like most companies Cobi 19, pandemic and the resulting economic downturn had an impact on our revenue performance in the second quarter of 2020.
However faced with the harsh reality of declining market conditions, we took a series of proactive steps to mitigate the negative impact on our gross margin operating profits, which can clearly be seen throughout our financial results.
No its revenues for the second quarter of 2020 totaled $47.6 million and represented a 2% decrease.
From $48.5 million in the second quarter of 2019.
Or data and analytics.
Services segment.
Contributed $6.8 million of revenue during Q2, 2020, which exceeded last year's second quarter revenue were George I approximately $100000.
Activity levels in this segment held up relatively well despite numerous projects being pushed into second half a year and some existing clients reducing overall spend.
Notwithstanding these near term revenue issues or pipeline of opportunities continue to remain strong and we booked over $10 million of new orders in Q2 2020.
Year over year revenues from our Ickes staffing services segment was down two course sharing in the second quarter of Twentytwenty as we saw early assignment and at a much lower level of activity from our existing client base.
Gross profit for the second quarter of 2020 increased to $12.7 billion compared to $12.1 million in the same period last year.
Despite 2% lower revenues and the 2020 quarter.
Overall gross margins for Q2, 2020 or 26.6% of revenue.
Compared to 24.9 course faring in the second quarter of 2019, making it our third consecutive quarter of breaking the 25% gross margin barrier.
Or data and analytic services segment had gross margins of 52.2% in Q2 2028, an increase of 610 basis points.
From a year earlier.
I know you'd assignment wins better consultant utilization and a much lower level of pass through travel revenues favorably impacted margins in that segment.
And our I keep staffing services segment had second quarter 2020, gross margins of 22.4% increase up 90 basis point from the 2019 second quarter.
Higher margins from new digital with signings and improved utilization may just performance possible.
S.G. and <unk> expenses were $9 million in the second quarter of 2020 compared to $9.5 million in the second quarter 2019, when adjusting for a 6.1 million dollar credit expense into 2019 second.
Order related to do revaluation of a contingent consideration liability.
Just adjusted 500000 dollar reduction in S.G. in a expenses into 2020 quarter reflected net investment of $600000 in our DNA segment.
Simply in the area of global shells and deliberate.
And a 1.1 million dollar reduction in our Ickes staffing services segment, largely reflecting proactive austerity major instituted in the first half the year.
I would also like you to note that SGN, a expenses came down by $1.2 million in Q2 2020 from the previous quarter, which shows our rapid response to protecting bottom line results.
GAAP net income for the second quarter, 2020 was $3 million or 25 cents per diluted share compared to $6 million for 53 cents per diluted share in the second quarter of 2019.
Again, it should be noted that get 2019 quarter included a 6.1 billion dollar pre tax gain related to the revaluation of the contingent consideration liability.
Non-GAAP net income for Q2 2020.
$3.9 million or 33 cents per diluted share compared to $2.2 million.
20 cents per diluted share in the corresponding quarter of 2019.
Second quarter S.G. in a expense items not included in non-GAAP financial measures net of tax benefits are detailed in our Q2 earnings release, which is available on our website.
Addressing more financial position at June Thirtyth, 2020, we had $10 million about standing bank debt net of cash balances on hearing.
And borrowing availability of over $17 million under our existing revolving credit line.
During the quarter, we've reduced debt by $7.4 million and increased our cash balances on hand by over $2 million.
Our largest asset accounts receivable is a strong quality and our days sales outstanding measurement at June Thirtyth was a solid 59 days, a one day improvement over last quarter.
I'll now turn to called <unk> for his comments.
Good morning, everyone.
Jack for the detailed financial review apart operating results for the second quarter of Twentytwenty.
I'll try make my comments on the quarter Ivan during the call or two bought a burden for his comments some views will not be done analytics business segment.
It has been over 18 months since all came aboard chief executive of our design haven't <unk> analytics business.
It seems like an appropriate time to have for joining us today to shared with you. His accomplishments is we won't be competitive like landscape and why he believes we are very well positioned direct selling the market for just follow up opportunity.
I think you will find Paul's comment booking drifting an insightful.
But first let me comment on the quarter.
During our last quarterly earnings call I had stated that mastic, it's still didn't navigate today's challenges from a position of relative strength.
I think our ability to protect and.
And even strengthen our bottom line in the midst Oh, yeah market Tomorrow is a testament to our unique and flexible business model and exemplifies my relative strength comment.
Despite a decline in revenues, which was actually less than I'd feel it it would be we generated record gross margins and bottom up best net income and earnings per share performance.
During the quarter, we continued to focus on transformational projects, if you're not doing analytics segment.
And it's still technology skills that you're not I'd staffing segment.
Good afternoon pricing pressures and protected gross margin successfully as we continue to deliver higher value for money to outgrow global customer.
With respect to austerity measures reacted earlier decisively implementing actions that put quite effective introducing it seemed to expenses in Q2 by 1.2 million from a previous quarter.
We also believe that these actions are prudent.
Understood and appreciated by the organization.
Crafted due consideration given to enable a swift pickup when the economy recovers.
Not only did functioning from a position of relative strength improved financial performance. It also had a very favorable impact on our balance sheet and liquidity position.
I'm happy to say that our cash conversion process has been stellar during this crisis and largely unscathed from the economic downturn.
Reducing debt and maintaining a strong liquidity position has been a top priority for us since the outside of the pandemic.
Given our progress in this area, we are in an ideal position to capitalize on strategic M&A opportunities when they present themselves.
Lastly, during the quarter, we lost our new remote staffing service offering branded as mass remote.
As we all know creativity doesn't and shouldn't stand still in challenging times.
I'm proud about organization for swapping that disruptive market factors presented by the current crisis and for responding with a creative and timely service offering.
Early indications are positive with respect to client interest.
We will obviously have board to say about mass remark on our future earnings calls.
I've been out on the call over to fall for his prepared comments on our data <unk> analytics business.
Thank you Vivek and good morning to everybody.
It's a pleasure to speak with you today about something as exciting as data and analytics by way of background Ive been involved with technology for over 20 years and with data and analytics for the great majority of that time.
Spent considerable time with Hewlett Packard I'd be I'm in Genpact with both I'd be I'm in Genpact I, let global data analytics businesses and in both roles had the opportunity to live and travel extensively in developed and developing markets. This experience has given me a perspective on technology data and analytics that I believe.
Valuable and that serves me well.
In my work here at mass tuck in the next couple of minutes I want to talk about the journey, we've been on at Mastec with the data and analytics business I will briefly remark on our view of the data and analytics marketplace. The team we've put in place to go after this market.
Lines of business, we go to market with the importance of alliances are competitive positioning and some thoughts on the pandemic currently gripping the world economy, So let's get started.
Hey, the Dan data and analytics marketplaces vibrant the data and analytics market as estimated by I'd see to be 275 billion by 2023 growing at a 12% CAGR Gartner offers a similar estimate everyday we see businesses waking up to the need to leverage the entire corpus.
Of their enterprise data in many cases, some desire to go even further by integrating open source and syndicated data with the enterprise data. We believe that data is the blood of the modern enterprise because increasingly its data the curious oxygen and nutrients throughout the enterprise that allows enterprise to perform at peak.
Fitness.
We are seeing that businesses that are able to mine high volumes of data for knowledge and glean insights from this knowledge that can be acted on smartly, especially in real time are the most competitive enterprises in their respective industries. This is because data sets. The foundation of all enterprise learning said another way.
Enterprises that could consume data at volume and scale in real time simply learn faster relative to others that can't do this consequently, they adapt to their environment and evolves faster than they are slower peers, the digital era, where knee deep in at this point lays bear for most enterprises the need to have.
Data and analytics programs that work Synergistically drive enterprise learning enterprises that do not learn simply fail.
Mastec, we focus holistically on our clients data and analytics capabilities with an eye towards accelerating enterprise learnings, we help our clients bring disparate sources of data together construct data products that reveal novel insights infuse intelligence in the business processes and assist decision making.
Especially with regard to strategy choices.
To drive this agenda for forward in the last 18 months, we've assembled a team of professionals with great experience in working with clients and help them develop and enhance their data and analytics capabilities. We've added senior members in Singapore, The Middle East Europe Africa and of course in North America too.
The team comes with Great experience from significant Fortune 100 companies, we brought onto the team deeply skilled professionals with phds in cognitive science Neuroscience physics, mathematics statistics and computer science. We've done this with the intention of being bought in content leaders in our chosen market segments as.
We extend the capabilities of our team to embrace our clients. We're proud of the value, we are creating and delivering and how it's enabling our clients businesses to perform.
This end we are engaged in building new service offerings that are finding expression and intellectual property we are creating.
And that we believe will meet the needs of our clients meet the needs that are clients are conveyed to us. We go to market across three service lines first is our data management service line or did the service line is the foundation of our business because without properly curated and manage data it's impossible for businesses to mine for insights.
That drive the enterprise learning process.
Good quality data is the one indispensable resource for every business.
Second is our data engineering service lines. This service line exist to ensure that the enterprise is wired to support the high velocity ubiquitous flow of data throughout the enterprise many businesses suffer because of an inability to access the data they possess may timely effective manner. The mission of this service line is.
To solve that problem and thereby expose the entire corpus of data the business for exploitation.
Third as our data Science service line. The service line bring state of the our computer science data science techniques to bear on specific client problems that heretofore has been intractable because of data access issues or simply an inability to deal with data velocity at scale commensurate with the digital age we find ourselves.
These service lines dovetail nicely, but the capabilities of our partners. So let me say a word about our allied strategy.
We can report that we're not going it alone we continue to build strong partnerships with significant technology companies. For example, I B M has named US as one of their 11 global elite partners and we continue to solidify other partnerships that complement and enhance our capabilities. The purpose of these partnerships is straightforward.
Third we bring our professional services to market along with the product it infrastructure capabilities of our partners offer best in class data and analytic solutions that help our clients increase the learning velocity of their enterprise enterprise learning driven Ford by the consumption of data at velocity and scale.
As one of the can tentative advantage available to all businesses.
I partnering with leading technology companies, we were able to deliver this adds to our clients because we are able to deliver comprehensive solution hardware software cloud and professional services.
Mastec, we believe we are different because we focused squarely on delivering what all businesses needs. We help our clients Arca prop architect Enterprise intelligence, we help our clients learn at philosophy and scale from the voluminous amounts of data they have at their fingertips, but have heretofore been unable to fully exploit.
<unk> Mastec, we believe.
Our approaches unique by focusing on learning as a function of data consumption, especially in this digital age where data volumes continue to grow exponentially, we help businesses adopt more quickly to their environment and therefore evolve more quickly by linking the consumption of data the learning and the consequent product.
One of superior business outcomes, we are able to help clients re architect their entire enterprise to be data driven that is to say, we help our clients fully embrace digital era, they find themselves squarely in.
It goes without saying that as we help our.
Our clients accelerate their enterprises learning, we help them become more agile and competitive and an interconnected world that is increasingly sensitive and vulnerable to unexpected events now let me conclude by saying a brief word.
About the code that pandemic.
The repercussions of the code that pandemic have been systemic at first our clients pause because would be understandable economic uncertainty there were confronted with with each passing day. However, we've seen our clients adapting to what can be perhaps best described as a new if only temporary normal prior to that.
Pandemic, we posted five consecutive quarters of growth with improving gross margins.
Four of those quarters represented records for us a pandemic interrupted the streak, but as I said a moment ago. There's reason to believe that things are beginning to return to normal.
We believe the prospects remain positive for our data analytics business.
Thank you for your attention I'll now hand, it back to back for his closing comments.
Thanks, Paul I.
I hope all his comments I've given you a field for why I'm, So excited about a data and analytics business.
I will now open the session put up questions.
Thank you.
This time, we will conduct a question answer session. If he would like to ask a question. Please press star one on your telephone keypad, a confirmation tome indicate your line is in a quest in Q.
Do you make press star to Super like to remove your question from the Q.
For participants use and speaker equipment, it may be necessary to pick up your handset before person just starkey once again that star one to ask a question one moment <unk> first question.
My first question comes from Josh Vogel with Sidoti and company. Please proceed.
Thank you good morning, everyone and thanks for that extensive background on the data and analytics segment, it's very helpful.
My first question is looking at the gross margin performance in the quarter. I was just curious was there any one off for short term projects or anything that that helped.
The performance there and can you also maybe talk to a the bill pay spread in the I.T. staffing business and if it's at that wide ended that sustainable.
And then also maybe a sense of the margin profile of these businesses over the balance of the year [laughter].
Hi, Josh.
I didn't quite get the second question can you just repeat that please.
Oh sure.
I was asking about in the ITC staffing bill pay spread.
If you saw a widening there and also just a sense of the margin profile of the the two segments over the balance of the year any any directional commentary there would be helpful.
Okay.
Jack would you like to take this and maybe I had to do it the idea.
Sure sure Hum.
Yeah, the margins for the quarter Terry they didn't have any material like one time items included in <unk>.
So that's sort of the first question.
With respect to de did the bill rate pay spread in staffing. It did go up and that was part of the reason why are or margin strengthened in Q2, we did have a benefit of a better utilization utilization was very good.
And that helped as well D in data and analytics or you know.
Good 52.2% is clearly a a really nice number for US you know we generally I can call generally caught you know talks about 50% crush margins. So we're probably a little.
I on what we would consider as.
More normal margins of 50% wanted the sort of onetime shots that we got onetime shocked that we guide in the DNA marching area was.
We have oh people travel that consultants to for clients and that's basically pass through revenue. There's no margin content on that show on because of coded a we did we did practically no trouble whatsoever. So that helped our margins a bit.
Not a crazy amount maybe.
20 to 30 basis points, but if they but it also heard or our revenue because you know we lost about three or 400000 doors of revenue because of of no travel show.
If you factor you know those into the second half the year.
Hey.
And I'll pass it over to Paul to verify but I would expect our margins to be you know around 50% in DNA and.
Relatively flat, maybe a little tied down.
From what we posted in Q2 of 2020 just because.
No there's no guarantee that the utilization rates, you're gonna be as healthy high in the second half the year.
Does that answer your question.
Yes that is extremely helpful. Thank you.
But you know it is really good to see how well the did an analytics business is holding up and you know in face of the project delays and I'm. Just wondering if you can talk about those projects that had been or are being pushed off or do they appear to be moving forward or do you at least half a targeted.
Start dates.
Over the second half.
Josh I Love pop this question over to fall.
So a in the first half, particularly in the March timeframe, we had a number of as I alluded to in my remarks, we had a number of clients that pause.
Every one of those clients just come back to us and restarted since that point in time. So we expect no deterioration from those particular clients and second huh.
Great and maybe a [laughter]. This one is for you have in fact, the launch of a mass remote no maybe talk about how it's being received and does it suggest that.
You can move a meaningful portion of this business to a remote platform.
Long term and then I'm a second part of that in light of the recent events and seeing how work can get done today are you planning other such such a launches or changes to the platform.
Oh, yeah actually that that's the topic really very close to my are so excited about launch up this a remote staffing offering last remark.
So.
<unk> be a reaction from the customer is very positive.
And if we had launched the six months ago I don't know how much what kind of reaction. We would have guard in general because a lot of customers, but of course to the idea of having people work from remote locations.
But this fourth.
Global experiment or working from home has proved to everybody.
Especially our customers that this is workable in fact, many of them have actually said that the productivity actually went up and have been people working from home.
We saw that doesn't mean, you know what are the great opportunity for us.
[music] launch this new service offering.
And we test markets. This without customers first we did a lot of brainstorming internally and then after launch as we started talking to prospects and customers. We've only had positive reaction from them.
Of course custom of the fill a cautious about the spend overall spend not necessarily for remote or put on prem. So as they start to the one thing that both strings and investing more and more than having more oh, we see there will be an uptick in a remote staffing.
But you know this early days, we launched this only last month.
And we will see how things pan out over the next a few quarters, but we are pretty bullish about.
And I forgot how do we have anything else being planned Oh, we're always looking at new ideas and Bobby you have a a great theme, which is constantly coming up with innovative suggestions.
They maybe others in the pipeline, but do we have something which is ready for announcement right no no.
Okay, Great and just last one I'll hop back into queue, you did have comments around.
Henshall M&A activity capitalize when opportunities present themselves and I'm. Just wondering if you could talk about the M&A pipeline and then if there's a assuming it would be more on the didnt analytic side you know if there's any.
Gaps in the platform that you want to fill in is it possible to do that organically or does it have to be inorganic. Thank you.
So on on the M&A front, a Josh I being thing for many quarters down that yes, we will be looking at you know appropriate targets in the but all in the data analytic space and that's still holds true real always looking at Uh huh.
Opportunities in that area.
And.
As Paul explained we have a pretty full stack of offering.
And you revert constantly looking at you know if you find a target what kind of a match wouldn't that have would that.
Crees out capability in terms of delivery technology, or a hope us open up new fails or what should we say opportunity.
So.
Definitely we are.
Oh open to this we would look at Oh, I guess, what do we have anything because at a stage when we are ready to announce it or no.
[music].
Okay, well, thanks for taking my questions.
Our next question comes from Brian Kinstlinger with Alliance Global. Please proceed with your question.
Hi, Good morning, guys. Thanks for taking my questions.
Right [laughter] leadership Paul's comments kind of recovery can you talk about revenue trends in July compared to June maybe compared to may in both your staffing in Ghana data analytics business I'm curious how these businesses are trending as the economy slowly opening up.
Hi, Brian.
I'm actually we do not a break things down in on a on a monthly fashion.
Any treat the whole quarter the whole.
So it's hard for me to tell you when they're you know it and I thought we Havent. Even finished July is it a closed as of yet.
So it's difficult to give a you know what is the you know how directionally bad and things are going.
The only thing I can't say about as we were going to second quarter.
Well, we've found that the maybe a reduction in the I'd be staffing side started slowing down.
So it was a lot more in the beginning then it was towards the end.
But Ah I don't know with what more like him a shared with you at the moment.
Okay.
In terms of the data and analytics business.
Can you describe the sales process was it pre kobe more of a face to face shale for a new customer when and how he's koby change that process and the sales cycle.
Great question I'm, a I think Paul and his team have done a stellar job off a managing that so I'm again went off Baldwin service.
Okay Creep Creek co bid or our salespeople spend a lot of time face to face with clients are talking about data and analytics capabilities and how data and analytics can be used to deliver specific business outcomes with co bid and the shutdown in travel almost all of that activity is.
Transition to video conferencing and phone conferencing.
We still continue to open up new logos and close new business.
But the way we're doing that quite frankly, we've adapted to the environment. The way we're doing that is through video conferencing and phone calls and we continue to get leads from partners and leads from other sources as well and we're simply pursuing that via telephone and video conferencing, but we're having success so covance definitely change things.
But the process itself isn't changed is just now being done over different than you.
Great. Thanks, and then Paul you talked about $10 million in bookings I think it with you during the second quarter, how does that compare to the first quarter of 2020, and then maybe a year ago period, and then for that 10 million over what duration others bookings are those two years of revenue that goes into kind of backlog is it three years is a one year.
Thank you.
Yeah, So second quarter bookings were down slightly from first quarter bookings, but they're up significantly from same quarter previous year.
Our bookings for the half are up.
Significantly from first half last year.
In terms of you know down slightly and how it translates into future years, most of our bookings are for.
Projects that are many months in duration I don't want to say many years, but certainly you know our bookings range from six to 18 months in duration many times because they're large projects.
So it's a bit of they.
It's a bit of you know, it's a bit of there's many different types of projects, we do but generally their multi month projects some extending over a year.
Great and then finally, what verticals are you seeing the strongest demand today for data analytics I guess as you look at the first half bookings.
Oh, you know street retail distribution healthcare.
Financial services are all very strong.
So we're seeing a lot of a work in data analytics and those particular.
Verticals I wouldn't say because those verticals are stronger or not stronger than other verticals that tends to be were most embedded at this particular point in time, but we are seeing demand and other verticals as well.
Great. Thanks, so much for your time.
Once again, ladies and gentlemen to ask a question. Please press star one when your telephone keypad. Our next question comes from Lisa Thompson with Zacks investments. Please proceed with your question.
Hi, good morning [noise].
[noise] funny.
Right well my first question is is it a quick easy one what was that number billable consultant well this quarter.
Oh, sorry I'm.
I didn't quite get the no question, what was that could get a breather.
Well it wasn't the number of billable consultant so the quarter.
Oh, Okay. Jack do you have that figure handy, yeah, I guess on staffing it was a 1035.
Okay.
Oh, so I would I'd love to describe a little bit what.
What your remote product is versus just somebody working from home like pilots that market isn't always that difference.
People, just not going to an awful.
Okay. That's a good question the visa.
So [noise].
Oh from home right. Now is is motivate them pretty phenomena, where people are you know could be in the same city and let's take one Pittsburgh where would be our headquarter.
People are working out of that you know offices are all customer locations and they've been told that you have to work from home until you know what a period of time, how that's temporary books from Paul.
What this math remote offering is a remote staffing if it is it could be that people are working from home in the same location or they could be in a completely different city altogether.
So until we until now the staffing has been on premise stopping to on Prem as we use a sharp though for it.
In the on premise was you would be looking for people who are in the same affinity with the client location is all you may entice people do a move from another location.
Being close to where the client location is.
But in this bats remote situation the entire countries open to you because the customers out okay for people to be sitting in again, let me pick a name location Miami.
We find the right person who has the right skills.
One of the best in the country, maybe what didn't even a different city altogether that was never part of our search only at all because the customers wanted that person to be in Pittsburgh.
What to do that option suddenly opens up so not what this means is that the customers have as much larger pool to choose from we as an organization that have a much larger for the fish from in terms of finding the right talent.
And the talent as.
And a lot of it'd be fine happier because they are where they are they don't have to travel.
That's it that's at a so this this is a.
It's more of a prominent I'm working from a different locations, which could very well still be hall and in most cases. It is but it is by design you know are expected to be more permanent and out of a different location I don't have that I've been able to clearly explained to you the difference between the temporary work from home.
The mass or more.
Yes, and does that change your economics any or is it exactly the same.
Well when you say economics, it's a you know what kind of gross margins. We can make on that a I would think that it would follow a similar kind of profile but.
You know the the input costs could be different.
As an example, if we pick a high expensive location, such as maybe New York or you know the Bay area and if you're able to find talent in some of the Oh.
Cheaper locations Oh smaller locations elsewhere, you may actually be able to see us even significant price difference.
In terms of what the input prices and what you can charge tried to customers.
And then to carry that carries through that I know, there's been a lot of talk about.
Changing visas and how many people they're gonna let in on H.B., one or whatever how does that.
How does the remote working in that possibility change how you go about recruiting or I don't see why these remote offering couldn't apply the anyone in the world rather than just U.S. days, you talk about that and towards is your competitors, maybe how things might change.
Okay.
So you're right it remote staffing I mean, if he can vary that would be done out of Ah. You know are quite a lot offshore locations or any actually location anywhere in the world.
Although we are trying to keep it limited to within the U.S. a win win customers want somebody locally.
So, but but but very much offshore staffing is very much a variant of that and it is part of what offerings as well. So we do do that.
[noise].
How about this the visa situation that you touched upon I don't think it's really a effects. So it's a very much strictly because we are not bringing people in from overseas, we got actually looking.
Within the U.S. and they bid dog.
People you know it wouldn't be people available within the U.S., we help them find better jobs.
We are looking within the country. If it's not that we are affected by you know people not being able to come.
From overseas. So it's the form for us is very much with them to you.
How other competitors doing I guess in a lot of ways, we aren't model it's.
It is unique or there are some competitive advantages that we have.
Which may be bad with others, but a if you combine all the various things that we I have to offer I think we have a compelling a proposition.
We have a low cost model, we have a very large number 200, plus recruiters who are.
Looking out of India, the centered in India, Illinois Dog, which is near daily.
And that allows us to actually have a much better racial offered a crude goes to eat salesperson.
So just as an example in the industry you wouldn't find typically wanted to dig supersports salesperson.
And that's the kind of a combination which can be created whereas we are able to bring almost fiber to crude goes to a salesperson.
So that if so.
One of the second thing is our ability to be able to work with each one but few people and to be able to find them better jobs. The thing that's not a lot about competitors are doing that.
And then we have stellar reputation.
Being that own for long time, and yes, <unk> listed company. We are all very transparent visible to people. What we're doing if you put all of these things together then I think of it come across you know.
Yeah.
Preferred the sort of apart from Oh, that's compared to a lot about competitive.
I don't know fab.
Answered your questions.
Yes definitely.
And just.
In the near term outlook. So I do you feel that the Q2, we will be up sequentially in revenue in both segments and give the margins stay where they are because probably really hasn't come down yet.
What are your thoughts about what's happening right now.
So he's a I would shy away from giving guidance on that because we don't give guidance.
As to how Ah Q3 will do it out and.
I'd also via if it's early days before I leave you haven't just a yet you had finished the first month.
But oh.
Oh.
I don't know what what else I can share the and this is Jack is there anything else that we can.
Talk about.
Hey, Jack I do that.
I I don't think we can you know talk about you know the direction of revenues or.
We just don't give guidance you know I did make some remarks of.
You know about our gross margins on what we believe would be normal I'm moving forward.
But beyond that I.
We don't feel comfortable given guidance Lisa.
What's Oh I guess my last question is.
Oh CJ adds DNA came way down from last quarter.
Are you still in that same austerity mode or have you started spending again.
No. We are very much still in the off that anymore or we want to see ER positive indicator indications that are things are beginning to pick up a significantly and that wouldn't be will go back in stock or.
That kind of pulling back on the measure, but currently we are very much keeping the asking there you never really tight control.
Okay, Great. That's all my questions. Thank you.
Thank you.
Once again to ask a question that star one on your telephone keypad at this time.
We have any follow up from Josh Vogel. Please proceed.
Thank you I'm just a quick one for Paul I'm.
Going back to December when didn't analytics are you signed those orders were 23 million that was you know given that it was pre coded I'm. Just curious is the scope of those projects change since and is it still estimated to be around $23 million. When all said and done and then just kind of building off your comments earlier.
On that six to 18 month duration of the project. So just curious if the timeline initially was on those specific deals. Thank you.
Yeah, so that the so the $23 million bookings that you referenced for Q4, I can simply say that we de booked $0 from that all of those bookings are still in effect and they will continue as they were contracted I said in my prepared remarks that we had a pause.
With some clients and we did but I also indicated that that that pauses ended and we're now back on track I think when a little bit broke out March there was a lot of uncertainty as to everything basically and so clients or had a knee jerk reaction to pause and understand what was going on in plot of course of action that seem to make sense to them.
What I'm seeing now is that clients are you know the pauses over clients are moving forward and we've seen no deterioration in previous bookings, meaning no de bookings and I have no reason to believe that the contracts won't be fulfilled as written.
Alright, great. Thanks, again for taking my questions.
Thank you at this time I would like to turn the call back over to management for closing comments.
Thank you operator.
So if there no further questions I would like to thank you for joining our call today.
Okay Fair fan, we look forward to shedding our third quarter 2020 results with you in late October. Thank you.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.