Q3 2020 Altus Group Ltd (Ontario) Earnings Call
Good afternoon, ladies and gentlemen, welcome to the Altice Group third quarter 2020 financial results conference call. During the presentation, all participants will be in listen only mode. As a reminder, this con.
Conference is being recorded.
I would now like to turn the conference over to Ms. Camilla artist Cheviot. Please go ahead.
Hi, Good afternoon, everyone and welcome Solstice group third quarter results conference call and webcast for the period ended September Thirtyth 2020.
The news release announcing our results was issued.
Your market close this afternoon and is also posted on our website along with our Mdna and financial statements. Joining us today are Mike Gordon, our new Chief Executive Officer, who will officially joined at the end of September and NGL Bertolini, Chief Financial Officer.
Start with some prepared remarks, and then we'll move right into the Q and a session.
We Miss any questions. Please contact me directly by email.
Let me get started see you advise that some of our remarks on this call may contain forward looking information also Pete reminded that also scoop uses certain non-GAAP niobrara measures as indicators of financial and operational performance.
Looking statement.
An explanation of these measures are detailed in today's news release and in our related reports on SEDAR and with that I will now turn the call over to Angela.
Thanks Camilo. Thank you all for joining us. This afternoon, we hope you're all safe and healthy on today's call I will begin by covering off the performance in the quarter and then.
We'll hear from Mike who will share some of his thoughts on the business what attracted him to altice and where he sees the opportunities ahead.
So let's start with our third quarter results.
We were pleased with our execution in Q3.
Steady top line growth and strong earnings performance, improving our consolidated margins to 18.
<unk> on a consolidated basis revenues were up 6% to 135 million and adjusted EBITDA was up 28% to 24 million driving a notable improvement to adjusted EPS at 40 cents.
We're really pleased with the exceptionally strong performance from our property tax group and to sustain double digit growth in our.
Retime revenues in office analytics, as we continue our transition to a SaaS model.
As the CRT industry continues to navigate through a challenging external environment, our industry, leading solutions and services are driving significant client value. Our Q3 results speak to this further validating that Altice group has a high degree.
Our own revenue stability during CRT market cyclicality and that many parts of our business are counter cyclical clearly, we're able to sustain good productivity levels, while the majority of our workforce continues to work remotely.
We continue to adhere to guidance of local and global health authorities.
Health and well.
One of our people clients and communities remains our top priority.
Turning to the individual segments at Altice analytics, we continue to make progress against our multi year transition to a primarily overtime revenue model through a shift to cloud based subscriptions for Argus software.
Given the first year of the shift and a combined with ongoing cobot related pressures on some parts of the software business Altice analytics revenues were down 2.5% to $49.2 million, although earnings improved by 7% to 11.1.
But most notably overtime revenues.
Our key metric were up 12% to 41.4 million.
To add some color on the revenue performance as you are aware at the start of 2020, we made the full shift to subscription model for all our August product software products and as you know, although this transition creates a stronger long term.
Economic model revenue growth is muted initially as upfront perpetual license revenue is replaced with ratable overtime revenue per.
For context. This time last year, we recorded roughly three and a half million in upfront perpetual licenses revenues that did not reoccur this year.
The cobot related pressure was primarily on our point in time revenue streams, such as software consulting and training services, which were down year over year similar to last quarter. We we felt the impact of lower sales volumes in the SMB space and overall prolonged sales cycles, especially for the large.
Term deals as companies recalibrate for the new normal.
Given the current environment of rising Cobot cases, we expect this to remain an impact on our performance into the fourth quarter.
I would also add many of our existing customers continue to expand the use of Argus enterprise as they realize.
Substantial value from the software, especially during this time and this includes expansion of cloud deals.
Overall, our pipeline is stable, especially with some attractive higher ACB deals that we're working on in closing in Q4.
Most notably our overtime revenue.
Today's continues to build with sustained double digit growth I.
I should point out that on a sequential basis, however, overtime revenues were down 3%.
Impacted by an FX headwind of 3.9 compared to Q2.
The strength in overtime revenues reflects a strong software subscription.
Annual revenue base as a reflection of the economic model of both current and past deals higher subscription license sales, reflecting sustained customer expansion and a steady addition of cloud clients.
A steady maintenance revenue base supported by a 94% retention rate for Argus enterprise, which by the way we.
Aspect, our retention rates remained stable in the mid Ninetys range.
Finally, the strong overtime revenue performance reflects continued strength in appraisal management and Canadian data solutions.
At appraisal management, the external environment reinforces the strategic value, we bring to our clients.
Shipments were.
We are benefiting from increased business development and brand awareness initiatives as well as technology and enhancements that are allowing us to drive more client value with data analytics overall.
Overall, we are seeing continued growth from our existing client base as our customers add more properties on our platform and launch new.
Clients.
Which include opened closed and separate funds and geographically, we're benefiting from growth of new funds and new clients in the us and internationally.
As we look ahead to next year, we are evolving our go to market strategy and ensuring better integration of our with.
With our Argus solution sets.
A big focus next year, we'll be integrating our data exchange analytics platform with Argus cloud.
We want to leverage Argus, cpis and other cloud capabilities to not only ingest data for me in real time, but also convert from file based model sharing to host a model and.
A central place inviting others to update.
And in Kent, Kent median data solutions, we continue to see healthy demand for our national data.
On the earnings front, we saw notable improvement, including 23% margins, which after the bonus allocation that takes place in Q4 puts us on track to.
Finished the year within our expected margin range.
We would add that improvement in year to date margins inflect includes the benefit of the restructuring program that we initiated near the end of Q2, but would also remind you of our intention to reinvest for emerging opportunities and to strengthen the capabilities.
Abilities in support of our long term strategy and of course it reflects some of the cost savings realized this year from reduced travel and marketing events.
With respect to our cloud subscription strategy, we continue to make progress and you'll hear from Mike shortly on his assessment.
Some highlights.
Based on.
Our year to date performance well over 80% of our office analytics revenue base is now over time.
Our customers have fully accepted subscription contracts. This hurdle is now behind us.
We finished the quarter with 10% of our total Argus enterprise user base contracted on the Argus cloud.
Platform.
This is still SMB driven as planned.
So we expect adoption to accelerate before the end of the year and into 2021 as larger deals come to fruition.
The recent release of AG included the threat Federated single sign on feature will be key for some of our larger.
Clients to move to the cloud.
We remain focused on the migrations and it's fair to say the pandemic has reinforced the strategic benefits for companies to be on the cloud over.
Overall, we are still on the path to migrate the significant majority of our Argus enterprise users to the cloud by the end of 2023.
Overall, we are seeing continued momentum as we are now approaching 950 Argus cloud cloud customers.
This includes both new customers as well as those who have migrated from the legacy on premise version.
And with the introduction of our newest developer on the cloud this year, we have over 1000 customers.
Richard on our cloud platform.
Plus in support of our strategy to serve the market with an end to end platform solution for asset and investment management, we remain focused on multi product enterprise deals, while continuing to integrate our solutions and shift our sales focus from point solutions to value based selling.
I would like to illustrate this by highlighting a couple of interest in Q3 deals.
One of our longstanding Argus and appraisal management clients and VESCO expanded their engagement with us through a managed service capacity for CRM data management through Argus spring into as part of this service our team will manage all.
Of their data ingestion aggregation and analytics for the year for their European operations.
Another example, during the quarter. We also signed a deal with a mid sized CRT investment firm, where we combined our appraisal management offering with Argus enterprise and Argus talents.
They're fine modeling and forecasting needs.
The classic combination of how we can serve our clients needs with expert advisory data analytics and software.
As we look ahead, we will continue to feel the impact of the model transition as well as cobot into Q4.
But we do FY.
Phil good about the opportunities for 2021, as our pipeline of opportunities bills sales activities ramp up and as SMB volumes and software services begin to gradually rebound.
Overall, the acceleration of digital transformation in the CRB industry is a positive catalyst for our long term strategy.
For hedging.
As you'll hear from Mike Shortly we remain favorably positioned for continued long term growth.
And there are opportunities ahead.
That he will be focused on.
Moving onto our CRT consulting segment.
Another solid quarter of excellent.
Of excellent execution during a period of disruption.
At our global property tax business.
The strong momentum. Following Q2 continues Q3 revenues were up 18% to 58.2 million and earnings were up 37% to $20.2 million driving 35%.
Margins.
We had strong double digit growth in the UK and the U.S.
Where we benefited from both the acceleration and catch up of case settlements some of which were previously held up due to cobot related slowdowns.
In addition to catching up on some Q2 delays we also saw some mix.
Expected Q4 settlements come forward into the third quarter, both the UK and us.
I, particularly point this out given the existing consensus estimates that were made for Q3 and Q4.
In Canada, Ontario had a temporary slowdown of settlement volumes due to cobot related delays as well as.
Occur year over year comparative performance in Manitoba, and Alberta, who are more favorably position in their respective.
Cycles in the prior year.
Overall, we are having a great year.
We're seeing higher appeal settlement volumes higher success rates and higher savings for our clients.
As we pipeline continues to grow as measured by volume of appeals on hand, and by total value.
We continue to onboard new clients and more properties onto our platform, thus increasing our market share.
Property assessment values continue to rise and we see greater opportunities for savings.
Particularly.
Okay and disruptive times like these.
Lastly, with the investments we are making on our technology platforms. We expect to see the continued benefits of improving our CRM and business development capabilities, creating greater efficiencies in our workflows and capturing greater appeal savings through data and analysts.
Our next.
With the strong results year to date, we are very well positioned to post record revenues for the year achieving another important milestone.
This strength should continue well into 2021, given the strength of our pipeline and the extension of the tax cycle in the UK, which gives gives.
Gives rise to another year of annuity billings.
This of course is contingent on our ability to continue to close appeal settlements as expected.
But the uncertainty of Covance and its implications on tax tax regulations, economic and market conditions continue to persist and we continue to.
To monitor the situation closely.
Long term, we continue to see great growth opportunity as we differentiate ourselves from our competitors and grow our market share.
Our valuation the cost advisory businesses continued to deliver steady performance in these unprecedent.
And at times.
On balance we are maintaining our revenues with strength in our core practices.
And navigating carefully around some of the pandemic related challenges in the industry by focusing on unique opportunities in sectors.
Such as seizing the momentum of more frequent valuations and capitalizing on.
For Tunis and infrastructure and distressed real estate deals.
Turning to our financial position.
Our balance sheet remains healthy.
At the end of the quarter bank debt stood at 153 and a half million.
Down from last quarter, representing a funded debt to adjusted EBITDA leverage rate.
Auto of 1.49 times, well below our maximum limit of four times, our cash and cash equivalents was $91.1 million.
On a net cash basis, our leverage ratio is 0.7 times debt to adjusted EBITDA.
So before I turn it over to Mike I Trust Ariel Sharon.
Sure enthusiasm that Mike has agreed to join Altice group as our next CEO.
Having spent quite a bit of time with Mike in these past couple of months I can tell you. He is already making significant contributions with this fresh perspectives.
And challenging the team in new ways.
He is a visionary.
Canary CEO and the right fit for our company experience wise and culturally.
With his high emphasis on client success and people.
He is well equipped to build on the strong foundation established by Bob and lead our company and to the next stage of growth.
With that I'll now turn.
Not over to Mike.
Thanks, Angela I appreciate the vote of confidence and good afternoon, everyone.
It's been a pleasure to connect with many of our shareholders and analysts over the past several weeks and I look forward to the our ongoing dialogue.
To start I wanted to congratulate Bob on as well.
As a retirement after a very successful career and thank him Angelo and the board for the ongoing support through my transition.
With Bob at the helm. The team has built a business thats revolutionized the CRT market.
And we're far from done.
Im very excited to be part of that and it's an honor to fall in Bob's foot.
Steps to lead this great company.
Like many of our shareholders I was attracted to the opportunity at all to this group for both its many strengths and its immense potential.
As I studied the company Altice group had all the hallmarks of what you'd expect from a great business.
With a very purposeful transition of the analyst.
The next business to the cloud and the logical progression towards an information services model.
Well, let me tell you I have big aspirations and I believe we can make this great company even better.
Theres high potential to unlock and grow value.
With the two core business segments on a solid trajectory.
And the cloud transition underway.
We're now at a great inflection point in our strategy to become a leading CRM.
Information services provider.
For me personally this is an exciting time to join.
Also as was the right next chapter of my career.
And frankly my background in software analytics service.
Analysts and data is uniquely tail tailored for the strategy we're on.
Through my experiences of FICO and called credit I have a good handle on what it takes to realize our potential and the next steps we need to take.
I'm definitely fired up.
Ill give it my all.
I am about 45 days.
Yes in now, but happy to share some of my preliminary assessments.
I spent the last several weeks studying the products and assessing our competitive position and addressable markets.
We're also doing a deep dive on the operating structures, including evaluating talent sales capabilities product development and technology systems.
I've also had the ability and opportunity to connect with a number of our shareholders and starting to connect with some of our largest clients.
Having spent time with the board the management team and having the opportunity recently to dive into our budget cycle and strategy sessions I'm impressed by the great shape the businesses in.
Particularly against the backdrop of the pandemic and the majority of our workforce still working remotely.
Without a doubt we have a very coveted marketed physician.
And I'm, especially impressed by the quality of the team.
The powerful combination when you have both market expertise.
And technology preeminence.
So what attracted me to all this.
I was drawn in by the potential but here are the top five strengths that got me excited and I've been able to validate over the past several weeks.
First.
We have two high quality business segments, each with its own growth potential mission.
One critical products and services that are in non discretionary demand with utility in the market.
Our office analytic solutions are highly strategic to our clients in many cases embedded in daily workflows, where replacement costs are high.
NRC Ari consulting services drive significant.
Quantifiable value.
For our customers.
Second.
We have exceptionally strong competitive MOAKS and with a global footprint. We're years ahead of the competition I.
I admire the innovative culture, that's an offices DNA. This is not actually be organization the.
The team is.
We focused on strengthening and protecting our competitive advantages.
Third we have a solid recurring revenue base and replace for long term profitable growth.
In addition to our growing overtime revenues at all times analytics, a high majority of our CRT consulting revenues.
We are in fact quite repeatable.
Our performance during this pandemic speaks to that.
Fourth we have deep seated client loyalty with a world class global customer base comprised of the largest and most influential companies in commercial real estate. This.
This is something not to be taken.
For granted.
In many cases, we are integral to their operations. This is a direct reflection of the bench strength in the talent on our team that is required to achieve that.
I am a big believer in customer satisfaction as the foundational building block and that's an area of focus for me right now something that I will assume.
Yes through a formal customer survey and the many meetings that I'm already taking with clients to influence our path forward.
And finally, I see a long and global growth runway ahead supported by the sturdy demand trends, even though and perhaps longer term accelerated by cobot as the CRT.
Industry continues to prioritize digital transformation although.
Although many of our products and services have the market leadership distinction.
My assessment is that we still have limited penetration on a very sizable global addressable market, both with our current solution set and from emerging opportunities in the.
Jason sees with debt and data that will allow us to grow our footprint and add new revenue streams.
Next I wanted you to address something thats been topical in my conversations with investors myself.
My assessment of the strategy the company is on and specifically the path for office analytics.
Answer this very simply.
I support the current strategy I think we're on the right track and I look forward to building on it.
For our CRM consulting businesses, we will continue.
Enhancing each practice with a balanced view of pursuing revenue growth and maximizing margins.
At property tax our focus remains on market share gains.
Operational improvements to enhance the already strong economic model and accelerating digital transformation to better leverage data and technology and digitized certain processes.
I believe that property tax can sustain.
Robust topline growth and strong margins and although it's already a strong performer I think there remain opportunities for improvement as we bring the three national divisions closer under a global model and overtime shift the value proposition to property tax information services.
This transformational potential is there.
For the valuation and cost advisory businesses, both of which are well established market leaders will maximize opportunities to stimulate topline growth, but we'll also be taking a hard look at the cost base to optimize margins, which I believe can be achieved with tech enablement.
Our investment and innovation focus will.
Continue to be centered on the Alta clinic segment, where we will where we can best leverage our global operating model and the sizeable addressable market ahead of us.
Division remains as it was.
To build a global CRT enterprise platform solution that integrates software analytics.
Sticks advisory and data to help our customers enhance the performance and value of their CRT assets and investments.
I think we have a great foundation in place with a mission critical product set but our evolution in sales execution go to market alignment and product development continued.
Okay.
Completing our transition of Argus enterprise to cloud based subscription contracts is central to our vision and required to enable us to reach realize our potential in the fourth leg of the stool here predictive data analytics and an area, where we have potential to drive immense value.
For the industry and our customers.
As you heard from Angelo today, we're making steady progress with our cloud transition.
Having gone through to SaaS transitions in my past roles I have a good line of sight on where we are in the adoption curve.
And what needs to get prioritized to reach or.
Our aspirations and goals.
Although the pandemic is presenting us with some short term challenges in certain areas of our business. We have multiple strategies that we believe will help us achieve the aspirationally goals that we set out for 2023.
To share some preliminary observations and areas of focus.
I guess, where I see opportunity.
The CRB industry is maturing opening opportunities for ERP systems and larger platform deals.
Momentum for cloud is also shifting.
I feel good about the anticipated uptick in larger platform deals in 2021 and 2022.
The opportunity is encouraging and the conversations that I'm, having with many of our largest clients validate the conviction of the opportunity.
However to accelerate this pickup it will require greater integration between our office analytics offerings, a refresh of our go to market and product marketing strategy as well as.
The shift in our sales execution to sell on value.
I believe there is also an opportunity to refrain our customer value proposition and how even we bundle and package our offerings across the company many of which are currently maintain sold and priced separately.
Clearly a high priority is getting our customers on the cloud.
Like with all cloud migrations, it will be key to get over the hump on customer adoption.
There is an opportunity to accelerate this with a network effect by targeting the influencers in early adopters not unlike what the team did when they migrated.
And the Argus user base to Argus enterprise.
This remains a key focus for 2021.
As mentioned customer satisfaction is an important pillar and I think we can take direction from the feedback of the survey will be commissioning as a baseline of where to go.
On the product development side the fuse.
From there is cloud.
Cloud gives us an opportunity to scale improve our speed to market as well as for opportunities in some high value workflows and adjacent sees that would drive a lot of value for our industry and clients.
While instinctively prioritize organic growth and believe that much of our success will be organic.
We will consider acquisitions and partnerships and our buy or build evaluation.
Approximately two thirds of our software sales continue to come from existing customers a trend thats been sustained for many years speaking to the cross sell and upsell opportunity that remains.
Approximately 80% of our office analytics revenues are still coming from North America, Yes, we know that Europe, and Asia Pac combined represents a way bigger opportunity and the market.
We'll double down on these opportunities with a focus sales approach and an agile product roadmap.
Maximize cross sell and upsell opportunities and reduce our cost to serve our customers.
And when I think of Altice as a whole while the team has done a great job, adding technology across the organization to tech enabled many of our services I think theres still a lot of complexity here.
We'll be looking at how we optimize our current.
Current use of tech platforms, and digitize some of our processes.
Also say, while there is a lot of work to do we're on the right path and we're building on a very solid foundation.
A lot of heavy lifting is now behind us and by 2021, we'll be getting past the growing pains of the.
Condition.
But there remain untapped opportunities to enhance and optimize our operations to consistently operate within that rural 40 framework and that's where my near term focus will be.
Going forward, we will we're in execution mode and have control over the many opportunities I see ahead.
Try to get us to the promised land.
All of this reinforces my excitement.
I look forward to having more to share with you in February when we publish our annual results and take you through our strategic priorities for 2021 in greater detail.
As they start to wrap up I wanted to thank.
Thank our customers for their continued commitment to altice and congratulate our employees on strong execution during a personally challenging period.
The next few months are going to be busy.
Well, we will be focused on delivering the best year altice as ever had and getting ready for an exciting 2021.
Okay.
Okay, Let's open up the line for questions now operator.
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And the first question is from Yuri Lynk from Canaccord Genuity. Please go ahead. Your line is now open.
Hi, good evening everyone.
Hi, Eric.
We heard.
Don't know who wants to take this one maybe angelo but grew.
Great office analytics results, given given the macro situation out there but.
But you know overtime revenues have been flat now for for about three quarters.
The growth.
Yeah, I agree that you guys laid out at the Investor Day last year that that gets you to your 400 million of revenue in 2023.
You guys are starting to drift a little bit below that.
The trend to get there. So have you thought about walking back that revenue target at all.
And if not how do we how do we in select from some here, which is essentially going to be slot revenue to a path to 400 million by 2023.
Gary This is Angela.
At this time, we're not we're definitely not changing our 2023 targets.
<unk> co.
He has had an impact.
As we said in our prepared remarks.
We're slightly behind where we thought we would be at this time, just given the impacts over the last couple of quarters.
That we you know we continue to have good visibility in terms of.
Our pipeline the discussions we're having with our clients are extremely positive.
And we just see multiple ways of getting to to the targets, we set out to 2023.
So yes, its we have been side lining up a little bit we have some parts of our of our.
Business that are actually outperforming our expectations.
Such as the appraisal management.
But there is there are definitely is the the areas that we pointed out on the point point in time revenues and then quite frankly on the SMB.
Side of things that.
As.
Scaled back a little bit.
So far and some of these larger deals are taking a little bit longer to close but as we said you know we've got a few right now that we're looking at in this quarter and.
And into the new year, so I at this.
Point in time, we're feeling good about things I think we as Mike outlined we are going to come back in February and provide more clarity around our 2021 objectives.
And provide a little bit more.
Larry ill say around 2023, but I.
He would you like to jump.
Okay, Yeah, Yeah, sure I think I mean, as I got a chance to look at the business and look at the pipelines one thing I'm I'm happy with is that their study.
In talking to a lot of other leaders and commercial.
Commercial real estate I know that you know these are definitely.
Some challenging times, so I feel very good of what the team is doing right now I realize the challenge ahead, and I think that as I discussed one of the focuses that we will be looking at in 2021 is how do we adjust our go to market adjust how we package our products.
So just how we interact with our customers.
To bring that back and get to the point, where we achieve the goals that we set out in the Investor day.
For 2023.
Does the key really to start seeing some of the some of the larger.
Clients, which which I understand hub of a longer sales.
Got to see some of those make that.
Make the conversion to get the get the revenue base growing.
Yeah, I think that's the base strategy about getting people and getting customers in the SMB business on early was our strategy because it lays the foundation.
Our focus is going to be starting to shift.
Yes, and we've had a number of discussions with some of our largest customers.
In the Argus World and we very much focusing on them.
Later this year hopefully early next year and core every quarter thereafter, I think that you know aid the sales cycles.
Like a longer.
B the questions and the bars are a little higher when it comes to like how they're leveraging.
The products and see we need to make sure that they understand and they feel comfortable with the functionality in the Roadmaps, we're putting together, which I think.
It's all starting to come together for a.
A fruitful move in 2021.
Okay, but turbos alternate over there thanks.
Thank you. Thank you. Thank you. The next question is from Richard Tse from National Bank Financial. Please go ahead.
Yes, thanks, Mike for those those insights here.
As far.
What is your comment on in greater integration I was wondering if you could maybe comment on whether that sort of requires incremental development efforts on the part of the company is sort of bring those together.
Greater integration within the office analytics business or within all with office analytics and and the tax business.
Far in the office analytics business sorry.
No problems I just from from my end a lot of it is when I look at our businesses and how they operate today, they do cooperate very well but.
Some of it is we're trying to work with our sales methodology and our focus on how we handle some of our largest customer.
Summers and how we go to sell and most of the investment that we make is really in our go to market. Our products are are following the roadmap are our customers have told me that we have very good products and so I believe we have the right products in place. So now it's really.
Being able to bundle.
Was it price effectively and really hit the value proposition that our customers are looking for and now that to me is a combination of a number of things. That's you know a great tech platform and what we have in our solutions. It's.
Some of the great value added services that we have.
Okay, and then you know we're starting to do more work with them around how they can use data for Decisioning and to me those three things are where we're going to be focusing our time with our customers as we as they move to.
The the cloud, but as two large scale investments onto the platform we have a good investment moving now.
Now and we continue to foresee that that will be where we focus.
Okay, and I guess your comment on re framing market marketing sort of ties into that.
Integration as well.
It does I I look at marketing and go to market is and sales is one and the same I think that they are two things.
It off each other and again I think.
It gets back to making sure your customers have a high degree of satisfaction with what you're offering how they're looking at things and you know I look at all this is being incredibly important to the to the ecosystem of these are customers and so its really ensuring that our space.
That is adding value to those guys.
Okay. Okay, and then just I don't know this is fair question. We as you go into an adjusted 45 days, but.
If you look at the past few years, there have been acquisitions as part of this growth strategy like how are you thinking about that are you are you primarily focused on sort of.
Making these offerings.
The changes that you talked about just now.
It's not an unfair question, it's a good question.
I think listen we I I'm, a big believer as I said about organic growth I believe as a business. If we can continue down the path of the organic growth that we've had angelo talked about us having a record year. This year that's.
That's a great thing and we focus on for 2021.
As to acquisitions.
I have in my past lives I have always looked at.
Either build or buy when it comes to trying to move into an adjacency or trying to augment or accelerate something that we need to do.
So my guess is that there will be some acquisitions coming down the road that will help us get into some adjacent fees because our customers are demanding that of us and I believe that they start to make sense. It when I think of our tire business being about valuation for our customers. So no doubt that they'll probably be.
An acquisition.
Yes.
Okay, and just one last one from me.
Aside from Kobe give you sort of look at the larger customers today.
What do you think based on your discussions with them or is the gating factor here for them to make that transition.
I think they want us to solve.
Solve.
More of there there are problems I think when the conversations Ive had are twofold number one one of the reasons why we're going to adjust our go to market is we have too many people talking to them.
And we need to align that a little bit more closely to like.
Having one person conduct how we do business with.
Those larger accounts so thats the first thing on just go to market.
The second thing is we've been talking to them about you know where we fit on investment strict management and how we look at that I think thats a great strategy, we're having more workshops now my team has told me than we've had in the past about how that.
It works and we need to align that investment management vision with what our customers need. So I think what you see is.
As they want to move to the cloud they're thinking holistically.
How they're going to use our services, how theyre going to leverage our technology and how we can we will steward their data so that they can make.
Our decisions I think those three things are usually part of the conversations we've been having with them I think they get excited when we start to talk about how we can apply our thought processes whether.
On services or analytics around this and I think thats, where a lot of the conversation is high.
Happening so they can see that additional value we can bring so that it's a little bit longer sales cycle, but I think it's one that is going to be fairly.
Fairly worth it for them.
Okay. That's great that's really helpful. Thanks.
Thank you. The next question is from Stephen Macleod from.
BMO capital markets. Please go ahead.
Thank you good evening.
Good evening Dan.
Hi, Tom I, just wanted to follow up a little bit Mike. Thanks, So much for all the color you gave on your outlook for the business in your initial thoughts I think it's really helpful.
I just wanted to follow up you talked a little bit about it.
The rate will be talking more about the 2020 2021 objectives and you alluded to it in the last question with respect to going to market ingesting products. I'm. Just curious is there is there anything.
Specific that you that you found that isn't working or is it more that.
Not.
Things are working but I just wanted to just trying to get a sense of where the the motivation is coming from in terms of adjusting whether it's the go to market or the product mix.
Or is it just about.
Accelerating that from where you are more that the company was before you can come into it no.
No its Stephen that's a.
Fair question.
The best thing about coming in during budgeting you get to spend a lot of time with the company to look through every lever of the business and getting underneath the covers everything. So I you know what I tell you. It's twofold. It's it's one is ensuring our alignment.
You know sometimes in your.
During quickly sometimes in alignment gets off and I think that the team has been working very hard and very fast and I want to make sure that our go to market resources are aligned as they talk about all the great services, we have especially on the altice analytic side and they can really bring the power of what we have for.
For the software service.
Services, and what we bring to market even around data in Canada.
The second thing is.
It is about that acceleration.
It is about that sense of urgency in that sense of purpose I think that we have a great opportunity to help shape this industry going forward and.
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I came I came from the financial services sector.
Rose in software and solutions and this feels a lot like what happened in 20 O eight and 20 Onein and what was happening there in the next two to three years I think theres going to be fairly good adoption.
For a lot of the solutions that we're talking about right now.
Whether it's you know the valuation solutions that we do whether it's how we ingest data, how we cure rate data or how we show.
The information back to the users who are using it so that they can make decisions.
My view is on the acceleration I want to.
Sure that we are front and center with our customers on that and I think from the perspective that we that I have seen when I've looked at the business.
I think we have a lot of solutions that I don't really think you know we are.
Giving enough focus to with our customers and I think thats.
Maker, the some of the adjustments will be so.
If I had to answer again, just to summarize alignment and acceleration.
Okay. That's that's helpful. Thank you.
When you talk about the larger users and there are some wording in the mdna that you're talking about larger use.
User sort of initiating had begun to initiate their move to to Argus cloud in Q3.
Do you have any more any more color on that you can give around the the process that they are going through that maybe evolved in Q3, and what insights you have into timing around moving up.
Up from the Smbs to the more larger sized enterprises.
I think what as people have kind of now started I mean I realize cove. It is coming through its next the next wave, but I think as people have learned to live with.
The state we're in right now this new normal.
They've started.
To think about what they need to be doing in their own investments over 2021, and 2022 and so we started seeing.
It may be early to talk about green shoots, but the inquiries that we've been getting about the cloud and what we're doing with it in where the roadmap is going has certainly.
Started to solidify further and.
You know from from my perspective, that's where they are starting to ask the questions on how this fits towards.
Their entire valuation strategies and so this has been a a lot of period of time and talking to them about.
As we are using our advisory services, how can they leverage our solutions, even more fully our software solutions more fully.
In the past we might lead the software, but now we're sort of leading a little bit with advisory.
And the software is coming I think as I said is we as we talk to our customers.
They are definitely engage.
Engaged in trying to find.
New ways to do their business and improve their business.
Models, and that's where a lot of our discussions are going so back to your questions on when we will start to get to a well start seeing on progress with us.
The honest I'm very hopeful that we'll see some progress before the end of the year with some of our large customers I would but I definitely see next year being a year that we will.
It will be very focused on that and.
The I would say that Q1 Q2, we'll start to see more customers coming on assuming we are in the same where we are right now and so thats Michael.
Great. Okay. Thank you. That's that's also helpful. And then maybe just one last final one more more tactical but.
Is there anyway, you can quantify maybe Angelo has us number how much pull forward you had from Q4 into Q3 on the tax business.
Why don't I am not going to provide an exact number.
But it was it was pretty significant I would say that.
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Like if you're looking at consensus estimates Theres, a significant part of that that we pulled in from Q4, I mean, we were expecting.
In that in that space to have more of an impact with the ability to close on it with.
With some of our.
Our appeal files with the jurisdictions.
And.
And we were able actually to bring them in earlier, we had a great quarter.
As I said earlier in in the UK. So we saw a settlement to very high there as well as in.
As well as in the U.S. and Texas in particular.
Where they had been dragging out.
And from Q2.
And our expectation was that it would take it take a substantial part of the remainder of this year and we thought we saw a good part of it coming in in Q3.
So hopefully that gives you some sort of idea.
Steve.
Yeah. That's a that's helpful. Great. Thanks, Angela I think okay. Thank you. Thank you very much I think I'm, sorry, if I think I would buy it would add to it I think that when I've been talking to Angelo and and the team I think we're we're we're comfortable with the F Y 2020 tax consensus out there.
Okay. That's great. Thanks, Thank you guys.
Thank you. The next question is from Paul Treiber from RBC capital markets. Please go ahead.
Oh. Thanks, Good afternoon, I guess, Mike you spoke about Europe, and Asia as a large opportunity what do you think the company has been missing for the last couple of years as Bina straining adoption outside of North America.
And what's the plan to address that.
I think from a standpoint of again, a I don't want to keep beating the drum on go to market, but I think we have our different businesses that have gone out into new areas or new jurisdictions in the world and they've done it.
Somewhat independently and we're right where I want to spend some time with them as we have a lot of great resources. In this company. We have a lot of great resources from software and we have a lot of great resources from the people who do the business for our customers, but we're again it gets back to that align them. We're not we're not we're.
We're not using.
Using our half to solve solutions and some of these markets. So.
One of the things as we continue to shift things around we will be focusing a little bit more on a regional model and as a result of using that we'll make sure that we have the resources more aligned.
Two.
Leverage the solutions together, it's it's something that I I saw back in my days in FICO and its you know.
A lot of times, you know as you as you're moving into new jurisdictions.
You really need to think about.
Your partners your staff that you have there all the different things and how you coordinate the the.
Sales together I think what I heard from our global customers. They absolutely want us in those jurisdictions. They would like to have us play a role in helping them normalize the data around their assets the normalized evaluation around their assets across the world. So I think we're getting strong demands now we.
To be able to serve that demand in the right way and so that's where I think that's that's I think a major shift that we have to make.
And now that Youve being that you use it you can see under the Hood of the company one of things of all this is it does have two fairly distinct businesses. All this analytics and then see ARY services.
Business.
Or C series consulting fee do you see synergies from a data and software strategy between those two businesses and how do you look to execute on that if you do see them.
So my short answer is yes.
I think that.
When I look at where we were where both businesses operate isn't a very close ecosystem with each other we solve valuation services and we performed valuation functions for our customers and a lot of the data that our our our tax guys.
Guys are doing they are pulling Argus filed with our customers to help support the work that they do and so.
There is a a alignment of software.
As well as data that I think will align these businesses.
Further in the future and that gets back to the Digitization.
Question I have talked about with tax I think theres. Some theres. Some work there that we can really build a very strong solution when it comes to that.
Ration by leveraging our our tax team along.
And aligning it a little bit more with altice analytics I realize the practitioners in both businesses will go to continue to do what they need to do.
But I think that you know in the world in which our customers are really looking to us to provide solutions I think theres, a good opportunity and the software and data across both both units.
And lastly for me in all this analytics from a product point of view you talked about the need for greater integration between the.
But do you see any key gaps in the product portfolio that that perhaps you could address over time.
You know I think the I mean, I would say a gun and a good review of the road map right now and I've been spending time with the road with the teams and the Roadmaps I think from a perspective of getting those pieces aligned.
We have a pretty good set of solutions.
One we have a great valuation engine and Argus enterprise.
Boy Onton Taliban fit in very nicely nearby I think theres, some things that we probably need to do in the debt space. Our customers are asking us to you know we do a lot in the equity space, but they.
They take us to be able to align debt in equity together. So there's probably some work that we'll be doing on that but I think that the remainder of like 2021 on the roadmap will be really bringing out a lot of good core functionality that you'll you'll see us put on their cloud because that's what our customers are demanding right now.
Good luck.
Great. Thanks for taking my questions.
Thank you.
Next question is from Deepak Kaushal from stifle GMP. Please go ahead.
Hi, guys. Good evening, Thanks for taking my questions I got a bit of a hodgepodge contract short.
Mike You mentioned you took a survey.
Kind of market in your earlier remarks.
Wondering if you could note it's hard to probably talk about but any vulnerabilities, you've seen or any potential competitive gaps in the market.
That might be.
Be new to us.
Paul the story for long.
No I think I think what we're doing is we're.
We definitely look competitively, what we're going to be doing as a customer survey and so that's going to be something that we're getting in more just on our client on our customer satisfaction. So if I misspoke I I would apologize on that I think as to the competitive the competitive market out there.
Let's.
And I think right now there are there's a lot of useful information there is a lot of people running to the data market.
Everybody I met in this business, whether they're competitors or are there.
Customers are talking about themselves as data companies and I had the ability to be on a panel with a.
Several of my peers, a couple of weeks ago and.
I think that the major thing that we have is we're all trying to we have to be more aligned as you use data thats one of the things that the financial services industry got got right as they got the alignment down and there is different people in different parts of the ecosystem.
Tim where people are trading data back and forth. So I think what you'll see from US is you're going to see us do more on opening up our guys, making it easier for us to use.
Our business our solutions on the cloud so people can move data back and forth that is something that our customers have asked for so that we'll close the gap I think that you'll also see.
The.
The way that we leverage the data that we have we're going to steward that for our customers. Its there its their data and our job is to steward and make sure that they get they get as much is they get as much out of it as they can but one thing where I would say that is going to be something that we will vessel.
Definitely invest in as we go forward is.
There's definitely a need and this comes back from the space. They came from there's definitely a need for more analytics in this space. Some forward looking parts things are moving faster now.
Given with what Cogut has happened and I see the velocity changing so while you capture the data it.
How you really have to manage the velocity of what's coming at you and how you need to use that for Decisioning and I think that's something that I think we are uniquely set.
Set up for and that's something that will be.
Focusing on to help close that gap for our customers as well.
Okay, and just a follow on that when I think of the ERP.
Players in the space.
Are they competitors any partners or that their system players how do you how do you are there.
Right.
But they are both you know I think.
You know I've gotten a chance to meet a number of them and God. There. They do a lot of great things out there and I can see what theyre trying to do and you know, but at the same point.
Thanks, a lot.
We're starting to partner with them to make sure that we both we open up the apiay between.
Our systems to make it again easier for our customers to do to work and do business I think that's the right thing for our customers. So im sure that might open up some co-op a co-operative none are likely I will say you open up some competition.
But I'm also assuming at the same time it'll improve some partnerships that we have so.
No I cannot.
That's kind of how I look at them you know I I will have already had some nice.
Messages from them welcoming me to the game I'm looking forward to working with them and you know I'm sure that there is going to be times, we're going to compete.
Okay, well, thanks for taking my questions I'll leave it at that and look forward to season.
Thank you once again, please press star one on your devices keypad. If you have a question.
There are no further questions registered at this time I'll turn the meeting back over to Mr. Gordon.
Thank you for thank you for that it's been great to have you guys on Tonight, and it's been great to talk about the business as we see right now.
I would like to thank you all for coming I look forward to working with all of you in the near future and continuing our conversations and.
And.
I wish you all a good evening.
Thank you very much.
Ladies and gentlemen. This concludes today's conference call should you have further questions. Please contact Camilla Bart Shavitz at Altice group. We thank you for your participation and ask that you. Please disconnect your lines.
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FIFA.
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Okay.
Probably not because it depends on the timing.
Okay. She was feeling.
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Let me jump on 50, though.
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She would say opinion, that's because I don't say tell me.
Okay Cushy, what's funny thing.
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