Q4 2020 Perficient Inc Earnings Call
Ladies and gentlemen walk into the queue for 2020 proficient earnings conference call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
If anyone should require assistance during the conference. Please press Star then zero on your Touchtone telephone and as a reminder of this conference call is being recorded.
I would now like to turn the conference over to your host Chairman and CEO, Mr. Jeff Davis, Sir. Please go ahead.
Thank you and good morning, everybody. This is Jeff Davis with me on the call today is Paul Martin, our CFO and Tom Hogan, our COO and President I'd like to thank you for your time. This morning is typical of what we have about 10 to 15 minutes of prepared comments after which we'll open up the call for questions. Before we proceed Paul would you. Please read the safe Harbor statement.
Sure Thanks, Jeff and good morning, everyone. Some of the things we will discuss on today's call concerning future company performance will be forward looking statements within the meaning of the securities laws actual results may materially differ from those discussed on these forward looking statements and we encourage you to refer to the additional information contained in our SEC filings.
Turning factors that could cause those results to be different than kind of concluded in today's discussion.
The times during this call.
The adjusted EPS or adjusted EBITDA or earnings press release, including a reconciliation of certain non-GAAP financial measures for the most directly comparable financial measures prepared in accordance with generally accepted accounting principles or Jeff.
Posted on our website at Www Dot completion of Dot Com. We have also posted a slide deck, which includes a reconciliation of certain non-GAAP guidance to the most directly comparable financial measures prepared in accordance with GAAP on our website under Investor Relations Jeff.
Thanks, Paul and once again, thanks, everyone for joining we're excited to be with you. This morning to discuss our fourth quarter and full year 2020 results.
But I'll start with this I am as proud of as I've ever been of proficient our performance and our people you know on a year marked by uncertainty challenge change proficient rallied and rose to its strongest position yet our colleagues double down on their commitment to our clients and our company and the result was accelerating revenue growth record adjusted earnings.
<unk> and aggressive global expansion given the uncertainty that was the big debt was beginning to unfold a year ago. At this time I believe our 2020 results. So there's quite a bit about what proficient is capable of and also where we're headed.
As 2021 gets underway of momentum is building, we're pursuing and winning bigger deals. Our bookings are strong the pipeline is strong and we've evolved into a global digital consultancy is capable of any competitor in the space in fact were stronger.
As we continue to augment our broad north American footprint with fully integrated global delivery teams working across technologies and time zones.
We become even more formidable, particularly against digital firms that exist only offshore and lack of our broad market presence of the United States Fortune 1000 customers expect and require of global delivery, but they also appreciate in value and market talent and high touch service.
Consulting is ultimately about delivering value, but it's also about relationship but it's also of the relationship business and it's much easier to forge long term bonds. When you can engage locally the.
Current climate has put some of that on pause, but it will return and when it does we will begin on even more of an advantageous position longer term, it's simply easier to sell and expand accounts. When you can walk the halls and establish those personal relationships.
It's that blend of local and global which sets proficient apart and as I mentioned earlier, we're building upon our solid foundation in the United States with an aggressive global build out.
In fact since the beginning of 2014, our offshore revenue has had a compound annual growth rate of nearly 30% and in 2020, our offshore revenue growth grew at total of 73% and almost 17% organically again, that's in the Covid environment.
This year of plans and projections call for even stronger organic offshore growth in the high Twenty's is what we've modeled.
Our teams in India, and Colombia in particular, our hiring of great velocity, Paul will speak to the financial resorts results. Shortly but we were again pleased with the key performance metrics, including utilization in.
In Q4 and throughout the entire year. Despite the pandemic the business performed well and we drove margin expansion of strong profitability two.
2020 was full of positive developments, but the most important was certainly our acquisition of PSL Corp, and the Latin America in the mid year and the <unk>.
July timeframe that was our largest deal ever and we were optimistic wins would come quickly and often because our customers have been clamoring for nearshore talent, but the pace of our success integrating those colleagues and the project teams at many of our large accounts has surpassed even our most optimistic expectations.
The demand is very strong we're seeing a lot of activity. There. So again, just a great quarter and of great year, and we expect even stronger growth and results in 2021, so with that I'm going to turn the call over to Paul who will share of the financial results detail for the fourth quarters for 2020 Paul.
Yeah.
Yeah.
Paul.
You might be on mute.
Okay, sorry about that thanks. Thanks, Jeff can you hear me now yeah, yeah, sorry about that.
Let me turn on the fourth quarter results services revenue, including Reimbursable expenses were $158 9 million for the fourth quarter of 2020, the 13, 1% increase over the comparable prior year period gross margin for the quarter ended December 30, <unk> 2020 increased 30 basis points to 38, 7% compared for the prior year period.
SG&A expense was $33 million compared to $34 million of the comparable prior year period, and SG&A expense as a percentage of revenues decreased to 23% from 23, 4% in the fourth quarter of 2019 adjust.
Adjusted EBITDA for the fourth quarter of 2020 was $35 million or 21, 5% of revenue as compared to $26 $5 million of 18, 3% of revenues in the fourth quarter of 2019, the fourth quarter included amortization expense of $7 3 million compared to $4 million on the prior year period and this increase was primary.
Of the associated with the 2020 acquisitions. The fourth quarter included an adjustment to contingent consideration of $5 7 million compared to the point $6 million in the prior year period the.
This increase is reflective of of the favorable performance and outlook of our $3 2020 acquisitions, which of your performed better than originally anticipated in large part due to cost reductions, resulting from travel and other restrictions caused by the COVID-19 pandemic and for PSL quicker than anticipated market demand for near shore resources net inter.
<unk> expense for the fourth quarter of 2020 increased to $3 3 million from $1 $9 million on the comparable prior year period, primarily as a result of of the August convertible debt offering.
Our effective tax rate for the fourth quarter of 2020 was 27, 4% compared to 14, 2% for the fourth quarter of 2019, the increase in the effective.
Effective tax rate was primarily due to an increase in non deductible transaction costs of contingent consideration compared to the three months ended December 31, 2019, net income decreased 29% for $8 4 million for the fourth quarter from $11 8 million of being in the fourth quarter of 2019, primarily as a result of the adjusted.
The fair value.
Angel consideration increased amortization and increased interest expense, partially offset by our strong and improved operating results diluted GAAP earnings per share decrease of 26 cents a share for the fourth quarter of 2020 from 36 in the fourth quarter of 2019 adjusted earnings per share increased to 76 cents per share for the fourth quarter of 2000.
'twenty from 58 cents a share in the fourth quarter of 2019 and please see the press release for a full reconciliation.
The GAAP earnings I'll now turn to the full year results services revenue, including Reimbursable expenses were $599 5 million for the year ended December 31, 2020, a nine 7% increase over the prior year gross margins for the year ended December 31, 2020 increased 40 basis points to 37.
8% SG&A expense increased to $134 7 million for the year ended December 31, 2020 from 130 for <unk>.
$2 million on the prior year SG&A expenses of percentage of revenue decreased to 22% from 23, 7% in the prior year the <unk>.
Adjusted EBITDA for the year ended December 31, 2020 was $116 3 million or 19% of revenues compared to $95 million or 16, 8% of revenues in the prior year.
2020 of included amortization expense of $22 9 million compared to $16 $2 million on the prior year the year end of day.
December 31, 2020 included an adjustment to the contingent consideration of $9 5 million compared to <unk> 3 million in the prior year. The increase is primarily related to the favorable performance on outlook of our three 2020 acquisitions.
Net interest expense for the year ended December 31, 2020 increased the $10 1 million from $7 4 million in the prior year, primarily as the results of the August convertible debt offering our effective tax rate for the full year was 25, 2% compared to 22 six per cent in the prior year net the increase was primarily due to increase in non.
The transaction costs.
And contingent consideration.
Net income for the year ended December 31, 2020 decreased 10, 7% to $30 2 million from $37 1 million again, primarily as a result of the adjustments to fair value of consideration of increased amortization loss on convertible debt extinguishment.
Increased acquisition cost of interest expense, partially offset by strong operating results dilutive.
The diluted GAAP earnings per share decrease of 93 from $1 15.
Adjusted earnings per share increased to $2 50 for.
For the year ended December 32020 from $2 seven in the prior year or any billable headcount at December 31, 2020 was 3880 for including 3628 global colleagues and 256 subcontractors and the SG&A headcount was 649.
Our outstanding debt net of unamortized debt discount and deferred issuance costs. At December 31 was 183 6 million. We also had $83 2 million in cash and cash equivalents on the balance sheet and $124 8 million of unused borrowing capacity on our credit facility, our balance sheet continues to leave us well position.
To execute on our strategic plan.
Finally day sales outstanding on receivables decreased to 67 days at the end of the of the fourth quarter compared to 71 days at the end of the fourth quarter of 2019, I'll now turn the call over to Tom Hogan for a little more commentary behind the metrics Tom.
Thanks, Paul Good morning, everybody.
Another solid quarter for bookings large wins with many existing and net new customers, we booked 70 deals greater than $500000. During the fourth quarter of 2020 that compares to 66 in the third quarter of 2020 and 65 in the year ago period, as I mentioned last quarter, I think that number really underscores our traction.
The market and how well we're executing right now.
We can't travel to meet with our customers or prospects and were not working at any of our client sites yet large deal win volume was up sequentially and year over year, our fully integrated global pursuit and delivery model is helping us win customers and projects. An example of the many meaningful new client wins during Q4 2020 evolves.
Deploying an offshore delivery strategy with the leading maker of packaging processes and materials to support the growth of their commerce capabilities. We will build the clients first commerce website to enable the scale of its products to the mid market.
The new site will be built to the scale with the company.
They're long term goal of creating of commerce environment to support <unk> sales for the even larger clients.
Proficient has always been a unique and compelling place to 1 billion of career and that is resonating even more with our colleagues right now Jeff mentioned on the last call that our employee satisfaction is the highest its ever been and we've done a lot of things in the recent years to build culture and ensure our colleagues the proficient as the extraordinary place it is.
A great example was our make of December difference campaign of kindness that we were able to launch in December of last year.
Because of the success, we had in 2020, we were able to grant each and every one of our globally colleagues the equivalent of 100 U S dollars to brighten the someone's day during the holiday season.
The surprise to spread the stranger give to a charity donate two of first responder of healthcare hero, we put no strength on these funds only that they had to give it away.
And the stories of giving the emerge were truly remarkable.
Our concept inspired others beyond proficient do the same the funds were multiplied many times over his colleagues matched our contribution or raise more funds within the greater communities proudly we inspired a lot of other pay it forward type programs as well.
One of my favorite stories of giving came from our team in India, where many colleagues pulled their funds gathered additional donations and purchased the dialysis machine for a health care facility, serving very needy patients.
The separate alone will benefit hundreds of people for more than a decade and literally save lives.
At the end of such a challenging year for so many we were so proud to be able to not only grow our business and deliver strong results for shareholders, but inspire our colleagues and communities with this program of investment.
So with that I'll turn things back over to Jeff to discuss Q1, and our 2021 outlook.
Thanks, Tom well before I get into guidance I did want to mention one additional item. We included in the news release. This morning, something I'm very excited about and that is of that Tom has done an exemplary job since being appointed COO of couple of years back.
Of course, the team effort, but he has played a key and leading role in driving the operational excellence that has powered our performance.
Happy the board approved my recommendation that he'd be named President of going forward is the ambition energy and enthusiasm are well suited for the immense opportunity of hats.
So I want to congratulate Tom.
As for guidance proficient expects its first quarter 2021 revenue to be on the range of of $165 million to $168 million.
First quarter GAAP earnings per share is expected to be in the range of 31 to 34 cents.
First quarter adjusted earnings per share is expected to be in the range of 65 to 68 cents proficient expects its full year 2021 revenue would be on the range of $670 million to $704 million.
2021, GAAP earnings per share is expected to be in the range of of $1 57 to $1 72.
And 2021 adjusted earnings per share is expected to be in the range of $2.85 to $3 and with that operator, we can open up the call for questions.
Ladies and gentlemen, if you have a question at this time since the press. The Star then the number on key on your Touchstone telephone one moment. Please for our first question.
And our first question comes from the line of Maggie Nolan with William Blair. Your line is open.
Thank you and congrats to you Tom.
Alright.
The question.
How about the growth and durable on.
The metric has been fairly strong year over year and sequentially in the last couple of quarters here. So I'm wondering what the expectations are for hiring of and of course of the year and then what would be kind of the normalized level of the questions. When he second question to the side.
Yes, I think it's.
If you look at the midpoint of our guidance for the year were about 10% organic I don't expect much of that to come through right.
The increases were trying to maintain very competitive rates, but leverage our offshore.
And building out our pyramid to drive additional margin expansion, which was also we've also guided to so in terms of head count you can expect about 10% across the board.
And I.
I should say, probably five or six in the U S and the rest offshore and of course of the offshore is actually multiplied.
By the rate differential so.
What would the hiring of what we are currently hiring of life.
Great. Thank you and then I wanted to follow up on both the demand environment and the competitive environment, particularly in your health care and banking and financial services.
Segments, and we've seen a lot of potential.
Thank you for.
The competitive new entrants into the health care space on the services side, and then I'm interested in kind of the strong performance that you were able to put up this quarter in banking and financial services, Yes, it's interesting.
We're not necessarily seeing any new players.
We're experiencing it tends to be the the majors that we've always competed with in the space and in fact.
We had a knockout.
Q4 in terms of the <unk>.
Health care of bookings you know health care is about 33 per cent of revenue, we did about 42% and bookings and likewise in financial services.
We probably are seeing more competition, but that's because we're penetrating that market more of a lot of our revenue comes from our management consulting business consulting in that sector.
But we've managed to expand those relationships now into the technology consulting as well so we're seeing nice growth there as well.
And the and frankly not not competition that we're terribly concerned about in fact I'm certain we're taking share away at least in financial services.
Great well congrats on the momentum of the guidance. Thanks. Thanks Maggie.
And our next question comes from the line of Bryan Keane Stringer from Alliance Global Partners. Your line is open.
Hi, Good morning, guys. Thanks for taking my questions.
But as you look at your industry verticals of focus which of them do you think is most behind in terms of executing on the digital transformation strategy and how do you see that changing over the next year or two.
That's the great question I almost want to say all of them.
I think retail is probably ahead, obviously retail on the brick and mortar side is the is waning and the <unk>.
Clearly the business model is changing pretty rapidly.
So that's forcing them to drive accelerated transformation and Theyre, probably further ahead as the.
The way I would describe it and I think there's plenty of runway everywhere else, it's pretty fascinating, we're doing a lot even in manufacturing and sort of.
People might consider older businesses.
The two to do transformation, but I still think healthcare given the high volume and high touch nature of that business and by high volume I mean customers of their patients as it were.
<unk> is similar to a similar to retail in many ways and they've got a lot of catching up to do still in that industry.
But I still think.
There's opportunity across the all sectors.
And in fact, you know there's sort of the prisoner's dilemma of affect that.
There's a lot of leapfrogging going on and this is a very dynamic environment, you know the tools behind digital transformation.
Very dynamic changing and evolving rapidly and so it's sort of a constant process more than a one and done type of environment. So I would say in terms of digital transformation like I said retail is probably ahead.
The rest are probably similarly behind the financial services it might be a little bit ahead of the curve, but that's.
That's how I would cabot.
Great and then in.
In the fourth quarter as it as well as thus far in the first quarter.
The majority of your bookings coming from digital transformation and.
In addition of are these generally new logos are they existing logos I mean, obviously everyone's got to adapt to the changing consumer behaviors.
Yes, it's a strong combination actually and I would say the vast majority 90 plus percent of those bookings are absolutely.
Square in the middle of the digital transformation.
But theres a lot of new logos in there as well to your to your question. We've got a long track record of maintaining good tenure.
Stickiness as it were and strong relationships are a lot of our business is repeat business 90, plus percent typically and I think we will see that 90 per cent come down a little in a positive way not in dollars, but as a relative percentage of the business as we do add new logos and we have added quite a number we've got a number of the.
Of new accounts that have joined us in the last say six months.
Starting out you know kind of small as is typical of what do you think about the lifecycle of an engagement and yet to ramp up this year. So we're expecting to see a lot of that activity ramping up throughout the year and additional logos coming in at the very major focus that we have.
Which is a perfect segue to my last question.
When you take can you take us through a typical roadmap of the digital transformation program for.
For example, the initial design that small as the initial development of small and how does that change with follow on projects over the course of the years.
Especially as it pertains to larger customers.
Yes, absolutely I mean, it typically starts and what we prefer to be in the.
And the lifecycle is with strategy and.
And that strategy tends to center around some user experience, whether that's our clients' customer an end customer.
Or Corp to Corp.
Or even internal so so really the requirements of developed first and some sometimes high level. So you can get that strategy mapped out and then you go deeper on the requirements and then begin to engage in the.
Technology implementation whatever that is typically a lot of custom development a lot of data as well.
So so that lifecycle you can think of it.
As a for a given project you can think of it as sort of the bell curve.
Typically our engagements are made up of the number of projects. So the overlap.
On our relationships are actually paid off of a number of engagements of the day overlap.
So we tend to get a pretty steady stream.
Coming out of the relationship that makes sense.
Okay great.
How much.
And our next question comes from the line of Myles Tandon of day, Dan Your line is open.
Hey, good morning, the sexually Kyle Peterson on for Michael Thanks for taking the questions.
Just start off on the margins and kind of what your assumptions are.
Especially on the gross margin side in 2021.
I believe the you know as you guys are continuing to move work offshore should we expect to see some gross margin leverage.
Here in 2021 and will this be partially offset by any like increasing teeny or anything on the back half of the year.
Assuming things kind of normalize in the world.
Yes sure Great question.
We're expecting margin expansion this year, probably 50 to 100 basis points, our long standing goal, we've talked a lot about us.
Adjusted gross margin that is netting stock comp of <unk> 40 per cent and I think that's right about where we'll be this year. That's our I think our model reflects that.
But we've got a number of the economy below that we've got great scale, that's really kicking in so I actually expect and I think of the model. If you back into it reflects probably about a 200 150 to 200 basis point increase in adjusted EBITDA.
<unk> will return to a higher level, probably in the second half of the year, we're expecting I think it's gonna take of ramp.
Net there by the way for US all TNT is below the the.
The EBITDA lines. So I mean, the gross margin line so it won't affect gross margin.
But.
I think we'll be able to absorb it its reflected in our in our model and on our guidance and that still reflects like I said about 150 to 200 basis point.
Increase.
Great. That's helpful. And then maybe if we could just switch over to the M&A pipeline.
The PSL deal was.
A little bigger than you guys of normally done, but do you think like that is integrated and the like are you ready to do another deal and if so like what are you guys looking for for potential targets yes.
Yes, absolutely.
I'll answer the the well I'll tell you, yes P. S. L is integrated.
That's always kind of sort of an ongoing exercise, but in this case it was really straightforward as I mentioned in the script we've.
We've got a lot of business going there and early stages that I think will expand a lot. So that's good news as it relates to P. S. L. But yes, we're absolutely in the Hunt again, we took a little pause after P. S. L. One because of the uncertainty of.
The pandemic, but also because it was the larger size to your point, but we've got a number of things in the pipeline in terms of the focus it certainly digital.
We're also interested in more potentially more near shore type deals.
As we are rapidly scaling to meet demand that we're seeing increase rapidly.
But beyond that from a skill set standpoint, it's a it's cloud it's custom add debt. It's the typical.
Analytics data.
Commerce actually is another spot so.
We're seeing good demand everywhere and look at the scale of the business kind of across the board, but again really all digital.
Great. That's good color on a nice quarter guys.
Yeah.
And our next question comes from the line of Vincent Colicchio from Barrington Research. Your line is open.
Curious what would you target would be for bill rate increases for 2021.
Probably in the sort of 1% to 2% range. Vince you know I think our philosophy on bill rates is we want to stay as competitive as we can theres, probably a lower runway there.
But again, we've got I think such great opportunity and the and the offshore mix shifting more work offshore.
The two.
To drive margins debt.
We're comfortable.
On the rates kind of down so we can stay competitive the other point I'll make on margins.
And you know kudos to Tom and team on this but you know the average salary consultant salary in North America last year was actually down 1%. Despite the fact that we gave the normal merit increases and the sort of 3% to four per cent range, which is industry standard.
We were down about one per cent and that's because of that pyramid I alluded to earlier, we're actually able to hire.
The people more at the at the lower end.
Of the figure of at the bottom of the base of the pyramid as it were.
Taking on the larger and longer term engagements. So so those of the levers around margin, we're going to hold the rates, probably again, maybe one 2%, but we're not going to be too aggressive on that.
And.
How does your visibility when you're putting together your you know your outlook for the year.
Compare to what it was like pre pandemic.
Well I think right now we've got the the largest backlog we ever have and so on.
You've had really really strong bookings here in the second half of 'twenty.
The bookings have started off strong this year and so as we sit here a day, we've definitely got the largest backlog certainly in absolute dollars, but also as a percentage of our total forecast going forward. So there's abilities right now is the best it's been in recent memory.
And then what was the organic growth in the quarter on for the year I am sorry, if I missed the.
No problem it was about 3% for both I believe.
Yeah about two per cent for the year of about 3% of in the quarter and our guidance for Q1 is 8% and for the year is $10.
Okay.
That's all for me. Thank you of nice job. Thanks Vince.
And once again, thank you for a question. Please press the star Wang.
Our next question comes from the line of Jack Vander Ark of Maxim Group. Your line is open.
Thank you good morning, guys congrats on the the strong quarter.
<unk> as well Tom.
Ill start with the question for you then to Tom in terms of large deals.
70 in the fourth quarter, which is good to see.
Just given this was the year end quarter can you provide some color on maybe two things.
In terms of timing of when those deals closed throughout the fourth quarter. There was any noticeable changes from prior years of backend loaded or is it kind of evenly distributed.
And then the second one how many potential large deals.
Maybe got pushed into 2021.
Let me just kind of got pushed out of delay for whatever reason that maybe you kind of close in the fourth quarter.
So thank you for the congratulations on the.
The compare Q4 year over year really not much of a difference we definitely see it spread throughout Q4, I think by nature of some of its a little bit closer towards the end as people ramp up some of their physical years.
But no real material difference between year over year.
The closing deals we always see some deals slipping from quarter to quarter, nothing that sticks out in 2020 compared to previous years. So we have some nice deals that we closed in Q4, some nice ones in Q1, some move every quarter over quarter of nothing sticks out on that one Jeff.
Great that's helpful. Thanks, Tom.
Then the question for Jeff.
And the analyst just asked about this as well, but in your prepared remarks, you know bookings are strong pipeline strong everything seems strong.
Great, but can you maybe just talk about back to kind of visibility topic.
Throughout 2020 is kind of a common theme was the.
<unk> contract cancellation risk maybe can you just update that view that you have in terms of how you were kind of perceiving unexpected I know, it's a tough question, but unexpected contract cancellations for a few months ago, and where that view is for today now.
Yeah I think.
Of the going forward I really just speak to that.
We always bacon of fair amount of conservatism in our guidance and on our forecast.
You know there is an ebb and flow.
But I will tell you in terms of any impact from Covid.
It really appears to be behind us as it relates to contract concerns in fact, what we are seeing is of significant pickup in demand that I think is probably related to some pent up demand of projects that were delayed or or not even embarked on last year. I think we're seeing that now I will tell you anecdotally our sales team.
Of this busier than ever so while.
While that debt is a factor it always is like I said, there's always an ebb and flow.
We feel like we've reflected.
Putting them out here and and like I said that were reasonable reasonable.
In terms of conservativism in the in the forecast.
Okay, Great. That's helpful. That's it for me, thanks, guys and congrats on the strong quarter again thank.
Thank you.
And our next question comes from the line of surrender time of Jefferies. Your line is open.
Hi, Jeff.
Just a big picture question here can you talk a little bit about the nature of the projects that youre seeing in the sense of that.
Our clients at this point in time, starting to embark on bigger projects that are like maybe different than the times that they had last year or are they still are the kind of biting off shorter term projects, where there maybe you can.
To get something done that's going to pay dividends within the next year or are these like bigger things that theyre thinking about at this point.
I would say they are increasing definitely.
The there like I said the demand that we're seeing.
I'm pretty bullish people are embarking on a pretty major programs now.
I don't know that it's the fundamental shifts you know again related to Covid from from last year to this year. Some of the quite frankly is how we've managed to elevate our relationships with a lot of the clients that we already had.
Including you know major Fortune 50 companies, where we've managed to become now the preferred vendor are one of only six globally.
So we're seeing without obviously comes more larger longer term opportunities.
The digital transformation is about speed and nimbleness and and so you know you have the yield some results along the way he says look the yoga.
One of the days of a three year program before you're producing the results it's much more iterative now so.
But that doesn't mean again of 90 million dollar relationship over for years.
<unk> involves a lot of again a lot of iteration of lot of deliverables, along the way you're building on the foundation.
And then by that time as I said before kind of the prisoner's dilemma.
The go back in and homes. So it's a it's sort of perpetual.
Got it that's helpful. And then just a clarification on the growth of offshore revenues from of definitions perspective is that refers to the revenues that are generated by offshore staff or is it.
The non North America based revenues, meaning from a client perspective, no it's offshore staff yep.
Okay. Thank you.
Sure.
Thank you.
And at this time I would like to turn it back to our chairman and CEO, Mr. Jeff Davis for any closing remarks.
Alright, well once again, thank you all for your time today I appreciate it and look forward to speaking to you on a couple of months with some more great results. Thank you take care.
Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect have 11 of them.
Okay.
[music].