Q3 2020 Perficient Inc Earnings Call
The nine months ended September 30th 2020 increases fifty basis points to 37.5% compared to the prior-year.
A few the expense increase to 101.7 million for the nine months ended September 30th 2020 from $122 million in the carpool prior-year. Sg&a expenses as a percentage of Revenue wage decrease to 22.6% for the nine months ended September 30th, 2020 from 23.8% in the comparable prior-year.
Adjusted ETA for the nine months ended September 30th 2020 was 81.3 million or 18.1% of revenues compared to sixty eight point five million or 16.3% of revenues accountable prior year. The nine months ended September Thirty twenty twenty included 15.6 million of amortization expense compared to 12.1 in the prior year. Again. The increase is related to the office positions that interest expense for the nine months ended September 30th 2020 increase to 6.8 million from 5.6 million the Constable prior-year. Primarily as a result the August convertible dead or affect the tax rate for the nine months ended September 30th, 2020 was 24.2% compared to 25.9% in the conference call prior year. The decreasing the effective tax rate with prime due to the increases in tax benefits recognize related to share-based compensation deductions as well as higher estimated research credits. Not a certain uncertain tax positions compared to the nine months ended September 13th.
2019
Come for the nine months ended September Thirty $20 decrease 14.1% to 21.8 million from 25.3 million to capable prior-year. Primarily as a result of a loss on the convertible debt extinguishment adjusted to fair value of continued consideration and increase amortization associated with the 20 20 Acquisitions do to decrease the 60,000. It says from $0.79 on the topical prior. Adjusted earnings-per-share increased to a dollar seventy $4 per share for the nine months ended September 30th, 2020 from a dollar Forty Nine in the capital projects.
Already go ahead, September 30th 2020 was 3788 including including 3531 billable consultants and 257 subcontractors. And then STNA account with 612 our outstanding debt of unamortized that discount into particulars cost as of September 30th 2020 was 187.7 million and we also had fifty million a year. She can't just pull one says September 30th and 124.8 million of unused borrowing capacity on our credit facility or bouncy continues to leave us very well positioned to continue to act against our strategic plan. Finally Day sales outstanding our accounts receivable decreased is 73 days at the end of the quarter compared to $74 at the end of the third quarter of 2019 now trying to call I'm holding for a little more commentary behind the metrics, huh?
Thanks for calling good morning everybody but realized another solid quarter for booking large wins with many existing net new customers and existing customers books 66 deals greater than $5,000 during the third quarter 2020 that compares to $49 in the year-ago. I think that success really underscores our attraction in the market and how well we're executing right now. We can't travel any customer is a prospects. We're not even working on site anywhere yet large deal volume was almost 35% and that mess and has continued into the fourth quarter. In fact, we recently bought one of the largest dealers in company history. Well into a figures in this win was with a net new client. We weren't even able to meet in person because of the pandemic and it's typical. We beat a handful of much larger firms to win the World Cup.
This Five-Year Engagement for a financial services institution combine several proficient disciplines across multiple platforms that will ultimately help our clients Caleb's existing platform to accommodate evolving digital needs and further support business Innovation economic growth and consumer protections.
When the work really tested me for the culture we've created for patient where our colleagues collaboration is truly the differentiator. We bring to the market also aiding our success this year are several proprietary software tools and work. Work flow processes. We've developed and deployed including one of which which is an element enabling us to build better stronger customer relationships. We return really high life and strong customer satisfaction and repeat business rate and various forums building large and long-term client relationships has been and will continue to be the single most important contributor to our growth
and the Heart of thrilling our customers and
Any accounts is the rigorous procedure delivery Excellence one of the things now helping us build Upon Our strong Foundation of delivery Excellence is a proprietary tool we designed developed and deployed earlier this year artistic insights platform. It's a mechanism for capturing reacting to customer feedback constantly throughout project life cycles and providing the visibility to our leadership and executive teams immediately. And we need to scale obviously our Consulting teams are receiving collecting feedback constant throughout a project but what the instant Insight tools does is automate the solicitation and capturing of confidential team on many topics, whether it be the overall project project progress team Effectiveness or, Sarah individual deliverables or colleagues the vast majority of the feedback is always very possible. But what really we want is that we can dress it quickly and grow the customer satisfaction. It's respond immediately if and when there is concerned
We're not waiting for the verdict at the end of the engagement instant insights actively solicit feedback routinely and then disseminate that immediately so the proper leadership and executive teams in practice, but God means that it if a customer at 2 p.m. On a Tuesday shares a concern with us all the key stakeholders who can resolve the issue are made immediately aware that feedback and 5 to 10 minutes later. We're collaborating on a Thursday. This platform has been leveraged hundreds of times by our customers already this year as I mentioned earlier in those rare instances where we have a customer satisfaction issue to solve this proprietary process and toss in a bowling us to quickly and positively address those concerns and strength of the customer relationship of the process.
Being able to react in real-time to hundreds of accounts and thousands of projects become a competitive advantage and differentiated proficient in a challenge. We're solving with the implementation the customer proprietary dog incident site stool and recent quarters. We've been developing and deploying software tools across variety of process areas in addition to instant insights in each designed to help business to help our business out of jail, and we're seeing the influence of those efficiencies and improvements and culmination of Rapid growing bottom line. And with that what sort of things back over to Jeff discuss roommate of the Earth.
Well, thanks Tom. Just quickly here turning to the fact that we I'm sure you saw in the press release that we reinstate in guidance for the fourth quarter and full-year proficient expects fourth quarter 2020 Revenue to be in the range of 156 $261. Fourth quarter gaap earnings per share is expected to be in the range of $30.39 worth quarter adjusted earnings-per-share is expected to be in the range of sixty-eight to seventy-one cents and proficient expects its full 20 20 revenue for year 20th Avenues be in the range of 606 to $611. Twenty Gap earnings per share guidance to be in the range of a dollar to a dollar five hundred and twenty twenty adjusted earnings-per-share guidance to be in the range of $2.42 and $2.45. So with that operator we can open up the call for questions at this time. If you would like to ask a question wow.
Press star then the number 1.
And your telephone keypad?
Our first question comes from the line of Maggie Nolan of William Blair.
I thank you. I wanted to ask about the strong gross margins in the quarter. I'm assuming that is going to help the the margin structure wage and I'm wondering if you can disaggregate that. How much of it is no structural changes from the addition and integration of PSL versus how much is coming from kind of took measures that you may have taken in light of the pandemic that will return to the cost structure basically next year.
Yeah, good question. There's certainly certainly a creative to to gross margins. They're running about 50 a little over 50% off. However, you know in the overall scheme of things. They're not that large. So some of that is is that contribution we thankfully have really not had to do really any cost-cutting to speak with we've we've not contracted throughout this whole. And we're actually seeing growth return now so so no, I think that's a sustainable number. I think it's mostly driven by the mix shift to Offshore in near-shore. So I mentioned earlier that our own offshore grew organically 12% in the quarter and it's almost 20% year-to-date we're running over 50% as well so much. So those are the major contributors and of course you saw that is up and utilization has been sustained around 80% consistently. So so now I think that continues I don't think we're going to see any any wage
fine and gross margin next year
great and then good to see that there's you know enough visibility to provide some guidance. I'm wondering what your confidence level is on the ranges that you provided June and I know it's it's early and uncertain in terms of twenty Twenty-One, but can you at least give us an idea of maybe the trajectory of some of the key metrics as we start to enter the first 6 quarters of of 20 21, thank you. Yeah, so cute for the range. We have out there very very confident. There's not a lot of time left in the year. So we've got very good visibility. We had very strong by last quarter and and right now have a a very active Pipeline and a good-sized pipeline. So as we look forward to 20 21, we're optimistic that you know, we're going to be rebounding from a growth perspective too early to say how much obviously we'll have our sights set on getting back to double-digit organic growth next year. But certainly the dust seems to have settled remains.
So what would impact the election might have but so far we're not we're not able to detect anything, you know material there. So I think once we're past that to me that that's just continues to settle down and and things continue to improve and that's what we've really seen since kind of am a timeframe. So we're optimistic about twenty twenty-one.
Okay. Thank you very much. Thanks Megan.
Your next question comes from the line of my Condon of Needham.
Thank you. Good morning. Jeff going back to the margin question that I just wanted to talk about the level. So what about any cost savings that you insisted on the sg&a line? That might not flow through in 221. Just want to get a better feel for also the ebitda margin trajectory and next year. Yep wage or a longstanding goal as you've heard in the past to to try to get ebitda to about 20% or adjusted ebitda. I should say to about 20% but we're closing in on a Target. I think that'll be a reasonable goal for us to to strive for next year and your question on sg&a. There are some things there that might kick back up a little bit next year. I don't think it'll have a a certainly won't have a negative impact. It might slow the expansion that we're seeing a little bit, but I think I think we'll be dead.
You know at that 20% or or right around it, so we'll be you know, we'll be working towards that obviously as we go forward but back to the sg&a. We are saving a little bit in travel expense, you know, that's non-reimbursable and a little bit on marketing. Although we've actually gone virtual with most of our marketing activities and and the spend there isn't bound as much as you might think so travel. Yes, which by the way when we talk about, you know, does that cost return next year? I don't see that happening, right? I don't think I've done two things one. I'm not sure how long it'll be before we're back to whatever the new Norm is. I say back to with two two were at a new norm and I suspect that that new Norm won't involve much travel as as we were doing pre-med because I think people that realized customers a white and Elsa like the realized that we can absolutely dead.
Do a lot of accomplish a lot of what we need to remotely and using a virtual tools.
That's helpful Geoff and then just one follow-up here in terms of Revenue growth in 21 and Beyond actually more like twenty one for now. How should we think about utilization? How much more room do you have on that front? And then departing sort of become the key driver behind top line goes if you can't expand utilization and then tied into that would be any conversation around pricing you're having with club house that trending, you know pricing is good. We've made conscious decisions proactively in some instances to encourage clients to move forward with things that maybe they were kind of like going on. So, uh, you know, we we made some concessions you're seeing that now I think was maybe down slightly sequentially but still up year-over-year and Thursday and in terms of pricing going in the next year. We're not seeing enormous pressure at this point. So I actually expect that those concessions that we made that I alluded to by the way, we're all temporary so
You know, we we didn't we didn't put anything in permanent permanently in place. So in most cases they had like a timeline of
Six months on them. So actually I expect that will check back up going into next year utilization is probably about the best. It's going to get I think that's a best-of-breed number, you know, consistently holding 80% 80% plus I think it's about as well as anybody can do and of course the balance of that isn't people sitting around they're they're actually actively working on Pursuits and and education and other activities administrative activities. So I think going into next year. I think we can you know plan for 80% utilization we can plan for at least some slight wage increase and you know continued mix to Offshore. I want to emphasize again, we're growing offshore even in this environment double-digit and now including PSL that that applies to Nearshore as well. We see a lot of demand for the near-shore and really more and more demand for our offshore. So we're going to continue to see that mix shift that mix shift will be a bit of a dead.
On Top Line, although not too much as most of it is incremental. So this is this is not work that we're doing in the United States today that we're going to ship offshore. It's actually wage increasing our offshore business incrementally in addition to the work that we're doing on short. That's very helpful as well. Just one final housekeeping item Jeff. I don't know if you mentioned this or called it. What is the wage growth in 3Q and what's implied in the four q and the full-year guide? Thank you. It was about a point. And and I think the I think you for the range is like zero two. So I think the I think the midpoint of guidance is is about a point as well. And again, we're we're seeing that improved but we wanted to be conservative for Q4. We we hope there's something there.
Thanks a great job on the quarter. Thanks Maya.
We have a question from the line of Brian kinslahger of Alliance global.
Good morning, guys. Thanks for taking my questions for that large financial services customer. I'm curious when you expect it to Ram when you expect it might be off peak run rates and how many years you mentioned that your contract is contracted to be.
Hey Tom, you want to take that?
Hey Brian, we're restarting the the ramp now. It'll really be probably 2134 early q1 for really start to see that ramp coming on. It's about five year program. It'll probably ramp up through, uh, twenty Twenty-One and from their sustained there for you know, a couple of years as we continue through the program.
And maybe if you can discuss the broader bookings Trends in the third quarter outside of this deal as well as the early stages of life. That's the fourth quarter.
Yes.
We you know, as you know, we don't disclose specifics subject too much misinterpretation, but what we typically will disclose and I will now is that we were up organically eight digits, you know, low low double-digits, uh-uh year-over-year. So we're really happy actually with that results. Um, and your two dates salad and queue for Thursday so far in October here is looking good. And as I mentioned earlier, we've got a really strong pipeline. So we've got to convert that and there's always you know, Q4 is always a a big Lounge bookings quarter as the year is, you know back in loaded and clients are lining up projects for the start of next year. And of course the quarter itself is back in loaded. So December typically is our birth big bookings month. So it's a little early early to comment on that but we're optimistic.
Great, you know Healthcare looks is I look at your numbers and back of the envelope Healthcare looks to be obviously the primary growth driver while Financial Services dropped and while Telecom and Autos are smaller. They also seem to drop so I'm curious as you look at your bookings and your pipeline also notwithstanding this large Financial one office services contract. That's pretty large. Do you see those segments returning to growth next year or you know our challenges any of them facing going to make some of those obstacles difficult?
No, I think I think we will, you know, I think Financial Services were already seeing some improvement and we've got some strong accounts there that we're targeting very heavily and I think off the meter there. I do think much of what you're looking at there is kind of more on a relative basis, you know, we acquired almost sixty million dollars of Revenue this year and month in in many instances. Those those portfolios simply didn't cover some of the verticals that appear down and that's not to say that they're not slightly but they're probably a little more dramatically due to those acquisitions.
Okay, lastly with your Consultants working from home. I'm curious about the deployment of offshore resources on new products. I know you've been taught me about this and focusing it but in the past customers have wanted some domestic resources given they were on site and the customer could see them misses years ago, but I'm wondering how working from home and you're not seeing the consultant anyway is impacting their interest in offshore mix or how you are changing decisions on fixed-price contract to the degree that you have. So
Yeah, a fixed price by the way is is relatively small it's less than 10% or run about eight percent now and so certainly in in many of those instances where we have total control we would obviously opted to deliver to some of that work from offshore. And I think you're you know, you're raising a good point but I would emphasize that particularly in the in the digital space where there's a lot of high touch and interaction with our client and in many cases our clients customer that that the skills that the onshore folks possess off maybe non-technical, you know, more cultural Etc business aptitude or Acumen. I think they're still critical and so we're we're still seeing clients looking for a blend. I mean we're we're introducing offshore with some exceptions as I mentioned earlier, you know, we're taking on larger offshore engagements now that again are incremental but you know if we look at in the future wage
I do think.
And and you're sure is going to outpace onshore growth, but I don't think it's going to displace it that that is to say that I think on Shore is still, you know going to grow at a at a good clip not as fast as offshore. But again on a combined basis, we'd like to see that get at least over ten and you know, maybe in the mid teens are higher and total.
Great. Thanks so much guys.
Your next question comes from surrendered end of Jefferies.
Good morning. Hi Jeff. I was hoping you could talk a little bit about maybe the evolution of your sales strategy over the past six months or so. You can kind of in the code in violent where I thought maybe you know in the past there's a lot more Reliance on conferences and so forth and and what you guys are now doing to kind of go and look for new clients and how that's impacting the your ability to find your clients. Yeah, we're we're doing a lot of of field marketing virtually. So so we're sitting up a lot of different activities both educational as well as frankly kind of birth, you know events wine tasting sort of fun things for new and existing clients and and certainly in in many instances still working with our partners. We do a lot of that of that activity often in conjunction with a one of the vendors that we work with one of the the software vendors. So there's been a a good response to that. I've been really impressed wage.
Do you think that's an area that once once it's safe to I think that will return to you know, a live event going forward that we're finding ways to get it done now and in terms of the sales office, uh structure and focus and strategy, I'm going to have time to to comment on that for sales reports the time and there's been a lot of work there that he can articulate. Yeah, we have we turned off with our vendor Partners as you know, we we work we partner with some of the largest software Brands out there and they're constantly looking for insights to help and we continue to leverage that but also say is we have a very strong portfolio and I mentioned instant insights as a way to lean into our current customer base and will continue to add new customers, but we have a lot of Runway within our current customers as well. And a lot of em is is bring a new customer but also leading into our current customer base, which you'll see a lot more of in 2021 and Beyond and I think that's a big competitive Advantage for us. Is that with the amount of run wage?
And the current client base, we're not beholden to just bring in new customers for growth. We have a lot of growth speaking gifts from our current customers and you'll see a lot of that in 2021. So a lot of our life she has obviously been bringing in new customers working with our vendor Partners, but also turning that sales team internal to the current customer base and cross-selling, uh, in the portfolio took our current clients can buy more of that portfolio. That's where there's a tremendous amount of upside for us for growth in 2021 and Beyond
Understood and then is related to that. Can you maybe provide a little bit more color on your brand strategy is that part of the the bigger strategy as well here? Obviously the issue seems like you're getting or trying to build out relationships within the the sports arena whether it was the st. Louis Blues earlier now kind of involved in in the Gulf seen is that kind of a reflection of where you believe is in terms of its scale and ability to reach new audiences at this point or how should we think about that tying in with the the earlier sales strategy? Yeah. That's exactly right. So go ahead. Go ahead. I think there's a an amount there though as well as also getting two larger presence, you know, when you look at the brand we've done a lot with in markets we've done things in Dallas who done things in st. Louis and that obviously goes outside of those individual markets going to the the gulf sponsorship was to to amplify the brand even more. I think that's a good job.
Fire demographic for us. I think it's a place for us to lean into but really it's about brand uh-uh amplifications. It's a really get that brand out there really making people aware of it. I think it's a great Global presence as well. You know, we were we were selective where we went with the PGA and the golfers. We wanted to make sure we were tying, you know success with our brand and and I'm pretty excited about where that's going as far as amplification, but it's to make sure we're doing it Beyond just markets, you know, we we have a global presence. We want to make sure we amplify that brand globally.
Interested and then I'll follow up on the the the average billing rate. Obviously you guys provided some color around the decline sequentially and and the fact that these are kind of temporary cost concessions, but can you maybe provide some color on how the clients were thinking about what it is to kind of get them over the hump to make the adjustment is it is it that they're willing to kind of take on shorter projects but it the bigger projects that they're a little bit hesitant on or how should we think about where the client is maybe relative to where the client was home last quarter. I'm assuming there should be an improvement in sentiment. But again, we're you know, there's an election occurring and there's you know near-term macro uncertainty and then obviously budgets are being established wage any kind of color there would be helpful. Yeah, I think you know, I mentioned earlier that that were not expecting and and that currently is we're you know closing these bookings wage.
Tom covered earlier not experiencing a lot of great pressure or any I should say great pressure outside the norm and you guys know this is a very competitive industry. So there's always read pressure. There's always a competition but I would say I've been really pleasantly surprised with what we've seen throughout this. Thursday. We're not really seeing our competitors or the industry in general kind of running to the bottom which tells me that you know, it actually held up better than than I expected anyway, and so I don't expect that in the going in the next year. I think we're going to continue to try to drive to our goal of about 2 to 3% increase annually really basically offsetting of cost of living adjustments for our employees at the same time, you know, we are as we're growing and taking on these larger engagements and of course I've mentioned offshore and you appreciate life
is there
But as we're hiring more unsure, you know, we are able to hire more towards the base of the pyramid and it really is we're experiencing some nice leverage there as well. So the net effect that is that we can get two or 3% APR increase and only spend you know, one or two net and Merit increase then obviously we've got some some margin operation are combined with offshore. You know, our ultimate goal on Gross margins has been for a long time adjusted gross margin to get to 40% We're very very close to that page very close to that this quarter and and I think going into 2021 will kind of be right there, you know, if you one seasonal due to the reset of payroll and payroll taxes et cetera. So we'll see a little bit of a uh, a tick down there seasonally as always but overall, I'm expecting margins to hold and probably dead.
And somewhat in in 2021.
And then obviously there were some good color on kind of bookings Trends and but if I was to take a step back in terms of just the game from the client's perspective. What is your visibility look like? Let's say two quarters out 3/4 out at this point relative to maybe how it was a year ago under a more normalized condition conditions, you know, probably a little less just just because the sales Cycles or a little less predictable I think than they were a year ago, but you know, I would tell you I don't think it's profound. I think you know, as I said before I think the worst is behind us. We were impacted this year by cancellations. We actually had a bankruptcy client go bankrupt, although they're coming back up after coming out of bankruptcy and we're working with them again, but you know, it's it's kind of slowly building back up so many of those that were canceled or delayed are coming back around and I think we'll see the impact of that wage.
And the first half of of next year, but I would say the climate, you know is is you know, maybe cautious is a word to describe it but it it seems to me, you know specific question. How does it feel feel compared to a year ago? I think it's getting you know good and close to being being similar to what it was a year ago, at least for us and a number of these these deals that the time talked about earlier that specifically the ones that are with new clients and I'll come back to that in a second too. But simply the ones that are with new clients, you know tend to start small and then a ramp up and the overall relationship. That's our model and we've got a lot of new logos that were we think will be, you know, meaningfully providing some meaningful growth next year off and lastly as Tom mentioned to a lot of Runway still in existing account. So keep in mind that in any given year over ninety percent of our Revenue comes from clients, we serve the prior year and and typically before the Dead
Earlier than that. So those things combined I think give us decent amount of visibility. And and again, we're pretty optimistic with what we're seeing.
That's a point and then final question on the any color on the kind of the the future deal Pipeline and stuff in terms of relative to historical. Yes, ma'am. You're talking about m&a. Yes. Yes. I'm glad you brought that up actually, so we intentionally took a break, you know, like I said, we had accomplished we typically have a wage started here with a goal of three to four deals fifty million plus of run rate Revenue. So we exceeded that goal by the middle of the year and given the again the backdrop of coded. So we basically kind of like included that the deal the deals that we had in flight went over him up took a pause, but we are actually actively back in the hunt now, so it's our goal to be Indulgence off with with a a shop Target by the end of the year looking to close sometime by say, you know mid q1.
Thank you. That's very helpful. Thanks.
Your next question comes from the line of Vincent coliseo of Berrington research. Yeah, Jeff the overall Healthcare client base wage, you know things are going well. They're obviously just curious. I think last quarter you said, you know, there's the pressure on the industry and you know some uncertainty just wondering if any of your larger Health Care clients or you know, a cautious right now and and and and any cause for concern, you know, it's interesting the the short answer is no anecdotally it based on what we're both. Both anecdotes were hearing as well as actually empirically and how they're spending. So it's interesting we've we've established a lot of sea-level relationships within that industry. That was a a goal that we had for the year and managed to establish a lot of those and what we're hearing from from those contacts is that that they had had planned they pretty well could model. You know, what was going to happen that actual wage?
Result was better than I think anybody expected right if you if you remember what they were saying before five months ago and you know running out of Hospital space and all that so, you know electives or wage earning and the light so we're we're we're hearing optimism a exactly how I would describe in the last few calls. I've had with cios it at some of the Blues and some others, um, they're optimistic that the things didn't get as bad as they could have and there were prepared for that and that that actually probably freeze up some some opportunities and many of them are starving planning right now exactly even ahead of the curve. One of them was telling because yesterday so, you know, it's the climate there was much better than I than I feared it could be and in fact as I said, it's been remarkably resilient.
Oh nice to hear that change but pre.
Will you recruit so we've actually hired you know, a number of new sales folks still kind of a it's kind of an ongoing process and we found some really great folks. And again, I think I was really well going into 2021 and Tom I missed the number how many large deals that were hit in the quarter?
66 greater than $500 compared to $49. Thank you. That's it for me. Nice quarter guys make sense.
And your final question comes from the line of Jack Bender Rd of Maxim group.
Hey guys. Thanks. Good morning, Jeff Paul. Tom. Thanks for taking my questions. One of the questions been asked so I'll try to avoid being redundant off. So I guess I'll start with a question on the the backlog and and and Pipeline and not not emanate pipeline but backlog of orders, you know that has been strong on a daily basis. I think last quarter you guys mentioned it was the largest it's ever been on a maybe on a weighted dollar basis. Um wondering if you in others have talked about the pipeline or ask questions on it, but I can you speak to maybe the how the backlog of pipeline at the end of the third quarter, maybe how that ranks in the context of how you describe to accuse pipeline.
Yeah, it's definitely definitely better. I mean, I I I I mentioned the bookings that certainly contribute and build up the backlog bookings were a little slower in Q2. We talked about that still solid, but but they had slowed a little you know, that was the that was the heart of all this stuff hitting right? So we definitely had a slower kind of April May as I said, I think made with the bottom but uh, and so during that period of time I would tell you the backlog I'm sure got somewhat depleted but we built it right back up in Q3 and I will be adding to it even more in Q4. So, you know, it's probably maybe down a little more than typically would be obviously without COVID-19.
Okay, great. And then so I heard I heard a few good stats on, you know, organic growth rates for the offshore business. And then as for the overall organic growth rate with that use embedded in your fourth quarter Revenue guide, I think you said somewhere around 1 to 2 % I guess first. I hear that correctly wanted to 2% is kind of rough ballpark. Yes.
Okay, and and I know historical you guys have been very transparent and upfront in communicating kind of your during twenty-twenty that's in this code that you can very transparent and communication kind of cautious optimism in your informal Revenue comments and Outlook or the past few quarters. Would you say that your Revenue guidance for the fourth quarter holds true to that sort of cautiously optimistic perspective that I feel you've demonstrated in the recent quarters.
Yes.
Absolutely, no doubt about it. I think, you know again above an abundance of caution also because we were in the middle of that convert, you know, we opted not to knock reinstate guidance last quarter. We probably could have but certainly we feel very confident about what we have out there right now and again with even some potential upside to it, but the businesses is recovering quickly and you know, I I would be optimistic certainly comfortable with we been out there and and optimistic we need, you know, commit more near the top end.
Okay, fantastic, and then just as a kind of a follow-up to that and give them questions on the pipeline strength and obviously the overall extension of sales Cycles throughout the year as well do to Cove it off. Are there any maybe other underlying assumptions? You can maybe share that are embedded into your fourth you fourth quarter Revenue guide maybe in the context of wage. Do you assume the same level of extended sales Cycles in conversion rates that you know have a occurred in Q3 or is there any sort of I don't know faith in proving of that or are you kind of just keeping it even Keel and flat flat assumption? Anyway, I would say it's probably fairly conservative the the the keep in my life at this point pretty much substantially. All of the Q4 is actually backlogged, right? So so what you know what we've got in that range around there is, you know, some potential downside of birth.
If a project gets canceled or you know, whatever something happened with a client, but the upside I think does come through additional bookings. We tend to we do tend to to pick up revenue office in the fourth quarter. There's offensive budget flush and things like that that is not baked in here. So if that happens and we see it more normal return to that experience than I think that's what the upside could come back. But we've also been cautious and and left room for a potential downside which we don't anticipate
Okay, it's very helpful. That's it for me. I appreciate appreciate the questions. Thanks guys check.
There are no further questions at this time. I would now like to turn the call back over to mr. Jeff Davis for closing remarks. All right. Well, thank you everyone for your time today appreciate it and glad to be here. Looking forward to talking again with our year end wrap up that I'm very optimistic about and so we'll talk to you in late February or early March. Thank you.
This concludes today's conference call you may now disconnect.
Thursday