Q2 2021 Grid Dynamics Holdings Inc Earnings Call
[music].
Thank you for standing by this is the conference operator, welcome to the grid Dynamics Holdings, Inc. Second quarter 2021 earnings call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then 1 on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.
I would now like to turn the conference over to Lilly turnover head of Investor Relations. Please go ahead.
Good afternoon, welcome to Great dynamics second quarter 2021 earnings conference call before we begin let me remind everyone and todays discussion will contain forward looking statements based on our current assumptions expectations and beliefs.
And our third quarter 2021 financial guidance, the growth of great and and.
This business, our objectives and business strategy as well as other forward looking statements.
You can refer to the disclosure at the and the company's earnings press release and form 8-K filed with the Securities and Exchange Commission and good day.
Mission about forward looking statements that will be made on this call.
All statements made today reflect our current expectations and we undertake no obligation to update and you'll come to reflect the events that will occur after this call.
And you can learn more about the specific risk factors that could cause our actual results to differ materially from today's discussion and the risk factors section of the company's form 10-Q filed on May 6.2021, and and subsequent periodic reports that the company filed with the SEC.
During this call we will discuss certain non-GAAP measures of our performance GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in the press release and the 8-K filed with the FCC.
And I call is also available via webcast you can find all the information I have just described and the Investor Relations section of grid dynamics section.
And then enough on the call today.
And then and lifted and CFO and <unk>.
And they have prepared remarks, we will open the call to your questions.
Let me turn the call over to Leonard.
Thank you are really good.
Good afternoon, everyone and thank you for joining us.
And had a great quarter with many positive trends shaping our results and.
And I am excited to update you all on a per.
And speaking to you 3 months ago.
From this call today.
And highlights our second quarter results.
And with no what we are witnessing across our business on the demand from.
And talk about the trends there.
<unk> third quarter and.
2021.
Consistent with low guidance commentary, we provided to you all 3 months ago. The second quarter results were strong across multiple crops.
More importantly.
The current demand environment is robust and.
This strong positive backdrop for the remainder of the year.
Digital transformation continues to be a central theme and customers increasingly seeking our services with strategic digital transformation projects across different industry verticals.
Now coming to the second quarter results.
I'm very pleased to reported the highest revenue quarter and our company's history.
Moreover, the organic performance is the highest and the company's history as well.
This is after reporting a record revenue in Q1 and the second quarter.
Grow organically.
$38.4 million.
<unk> $9.3 million from revenues from our recent acquisitions of index and depth of knowledge and it was higher and there are giving revenue guidance range of $35 million to $36 million.
And 12 months or more than doubled our revenue and substantially improved low margins.
Gross with what we accomplished and I would like to thank all our employees for their hard work and dedication and all load customers for their trust and grid and then.
There are many positive trends in the quarter and I want to share with you and some of the notable ones.
We are witnessing a robust demand across all verticals, while in the same way as a continuation of the trends that we highlighted last quarter.
This strength has exceeded our expectation and it's evident and our outperformance relative to our second quarter guidance.
Like last quarter, and brewing consumer sentiment combined with catch up and spending and some customers who held back in 2020 has been the key reason.
More importantly customers are more aggressive spending and digital transformation initiatives become.
Sure.
These are all business pipeline, we see a favorable business trends with expansion of existing and new customer engagements. We remain bullish for the remainder of 'twenty 'twenty 1.
And then profitability from outperformance was even greater and expect.
And there was accomplished by a combination of good execution aided by favorable business sales.
More importantly, we achieved all long drove non-GAAP targets.
40% gross margin and 20% EBITDA.
During the quarter benefited from a favorable offshore mix and COVID-19 related savings and help us and delivering a stronger than expected margin quarter.
Demand for engineering sales remained strong with some skill recruiting supply side constraints, such and industry wide trends persist since the beginning of the year. This is something we already highlighted last quarter. We continue aggressive hiring grid dynamics University training and retraining of our employees invest.
And as Josh and programs and expand into new geographies.
And the second quarters granted a total of 154 people.
Head count exceeded 2500 employees.
During the quarter weighted towards new logos with our organic business with all of them contributed revenue in the same corp.
Out of the 5.1 of the little literally in the wellness 2 companies are in Fintech..1 it is the leading global provider and Columbia secure mobile Enterprise Communications and the final 1 is a dynamic cloud cost management.
Including our recent acquisition of bags and Thats acknowledge the total customer count during the quarter was 200 cool.
On May 29, we announced the acquisition of the UK based tests and knowledge and and all cash transaction.
The company has made a market and the industry with the specialized high and e-commerce consulting capabilities and.
Our gaming business and <unk>.
Focus is on large and good prices and over time has built a strong reputation with our clients and retail CPG and technology space.
Company's primary delivery locations are in the United Kingdom mogul and Mexico.
Regarding the synergies are.
A key reason for the acquisition and work to deepen our enterprise market presence in Europe and to enhance our digital commerce capabilities with new areas of expertise.
Commerce tools.
Hybrid fluid card book.
Commerce and others.
Additionally, with the acquisition of testing, we now have initial presence and Mexico would you expect to expand and leverage overtime.
We're excited to have tested team joining agreed dynamics and we're looking forward to exciting times together and.
I'm also happy to announce that the cross selling opportunities with.
Our opening up with our core business clients expressed interest and we're working with.
<unk>.
Within our top 5 clients to work and the TMT space, 1 was CPG and retail or where you're from.
And our top 5 customers and the quarter were 45%.
This was down 67% of low revenues and the same quarter a year ago. The diversification of customer revenues were largely driven by a combination of our continued success and rent and new logos going deeper with existing clients and the recent acquisition of depth of knowledge and docs.
I'm very excited about <unk> partnership announcement with Google last week, Google Ingredient Index issued 2 separate press releases and highlighted agreement and having been selected by Google and implementation partners.
Cloud retail.
Grid and that mix will continue to work with google's retail clients and to build and implement search platforms for the retail.
And expertise around product and discovery solutions with lunch and the prices is well known and the industry.
And with this partnership will continue to help leading brands to improve their customer experience now.
And now coming to some segment commentary.
34% of our second quarter revenues TMT remained our largest vertical.
Top 10 customers continued to focus on expanding offshoring delivery offices and this resulted in healthy sequential growth or the first quarter.
Moving forward, we continue to expect <unk> to remain our largest.
Vertical.
At 27% of the second quarter revenue retail business continued to witness strong growth over last quarter, largely due to strength in our organic retail business combined with contribution of our recent acquisition of tax and knowledge.
Although the organic from we witness a pick up across the board with 1 of our top historic brick and mortar clients increasingly engaging our services that said.
E Commerce friendly brands continued to dominate the segment composition as these clients contributed meaningfully during this quarter.
And 21% below second quarter revenue.
CPG and manufacturing continued to show growth, both on a sequential and year over year basis.
And you're bidding this was growth from logos outside the largest CPG customer and revenue from that from knowledge and our largest CPG customers and we're preparing to initiate and new set of significant projects.
Our expected to rollout and the second half of 2021 onwards.
During the quarter.
We delivered on some notable projects.
Number 1.
And a global technology company, we worked on a tool to manage 1 of the worlds largest data and it will be split grid.
And it is developing and online portal that provides a single axis to manage the platform and its business intelligence Big data and data science services.
The door is operational and it's been used by tens of thousands of companies deliver loopers across the globe.
<unk>.
We're a large U S based retailer grid.
Great dynamics implemented and deployed intelligent and allocation engines.
Just on integer linear programming.
This optimization model was used to completely revamp and now David Order management system.
And effective all grid created and implemented by grid dynamics engineers, allowing the client to optimize their order and fulfillment system and decreased orders by 50%.
This initiative led to significant annual savings and had positive environmental.
Number 3.
And a global CPG company with design and deliver a solution by creating and modular and expandable platform.
Product discovery.
This solution and boosted the revenue of direct to consumer business, and then maybe Rev and experimentation for traditional and machine learning based recruiting techniques using a new search system. The Cline project a significant increase.
Annual revenue.
And number 4.
1 of the largest U S wealth management company, we have built and micro service application, which enable more than 9000 and financial advisors with rapid onboarding of new clients.
This single interface and coordinated crosses over the application resolved it with a strike and reduction of a deal closing time from 2 weeks to 30 minutes allows advisors to handle more clients simultaneously and minimized Glen and loss during the Onboarding.
With that let me turn the call over to our new who will discuss Q2 results and more detail and Neil.
Thank you Linda good afternoon, everyone.
Our second quarter revenue of $47.7 million exceeded our guidance range of $40.5 million to $42 million and was up 22% on a sequential basis and 113% on a year over year basis.
Excluding revenues from our acquisitions of docks and Tulsa.
Which contributed $9.3 million in the quarter, our organic revenue of $38.4 million was up 18% sequentially and.
72% on a year over year basis, and exceeded our guidance of 35 million to $36.5 million.
The stronger than expected revenue in the quarter was driven by across the board strength across industry verticals with greater contribution from TMT and Greece tailed verticals.
Similar to the last couple of quarters.
Our TMT vertical was the largest vertical.
Coming to the TMT vertical.
It was 34% of our second quarter revenues and grew 12% on a sequential basis and 35 person on a year over year basis.
Growth in the quarter, mostly came from some of our large TMT customers ramp their offshore operations with us.
During the second quarter, our retail vertical representing 27% of our revenues gross 44% on a sequential basis.
Within the segment, we witnessed pickup and business across many customers as they became more aggressive additional transformation related spending.
Our top e-commerce friendly retailers combined with the <unk>.
Pick up and some of our brick and mortar customer contributed meaningfully to the quarter growth.
And the second quarter, our non retail business now representing 72% of our revenues was up 15% on a sequential basis and 90 person on and year over year basis.
Here are the details of the revenue mix of some other verticals.
Our CPG and manufacturing represented 21% of revenue and the second quarter and grew 14% on a sequential basis and 300% on a year over year basis.
The growth during the quarter, primarily came from the ramp of new customers combined with contributions from test it.
Finance represented 9% of revenue and grew 18% on a sequential basis and 16% on a year over year basis.
Sequential growth and the financial vertical was largely driven by rapid programs from recently added customers and to a lesser extent contributions from test it.
And finally, the other segment represented 10% of our second quarter revenue and was up 31% on a sequential basis largely from faster than expected ramp and some of our recent client wins.
We exited the quarter with a total head count of 2000 and 510.
Up from 2056 employees and the first quarter 2021, and up from 1237, and the second quarter of 2020.
The sequential increase of 454 employees.
Our 22%.
Largely due to a combination of improving demand.
<unk> and head count increase and our recent acquisition of constant knowledge, which added and.
<unk> hundred 81 employees.
Excluding TASS at the headcount increase was 273 people or increase of 13% on a sequential basis.
And the end of the second quarter of 2021.
Our total U S head count was 264 or 11% of the company's total.
Head count.
This was slightly down from 12% and the first quarter and significantly down from 20% in the year ago quarter.
Our non U S head count, which we sometimes refer to as offshore located in the central and Eastern Europe, UK, and Netherlands, and Mexico was 2246 or 89% of the total head count.
And the second quarter revenues from our top line and top 10 customers were 45% and 62% respectively. During the same period, a year ago, our top 5 and top 10 customer concentrations were 67% and 84% respectively.
The decline was driven by a combination of new logo ramp.
<unk> industry diversification and acquisitions of docks and testing.
During the quarter, we had a total of 212 customers with 51 coming from our organic business and the remaining 161 from our test and <unk> acquisitions.
Our organic business customer count of 51 was up from 48, and the first quarter of 2021 and up from 37 and the second quarter of 2020.
As a reminder, we only count the revenue generating customers in the quarter and did not include customers and were enacted during the quarter.
Relative to the first quarter, we added 5 new logos to and the TMT vertical tour and the finance.
Vertical and 1 was in the other vertical.
Moving onto the income statement.
Our GAAP gross margin during the quarter was $19.8 million.
And <unk> 41, 5% up from $15.3 million or 39, 2% and the first quarter of 2021 and.
And up from $8.4 million or 37, 5% in the year ago quarter.
On a sequential basis, the increase and gross margins as a percentage from a combination of factors that included tailwind from more working days.
Favorable offshore mix and our recent acquisition of tacit knowledge.
On a non-GAAP basis, our gross margin was $19.9 million or 41, 8%.
$15.4 million or 39, 5% and the first quarter of 2021 and up from $8.4 million or 37, 8% and the year ago quarter.
Sequential increase and the non-GAAP gross margin as a percentage was driven by the same factors highlighted above.
Non-GAAP EBITDA during the quarter that excluded stock based compensation depreciation and amortization transaction and other related costs was $9.7 million.
About 24% up from $5.3 million or 13, 4% and the first quarter of 2021 and up from $1.2 million or 5.4% and the year ago quarter.
The strong sequential increase and EBITDA as a percentage of revenue was largely due to leverage on higher levels of revenue gross margin tailwind from favorable offshore mix combined with flattish operating expenses.
Additionally, in the year ago quarter, our business was impacted by pandemic related headwinds, resulting in low levels of EBITDA, both in dollar terms and as a percentage.
Our GAAP net loss and the second quarter totaled $1.5 million and loss of <unk> <unk>.
Based on a share count of 54 million shares.
Appeared to the first quarter loss of $2.1 million or.
Our <unk> per share based on 52 million shares and and loss of $2.2 million or <unk> <unk> per share based on 50 million shares and the year ago quarter.
And a sequential decrease and GAAP net loss was largely due to higher levels of revenue, both organic and acquisition offset by a smaller increase in operating expenses.
On a non-GAAP basis, and the second quarter. Our non-GAAP net income was $6.1 million or <unk> 10 per share based on 61 million diluted shares compared to the first quarter non-GAAP net income of $3.1 million.
<unk> <unk> per diluted share based on 60 million diluted shares and.
Point $4 million.
<unk> per diluted share based on 53 million diluted shares in the year ago quarter.
Contributing factors in the increase non-GAAP net income and compassion to the first quarter were higher organic revenue.
And revenue contribution from tacit knowledge.
Increased number of working days and the quarter and flattish operating expenses and comparison to the first quarter.
On June 32021, our cash cash equivalents and short term investments totaled $68 million down from $100 million.
And the first quarter of 2021.
The sequential decline in the current quarter was primarily due to the acquisition of <unk>, which was an all cash deal.
Let me to the third quarter guidance, we expect revenues to be and the range of 50 million to $51.5 million.
This includes $11 million and acquisition revenue.
From toss and index combined.
And we expect our non-GAAP EBITDA in the third quarter to be and the range of $8.3 million to $9.3 million.
For the full year 2021, we expect our revenues to be at least $189 million.
This includes a contribution of $38 million.
From our acquisition of <unk> and docs.
For the third quarter, we expect our basic share count to be and the range of $63 million to $65 million and our diluted share count to be and the range of 69 to 71 million shares.
That concludes my prepared remarks, operator, we are ready to take questions.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then 1 on your telephone keypad, you'll hear atone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then 2.
We will pause for a moment as callers join the queue.
Our first question comes from Matt tandem.
Needham. Please go ahead.
Okay.
Thank you good evening out letter and Billy Congrats on the quarter.
I wanted to start.
Start with.
And just given the demand backdrop could you speak to pricing what are you hearing from clients are they now more receptive to pricing increments and how is that impacting your expectations for the balance of 2.
2021 and into 2022.
Okay.
Thanks, Brian.
So I would say that and.
In general we see a more.
Positive trend with our pricing.
And customers understand that there's a lot of.
Competitive market situation and also the some of the inflationary.
Behavior, So I would say and.
Sometimes you do a bit more favorable than usual.
And we work with our.
And the existing and bringing new customers.
Driving this demand is driven by the.
Business Kpis.
And there are more flexible in terms of their pricing and.
Negotiation with us.
Got it that's helpful and then.
Sort of related to that question would be just your expectations around gross margins and EBITDA margins being so strong and the second quarter.
When we think about all the puts and takes on the margins how should we think about the margin trajectory over the balance of 2021, and then the sort of the same question into 2022.
And trend on the market would be helpful. Thank you.
I'm going to start and then again and you lose.
And more details, but I just wanted to take this moment to reflect on the year low Germany.
As you deal with US all the time Youll recall that.
Going through early days of corvid.
We're facing a lot of pressure and.
And Ah.
We got a we got to get ourselves from a wild horse again, and just kind of drive those business by the end of Q4, which we did in Q1 was and.
And quarter of accelerating our revenue.
And then mentioned that Q2 would be the quarter of financial performance.
I will later and you want to talk about details, but fundamentally we are maintaining our positioning on hopefully 'twenty.
Non-GAAP.
Gross margin and EBITDA, which really speaks to.
The bulk of the company as you can imagine I'm very focused and there.
Gross margin.
Which has driven.
And the appreciation of the clients the capabilities and respect to accrete and ethics delivers and I would let our new too.
And finally.
Details.
Thanks, Nick Thanks, Mike. So as you saw we had a nice pick up from Q1 to Q2.
And if you look at.
Some of the trends we share on the prepared remarks, so I won't go through them again.
But.
The bottom line here is that you must have seen a flattish opex between Q1, and Q2 and obviously the gross profit.
Dollar increase all fell to the bottom line.
So look as we go into Q3 and remember we're talking about 90 day intervals. So sometimes it gets a little tricky for a company like us that is in a gross stage and investing.
We are investing we continue to invest some of the timing things move around so as we go into Q3, and we're going to be investing we're going to be investing aggressively on the hiring front as well as honor and initiated which is sales and R&D marketing and things like that.
And.
As you saw as you can see from our guidance of $8.3 to $9.3 million on the EBITDA.
Youll see some of that investment playing out and showing up.
And to some extent and see that on the gross margin front, but I think the big picture is look we and.
And Lennar pointed out Q2 was very important for us to come back.
And show the 42000 and that will continue to be our long term, but again, we have to balance and with some of our growth as far as we get into 2022.
And then let's come back and wrap up 2021, and we'll give you a little bit more color, but remember our growth has to be balanced with some other strategic investments.
Totally understand and appreciate the responses. Thank you so much congrats again.
Thank you.
Our next question comes from Puneet Jain of Jpmorgan. Please go ahead.
Hi, Thanks for taking my question and good quarter guys.
Thanks Leonard.
Can you talk about black hole.
And behavior has changed and coming out of the pandemic on.
Obviously that is a.
Benefit from pent up spending easy comps in Q2 results.
But are you seeing increased digital imperative among enterprise customers, which could drive higher accrued over the long term for firms like per dynamics.
Okay.
Thank you and.
And welcome to power grid and I'm excited haven't you.
So the situation with their clients obviously.
And it's very hard to measure with the same approach and some of the enterprises accelerate substantially with some of their lives and more careful investing mode, but overall its a very healthy environment and I think more important and look at the general trend.
If you look at the relationships between grid dynamics and the larger clients.
And I believe and the past 12 months, we have been proven ourselves to be much more diverse and much more aggressive on that.
The capabilities, we introduced our <unk>.
Multiple solution and <unk>.
And pardon models, we increase more and more.
Taken over the entire project.
And given the solution that we have not and before but now it's more.
We will give more trunking and with their clients that even the book very very top clients are now taken a much more strategic approach with scaling.
And the financial and project relationship with grid, and then some and very bullish on that.
Okay.
Understood.
And many of your peers talked about seeing supply challenges during the quarter and pursue Hyatt regency, San and attrition rate.
Can you talk about how you are seeing supply across various countries in central and eastern Europe.
Okay I'm from the.
Hiring and a while and you know.
There there is always and a challenge of attrition I think I'll and general processes and 2.
Huge demonstrate.
We are booked and stay.
And the the front of the behavior.
Gotcha. Thank you.
Force.
Our next question comes from Brian Bergen.
Cowan. Please go ahead.
Hi. Thank this is Zack 8 and went on for Brian first question for US just on the balance sheet. It sounds like it's about $150 million cash or so as it stands today can you just update us on and kind of get your thoughts there and then a strategy should we expect to see anything and near term.
[noise] [noise] alright so.
Yeah. So that you picked up a few things first of all obviously [laughter]. The balance today is different from the balance of the end of the queue too right.
Because we successfully finished our secondary from raising a follow up just just short months ago and showed that none of that is more cash there's some more cash coming through the tri motivation of our.
Day to get those regions up to scale overtime.
Alright, well.
To share victorious straight.
Or acquisition was around the kids' abilities of cash and knowledge, just or financial retail and and cpg's sectors and some of the partnership with the S. A T and other core software products. It's it's a it's a U K based company and they do have shoe and.
Additional EG and the sender by the way that the the center the the center of gravity and.
The central gravity in the UK sounds you know still remains to be the key but they have centers and mom door to service, primarily European customers and and they also have a center of gravity and Mexico for the North America Clinton, So we already jumped.
On the bandwagon of the partnerships to buy and we have some projects both in the and the U S and and Europe jointly with gossip when it comes to Mexico of course.
It's a great opportunity for us to.
Oh and he.
Sure and I mean, it's and just to be trying to it's almost like our business started Ya, you know and and expand and we already are working and a tourist projects, which we gonna.
Work together with the you know without group and Mexico again, it needs to be careful when you need to make sure with full and I understand the.
Relation with a physician to you and they have a very rich culture of their behavior and customer relationships. So when a compliment without just stepping too fast, but we were excited about it and it comes to Singapore, well, we'll need to look at our you know the strategy and the fire.
Far east, it's not zero 4 agreed at this point, but I would say, it's a little bit too early to talk.
Got it thank you.
Thanks.
Our next question comes from Joseph and.
And a card. Please go ahead.
The Guy from good afternoon Nice herself just a couple from me 1 could you comment on your new logo away and said a quarter and their potential in terms of size and and secondly, just an update on where your sales force is now and uhm hiring on that from thanks very much.
Of course of course, thank you so [noise].
And so the first part of your questions and so.
And you don't typically all logos tend to be a little bit on the larger side.
No I would say in general and there's no much deviation from there. However, we do observe to pick ups and innovative clients of the you know what day would vote midsize because they're a plane from instrumental rules of the relationship with the into price claim. So it's it's a bit of and mixed.
And match between the guys, we acquired and Q2, and then kind of a preview similar meat and meat and would maintain the same position for a few street and for the smaller client as you know I'm wondering and I made a smaller startup plans, we have ducks Ah acquisition and she was done.
Last year or so from their reporting organic growth would we call her again and it gets without acquisition were mid to large clients and it comes to dogs tend to be on the on the smaller.
And the second part was sorry, and you'd have to repeat [laughter] Shake force, but.
The task Force Oh, Yeah, sorry, Okay. So that's 1 of the 2 main areas a degree dynamics and that's right and on the other already mentioned and that it would continue to do that so we're investing our technology capabilities are a solution and artefacts and you know upward mobility with Ah.
But really share with the clients, which also dry low more technology consulting relationship I'm and recently, we brought on board and.
And you you know CTO, which kind of supports the fact that we're trying to build more exchange and industry Prognathous Chin.
And when it comes to the sales side will continue to add this year management on on the regional side and maybe some industry specialization and we are and it's you keep people and queue to.
And I'm, a I'm a big Ah reserved from you know making loud.
The press releases and boast about people and their sales had a blue sales people are proven by the delivery on their clients are as we see and pick up a bit clients across the country and then you will see that but I can tell you that 2 regions, we've been mustard too invest additional resources been.
The southwest and and a northwest, especially around Texas area, and we see exponential growth and a sales relationships on the east coast all the way from South East to New York.
Reach.
Thank you very much.
My pleasure.
Once again, if you have a question please press stars and 1.
Our next question comes from Maggie Mellon and William Blair. Please go ahead.
Hi, Thanks, and now and 5 organic customer additions are these customers starting out with a mark low ball delivering all are you primarily starving and I'm from onshore and then should we be expecting any additional expansion of offer to the library and from there.
Arch tech client or other clients going forward.
Well and then you can make it even with new clients and the land and extend I would say and the current environment. Some of the engagement and start directly from Bill sure I mean.
We we we we do have very occasional face to face moving but most of them are still been roadshow and.
And in this case, because they they demand the rapid deployment and some of those those engagement directly proceeds with and Oh.
Oh, sure teams, which quite divorced and dealing directly with the customer and the state and the other hand, there are some clients they.
They they would like to have.
People with the proper background and their particular fields and they tend to be and then just onsite, but more or less local with the day area again, we play and there's 1 day, we will be able to.
Come back to their offices and the broader scale those people would be the the core of extending our leadership within decline and promises.
The the terms of the scaling offshore and it's absolutely it's a it's a huge momentum.
Across virtually although offices and we are adding virtual offices throughout pork locations I think if we really look at the number of service and the countries. We are where we have increased and incremental at the places where people work, while we still have.
The core cities Mark from the map without physical offices, located we have been and and people from the virtual offices within the region.
Okay, and and black planet and suffer out here crying and examples you were referencing and natural outcome and it's like.
You know expense reductions reduction and closing time, alright annual revenue and crazy as types of thing.
Are you talking with clients at all about outcome based compensation arrangements that would supplement that time and to carry all engagements and you have.
Well, it's more than them and material there is.
There is a or just for the the figs bids and project based and reward to the outcome based and relationships are getting more popular.
There are some customers, which would seek test the water with us so they they don't go across the entire platform boots and specific projects, but you know different different people.
Called the outcome based based and different criteria and so there are still they may call. It outcome based and then the way Holy Constellation works, it's more of a standard way of payment. So I would say when we golf line you dig in with and Neil She will walk you through many more examples.
And I would say generically as we grow all really should become and longterm, which includes the other more I would say and modern ways.
Settlement on on the projects, but most of their engagement. We have been recently produced those miserable results, 1 way or and now the base and the key P. S. So whether it's a monetary reward or it's the the measuring the progress of the relationship the easier way for us to do that and become because we have more and more.
And that's implemented so there's more tragic ownership and outside so easier to drive but.
You know the performance matrices and associated with the contribution from greed and things.
Alright, Thanks line or.
Fisher.
Our next question comes from Josh Siegler as Cantor Fitzgerald. Please go ahead.
Hi, Linda and and ill congratulations on a fantastic quarter really nice to see such strong revolt and every day all segment and you know we were wondering as adults and berrien spreads are you seeing any initial change and and sentiment from some of your retail customers are they felt pursuing digital transformation and force.
Well things first and the kind words.
So.
I think the the the.
And multi year developed it was.
It was conceived some of the ideas and you know breathe.
Breathe R and D project, and our kind of aviation work now of course, all day main quarters belong to try and but B and mentioned.
And by the by Google in there and you know press release, and and given graciously to US. The citation out press release tells you that the the truly I appreciate reading and that makes a contribution big part of it. It's all extra keys and retail you know it's it's 1 of those things just don't treat ideas from the clouds.
And you don't just read the transformation you go back from the legacy on premise and Ah Ah you know the the private Ah the private and the public cloud that combination day migration. The automation. So bye bye putting in a successful implementation and readiness too involved with a multiple retail customers sides.
Side by side with Google plot partners. It just it it it's a testament over a very comprehensive indepth keep and do it this within reason and and.
Over the past and 12 years.
Excellent. Thank you very much Leonard and congratulations again.
Thank you so much.
This concludes the question and answer session.
I would like to turn the conference back over to Mr relationships for any closing remarks.
And get everybody for joining us on the call today.
Oh second quarter results were strong and we executed well again, so guidance and haven't.
And even for a year and a half and have accomplished a lot and it was going to public and March 20th 1.
Very broad.
And that makes them dark team and they're continuing and hard work and achieving the calls and.
And the past 12 months, we all have.
More important and the second quarter highlight we were able to do and profitable level consistent with a long term targets and prepared and death.
And can you too we can put a second and then an acquisition.
Furthermore, we conducted a successful call law or free and June it resolved and and Hampton that companies flow and then there's substantial cash from the balance sheet cause it you should go.
Recently July 20th or we announcer redemption, all remaining public works the redemption would be concluded August.
And this will scream like all capital structure.
As we enter into the second half of the 20th 21 day.
The environment is robust customers continues to cry right, there and you sort of transformation initiative and we worked very hard to reassure and we can tune to scrape, our engineer and capabilities and resources I'm excited with the opportunities delay ahead, and what and look forward to give and.
And you are business and crew.
3 months thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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