Q3 2021 Exlservice Holdings Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to Q3, 2021 EXL Service Holdings, Inc. 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, the Sino Mr. <expletive> Weil assistance during the conference. Please press Star zero on your thought.
And on the telephone.
I would now like to turn the conference over to your host Mr. Steven Barlow. Please go ahead Sir.
Thank you Chris Good morning, and thanks to everyone for joining Exl's third quarter 2021 financial results Conference call.
So vice President of Investor Relations with me today in our offices in New York are <unk>, Chairman and Chief Executive Officer, Nick <unk>, Our Chief Financial Officer.
We hope you've had an opportunity to review our Q3 2020 earnings release, we issued this morning as well as the press release announcing a new $300 million share repurchase authorization. We have also updated our investor Factsheet in the Investor Relations section of Exl's website.
As you know some of the matters, we'll discuss in this call are forward looking please keep in mind that these forward looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements such risks and uncertainties include but are not limited to general economic conditions. Those factors set forth in today's press release discuss.
And the Companys periodic reports and other documents filed with the Securities and Exchange Commission from time to time. He fell assumes no obligation to update the information presented on this conference call.
During our call today, we may reference certain non-GAAP financial measures, which we believe provide useful information for investors reconciliation of these measures to GAAP can be found in our press release as well as on the Investor Factsheet I'll now turn the call over to Rohit Kapoor, Exl's Chief Executive Officer.
Thank you Steve.
Morning, everyone.
Welcome to our third quarter 2021 earnings call.
I Hope you and your families are safe and healthy.
I'm delighted to report another outstanding quarter.
EXL achieved unexpected results in the third quarter on revenue and adjusted EPS.
Q3 revenue was $293 million, which represents a 5.8% sequential increase.
21% year over year increase bolt on a constant currency basis.
Adjusted EPS for the quarter was $1 30 per share.
Our analytics business reported revenue of $125 million growing eight 3% sequentially.
32, 7% year over year.
Consistent with the first half of the demand for analytics has increased significantly.
And Budd.
We foresee continued healthy growth in analytics, driven by systems demand for our expertise in data driven solutions.
Our operations management business also achieved growth this quarter generating $169 $9 billion in revenue, which is up four 1% quarter over quarter and 12, 6% year over year.
Provided primarily by higher revenues from our suite of insurance solutions and new wins.
Emerging business.
Our revenue growth this quarter has been broad based.
We have continued to win across all industry verticals with analytics and digital.
Core differentiate us.
We see this trend continuing with a strong pipeline of large deals and surging demand for our digital solutions and analytics capabilities.
We feel confident that we will maintain our strong position in the market by continuing to secure strategic wins.
To illustrate what we are seeing in the market I would like to share some insights on a few of our recent engagements that showcase our unique strengths.
Starting with our analytics business.
Well you don't see them financing to buy now maybe just solutions have become a rapidly growing segment.
Banking and retail industries.
The popularity of the format is due to how seamless and easy it is from the customer perspective.
Real time credit approvals at the point of purchase allows for a much smoother customer experience.
This creates significant value for the customer and the bank or a lending institution has departure.
On the merchant side by integrating a financing solution directly into their purchase journey, we are able to drive higher conversion and higher order value.
On the financing side, we are enabling banks to expand share of wallet with existing customers attract new customers and create an efficient merchant services workflow.
We've developed a name for them.
Got it.
By now you got a solution for first National Bank of Omaha, The largest privately held bank subsidiary in the United States.
It is unique to reason.
First it allows merchants to provide information about the customer in real time.
He played an instantaneous credit decision with comprehensive credit analytics, preempt promos fraud prevention, knowing our customer support which directly into the process.
Second it is highly scalable.
Working together with our partners the submission was developed.
In the box capability that can be deployed rapidly across mushrooms.
In the case of first National Bank of Omaha.
And launched the solution in a live retail environment in just four months.
Given our deep client base in retail banking, we see good traction for this solution going forward.
Similarly, our innovative digital solutions built on our proprietary E O S architecture.
Big clients re imagined traditional business functions.
EXL partnered with a leading Australian insurer to proactively identify claims payment leakages and prevent regulatory features.
Our AI powered smart audio solution has helped the insurer automate 100% of the claims reviews, which has streamlined workflows and it.
D R.
Let's see of claims processing.
Additionally, our thoughtful they'll go out of town.
Now tracking data across the claims lifecycle to identify all but 10 times more leakage that previous benchmarks.
The smart audio solution is highly scalable.
I am making simple changes.
We have been able to pivot the solution to also address or compliance issues within other industries.
This expands.
Rest of World market.
Examples of major health care peer, it's using the solution to improve accuracy and compliance across 200 different.
Member communications in multiple languages.
Additionally, a leading manufacturer of electrical components leverage smart ordered.
If I, 20% leakage is within that vendor payments.
We are also seeing strong demand for our payment integrity solutions.
Let's say as evidenced in our recent contract win with a top 10 national hotspot.
Engagement and they should be focusing on complex hospital services and deployed several components of our favorite integrity solutions.
With a strong alignment to our growth strategy. This multi year represents a significant step forward for our payment services business.
The common theme across all of these examples is the extensive use of data analytics.
And cloud.
As our clients' needs have grown and evolved we've doubled down on our analytics and digital focus to create solutions that address their biggest challenges and opportunities for growth and drive efficiency.
This trajectory has been central to our growth.
Yeah.
In order to better communicate our focus on analytics and digital solutions, we launched our bold new brand platform in September.
And got into client value proposition.
We make sense of data to drive your business forward.
New brand more accurately reflects the critical role we play in.
Our clients strategic growth agenda.
It also emphasizes the critical raw data plays in driving their decision, making and more intelligent operations, enabling companies to predict trends.
Hyper personalized customer experiences and streamlined workflows.
With greater volumes of data and more focus on delivering real time insights and solutions, making sense of data has become the most important baseline capability health business just great.
This is a noteworthy evolution of our business and positions us well in the market place.
To realize our brand promise, we are making significant investments in advanced analytics, Yeah Beach offense extraction conversational AI and cloud based operations analytics.
As we look to the future we will continue to keep the health and safety of our employees and their families.
Top priority.
We have conducted.
Vaccination drives for our employees across all geographies and have seen progress over the last quarter.
Currently 70% of our employees globally have received at least one goes off the vaccine.
As vaccines has become more readily available and geographies such as the Philippines and South Africa.
We'll continue to push ahead for greater vaccination rates amongst our workforce and enable a safer work environment.
We have also added a future of work operating model, which focuses on maintaining our distributed workforce to maximize our resilience and deliver an optimal working environment for our employees.
As we've seen over the past several months.
The ability of our hybrid work from home model has been great for our employees and clients alike.
Okay.
As we have continued to grow and evolve as a company. We have made a very conscious effort to cultivate a strong bench of leaders who will help drive our business forward.
I'm pleased to share that we have eliminated two of our senior leaders to our executive Committee.
Call Ray, our Chief Digital Officer, and most advanced kidney leader of our emerging business.
Both smallpox off the leadership Executive Committee.
I'm joined EXL in 2006, as part of our acquisition of inductors.
Oh head of analytics for several years.
Kidney is a 21 year veteran of EXL and I've held numerous leadership roles since joining in 2001.
I am confident that of course will play pivotal roles in achieving the promise on new Brian and meeting our growth aspirations.
Going forward.
Our pipeline remains strong and our capabilities in the analytics and digital space are resonating well in the market.
Similarly within the operations management, we continue to see a healthy pipeline of large deals with digital transformation agenda.
As more of our clients make strategic pivots to becoming truly digital.
In conclusion, 2021 is shaping up to be a great year for EXL.
We have been able to grow our business across all verticals and formed strong partnerships with our clients.
We have created a unique solutions using data and analytics AI and the cloud that solve the most pressing problems.
I am confident in the restaurant in some of our business model and extremely proud of the commitment and in January of our people.
One another and our clients in a fast changing and complex business environment.
I would now like to highlight our Q3 financial performance and 2021 guidance. Thank you Robert and thanks, everyone for joining us. This morning, I will provide insight into our financial performance for the third quarter of 2021, followed by our updated outlook for 2021.
As Rohit mentioned, we had an outstanding quarter with revenue of 293 billion up 25% year over year, while adjusted earnings per share was up $1 30.
All revenue growth numbers mentioned hereafter are on a constant currency basis.
Revenue from our operations management business as defined by three reportable segments. Excluding analytics was $169 9 million up 12, 6% year over year sequentially from the second quarter revenue was up four 1%.
Our insurance segment generated revenue of $98 million or 11, 3% year over year, driven by expansion in existing client relationships and higher volumes.
<unk> for the second quarter of 2021 revenue was up three 9%.
The insurance vertical consisting of insurance operations management and analytics businesses grew 17% year over year.
Healthcare reported revenue of $27 3 billion up eight 9% year over year, driven by new clients signed in 2020 offset by lower volumes in clinical services due to a transitioning client.
The health care vertical consisting of health care operations management and analytics businesses grew 12, 9% year over year.
Emerging reported revenue of $44 5 million up 18.2% year over year.
This growth was driven by new client wins in 2021 and expansion in existing client relationships in banking and financial services travel and transportation and utilities.
Sequentially emerging revenue grew nine 7%.
The emerging vertical consisting of emerging operations management and analytics businesses grew 37% year over year.
And Olympics revenue totaled 125 million or 32, 7% year over year.
Analytics was 41, 5% of total revenue in the third quarter of 2021 compared to 37, 5% in the third quarter of 2020.
This growth was driven by higher volumes.
Across all industry verticals with expansion in existing client relationships, particularly in banking and financial services and new wins in 2021 as clients embrace our data with advanced analytics, AI and cloud solutions.
Compared to the second quarter of 2021 revenue was up 8.3%.
Moving down the income statement, our SG&A expenses were 19, 9% of total revenue up 240 basis points year over year, driven by investments in front end sales marketing capability development.
Compensation and Covid related expenses for health for health and safety of our employees.
Our adjusted operating margin for the quarter was 19, 4% up 20 basis points year over year, driven by operating leverage from higher revenue and partially offset by higher SG&A expenses.
Our adjusted operating margin was up by 150 basis points from the second quarter of 2021.
Our adjusted EPS for the quarter was $1 30 up 25% year over year on a reported basis.
Now moving to our nine month performance, our revenue was $826 8 million up 15, 7% year over year. This growth was broad based across all our segments with operations management.
Nine, 9% and analytics of 25, 5%.
Our year to date adjusted operating margin is 19, 2% an increase of 460 basis points over the prior year.
Adjusted EPS for the first nine months of 2021 is $3 62 sets of 51, 5% year over year on a reported basis.
In the first three quarters of the year, we generated cash flow from operations of $113 8 million compared to $126 3 million in the same period last year, driven by higher receivables and incremental income and withholding tax payments.
<unk> balance sheet continues to remain strong with a focus on liquidity flexibility and strong cash flow from operations.
Our cash and short term investments at September 30 was 284 million, while our bank debt was 185 million for a net cash position of 99 million.
During the third quarter, we settled our 3.5% convertible senior notes with an aggregate value of 150 million due in 2024, four $200 million in cash and approximately 310000 shares of common stock.
We are generating significant cash flow to invest in new digital and cloud solutions and have sufficient capital for acquisitions and our share repurchase program.
During the first three quarters of 2021, we repurchased 845000 shares at an average price of $99 per share totaling 80, $683 $6 million. In addition, today, we announced a new repurchase authorization for 300 billion.
Effective January one 2022.
Now turning to guidance, we have increased both our top and bottom line guidance for 2021 based on our strong year to date performance and visibility into the fourth quarter. Our guidance is based on our current flexible work model with more than 90% of our employee's work.
Can remotely further remainder of the year.
We are increasing our revenue guidance for 2021 to be in the range of 1.11 billion to 1.12 billion up $25 million at the midpoint. This represents a year over year growth rate of 16% to 17% on a reported basis.
15% to 16% on a constant currency basis in 2021, we expect analytics to grow in the mid 20% range and operations management to grow approximately 10% for.
For the fourth quarter, we expect our revenue to be comparable to Q3 due to lower volumes and ops management.
Including health care as mentioned earlier.
We expect our adjusted EPS to be in the range of $4 70 to $4 and he sets up 33% to 36% driven by increased revenue in 2021.
<unk> EPS is expected to decline in Q4 from Q3 due to the advanced hiring for future growth higher sales and marketing expenses increased investments in technology and higher compensation and select areas.
We expect a foreign exchange gain between three and 4 million net interest expense.
5 million to $1 million and our effective tax rate to be in the range of 23% to 24%.
In terms of capital allocation, we continue to invest in analytics AI digital solutions and.
In technology, we expect capital expenditures to be in the range of $35 million to $40 million.
In conclusion, the first three quarters have been strong with a double digit revenue growth.
16, 5% and adjusted EPS, increasing by 51% over 2020, our success is attributable to strong demand for our services outstanding delivery. Despite challenges faced by the pandemic and a keen focus on fixed and variable cost which has driven.
Margins higher we expect a strong finish to the year and looking at 2022, we have solid revenue momentum across all our business segments, and we expect much of our margin gains to be sustainable with the hybrid working model.
Now throw it and I will be happy to take your questions.
Thank you ladies and gentlemen, if you have a question at this time please.
Please press Star then the number one key on your question on the telephone if a question has been answered arguments.
Please press the pound key.
I ask that you limit yourself to one question and one follow up.
First question comes from the line of Maggie Nolan from William Blair. Your line is open.
Hi, Thank you congrats on the results.
I wanted to ask a little bit more about the health care segment with an ops management.
Go into maybe what your expectations are for kind of the medium term performance of that segment.
Yeah. Thanks Maggie.
There's nothing unusual going on in the healthcare segment.
From time to time, we do have.
A transition of a client that might take place where they might be in sourcing of work. So we have.
Particular situations out there, but the health care business in Ops management is fundamentally sound. It is growing very nicely. We are seeing strong traction amongst the bears, but also amongst that provide us where we've started from now.
The provider group in a fairly active way.
And the other part is as healthcare embraces data driven solutions digital interventions and adopt a much more end to end comprehensive digital transformation.
Operating business model, we think we'll be able to serve clients in that industry model really really well.
Keep in mind that the health care industry.
Is it a little bit behind in terms of the adoption of new technologies.
Back to some of the other industry verticals and therefore, the headroom for us to be able to continue to serve clients in that vertical are huge.
The industry itself is very large and therefore.
Of course, it is a pretty.
Pretty much a recession proof so it's something which we think is a large market space.
Our capabilities and our solutions can be really helpful. And we are excited about that.
Potential for us to serve and grow clients in that vertical.
Okay. Thank you.
And then.
Thinking about the margin profile of the company and obviously you've seen some.
Real pick up in the margins.
Do you think you can kind of continue to operate it at above that.
That are above that kind of 38% gross margin.
<unk>.
And even you know I like a 17% adjusted operating margin.
And.
An easy target or kind of a low target at this point.
Thanks, Matt.
The question when we look at margins look when we went through Investor day back in November of 2020, we talked about building margins to between 16 and 17% in 2022. This year, we have gone very well with margins in this remote hybrid model that we're all working it.
But we have made some significant improvements that are that is permanent really going forward. If you look at our head count growth over the last 12 months. It is lower on a year over year basis than our revenue growth pretty significantly.
And that's just becoming much more efficient. So there is embedded benefit in our margins going forward. So with that guidance that we gave back at Investor day, we're trending towards the higher end of that guidance really going forward.
Okay.
Yeah.
Thank you next we have Bryan Bergin from Cowen Your line is open.
Yeah.
Hi, good morning, Thank you.
Firstly I just wanted to follow up on that in that gross margin question. So you just said there there are some lasting changes here.
I mean, it seems like you've got good tailwind for this to continue easily into the early part of next year is there any reason youre going to have significant travel costs coming back in the in the short term, but just trying to bring because it seems like you'd get outperform even the high end of this 17% right now.
Okay.
Hi, Brian So when you when you think about some of the cost going back into our P&L will start to travel a little bit more most likely in 2022.
We all think that it won't be at the level that we were pre pandemic.
But we will have some additional costs coming in from return from office in this new environment that we work and we will still have a portion of our employees are working from home, but we will start to go back to the office in 2022, and we're also going to start hiring also to really drive growth in 2022 and 2023.
Having said all of that.
Right now we've given guidance.
From Investor Day.
Going forward.
And we're trending towards the higher end of that of those margins going forward and we'll update that in February of most likely we'll update it in February of 2022 really for the upcoming calendar year, but right. Now you are correct correct and that there is very solid momentum on margins and we are trending towards the high.
The rent of that guidance and also above that.
Okay I appreciate that and then just on the emerging segment within Ops management.
Can you can you dig in a bit more there.
Is that a travel recovery if it works or is it more broad based across all the various sub segments within that and can you. Just comment is that is it expansions at existing clients or is it also new logo additions there.
Sure Brian.
Our emerging segment is actually seeing.
Broad based growth across industry verticals.
The travel segment for US is a very small portion of our revenue within the emerging business and that has certainly increased but it has very little impact because the size is.
Much smaller.
What we are seeing as a tremendous amount of improvement.
In verticals like banking and financial services and transportation.
Patient and logistics.
And travel certainly has improved.
Ross utilities as well.
In terms of existing clients expansion and new clients.
Really really pleased with.
Existing clients expanding the scope of work with us.
At the same time, we are signing up a number of new clients.
In the emerging business. So frankly, it's a very healthy broad based growth that we're seeing in the emerging business and that provides us great confidence as we step into credit.
Okay. Thank you.
Thank you next we have Dave Koning from Baird. Your line is open Sir.
Yeah, Hey, guys great job.
And I guess first of all just when I look at Q4 sequential guidance kind of flattish kind of up I think five to down 5 million sequentially give or take normally that's up a lot sequentially did you kind of talk a little bit was there something a little inflated in Q3 that that falls off a bit in Q4.
Yes.
Thanks for your comments.
I have two kind of shared in his prepared remarks.
We expect Q4 to be flattish to Q3.
Because of the clients that we spoke about in the healthcare segment and so that's something which you know is something which we are anticipating but there's nothing unusual in Q3 in terms of our revenues we think.
Strong growth momentum Bolton operations management, and analytics and that likely continues going forward.
However, because of this transition that is taking place.
There will be an offset and that's what we are factoring in our guidance.
Gotcha, Okay. That's that's helpful and then.
In the analytics segment, I mean, you talk kind of about how some of this post pandemic work or it's just coming on and I mean, you're growing way faster than the normal is.
Is there some is there any nonrecurring business in there or is this really something that it's just at a higher level and can it continue to grow at this kind of elevated pace or does or does it come back to mid teens.
Sure.
So you're absolutely right.
Our focus on data the focus on data analytics has suddenly shifted into high gear with the pandemic and the demand environment has become very very rich and very very attractive for us and I think our capability sets are really resonating very well in the marketplace.
We don't think that the emphasis on data is going to drop down we think it's going to continue to be that.
No that data ends up being the differentiator between success and the geography.
Our clients are going to continue to embrace data on that strategy is going forward and we should be in a great position to be able to help them as we step forward.
At the same time, you also know that our analytics business always has about a third of its business, which is project based two thirds of our analytics business is annuity based and therefore those revenue streams continue to put up nicely, but always with the caveat about a third of that.
Business, which is project base that project based revenue.
Is subject to discretionary.
Decisions on the payoff of our clients and therefore, they'll always be some level of volatility associated with that but.
But we feel confident about the growth.
Off the analytics business, which.
Which we shared in our Investor day in November 2020, when it just said that is something which we are very confident.
Gotcha, Yeah, it seems like it great job. Thank you.
Thank you next we have Vincent Colicchio from Barrington Research Your line is open.
Okay.
Oh, yes.
I'm curious.
Is wage inflation.
<unk> gotten significantly worse since last quarter, and I think last quarter, you talked about using some equity to retain people I'm curious if you're doing any of that.
Yes, Vincent suddenly.
Wage inflation is a risk of that that we need to manage and be able to navigate.
What we are seeing is that wage inflation is particularly strong in a few areas of our business, but not across the entire business altogether. So in areas around data analytics and digital.
Suddenly there's heightened level of wage inflation and we are trying to manage that.
As we discussed last quarter.
Our focus really is to be able to defend and grow our top talent and we do that through a combination of providing them with a very rich environment, where they can learn and grow that professional capabilities.
Being able to.
Once their careers and manage a great up and pick up a piece of business.
The right compensation and then as you get more senior to the organization be able to participate more actively in the equity component, which is a strong retention tool for us.
And as our stock continues to remain.
Oh Boy, that's something which does provide a huge value to our in place. So I think it's really a continuation of our strategy of focusing in on those areas, where we need to be competitive from a compensation perspective, and making sure that we provide.
<unk> experience for our employees.
Focusing on the work environment the work itself.
Compensation and benefits and and.
I'm a team that is there so that's something which seems to be paying off nicely.
And ratio could you give us.
Remind us what's your done or on the real estate footprint and et.
That's a significant opportunity going forward in terms of reduction.
Yes.
Thanks for the question on the real estate side, we have started.
To review, we have been reviewing I should say all of our real estate footprint around the world with.
We've started to become more efficient on real estate.
In the last 12 months and we have plans to optimize our real estate.
Going forward in the in our 2022 budget.
We'll continue to look at real estate it is an opportunity for us going forward.
We're starting to get Finalization, just on our work from work from home or hybrid model for the future working environment going forward, but it does remain.
The potential opportunity going forward.
We will start to incur costs going forward as we start to open up offices, so that'll be a little bit of an offset for us to take a little bit of benefit in 2022, but you are correct.
We continue to look at real estate and areas that we can optimize.
And we'll do so over the next 12 to 24 months as leases come up.
Thank you for answering my questions.
Thank you once again in order to ask a question. Please press Star then the number one on your telephone keypad again that will be signed and the number one on your telephone keypad.
Next question comes from the line of Puneet Jain from Jpmorgan. Your line is open.
Hey, Thanks for taking my question and good quarter.
Rohit can you.
Let's talk about supply environment.
Yeah.
All of us had been impairment in that practice.
It does demand in data and digital success.
You would need to also increase.
Are you able to hard and that's deeper.
Just had with demand or.
You also resulted to tuning in Germany.
To start with analytics demand.
Thanks Puneet.
So far our analytics business.
Investing in talent has been a strategy that we have been investing in.
The last decade.
And we have.
Two part strategy in terms of managing the data and analytics.
One is we have a very strong campus recruitment program, where we hire from the Premier Engineering and management institutes in India and the U S. And these programs are now sufficiently mature well developed where our brand as well.
Name recognition are right on the top so we're able to attract sufficient volume to people as well as the right quality of talent from these programs.
The second part of our development program is truly about grooming talent internally within EXL and providing them the inputs necessary to take on more complex work and more advanced analytics capabilities.
That program continues to run very well and it's a combination both of you.
Training and put that we provide as well as use case experience, which our employees get when they walk on client engagements.
And given the size and scale of our team and analytics that is something which we believe you have one of the strongest capabilities developing internal talent and therefore that continues to work very well.
So the supply side of talent for data analytics is definitely a challenge but at this point of time, we are able to attract retain and develop adequate numbers of people to be able to support that business. So we feel good about where we are from accounting perspective.
Got you and the healthcare line.
The bonds.
Can you size the impact you expect when all of that hit in Q4 or could there be.
Subsequent impact.
And next year, that's been on sequencing business.
Also I know you mentioned that it happens it's not unusual for clients been sued but looked at any.
I think the reason that they chose to go with that.
Uh huh.
Stan.
Nobody says Theres nothing thats.
We discussed that sometimes clients fell off.
You know shift work from partner tool that captive operation and that's what's happening here, it's not significant for us to be able to call out.
Separately and provide detail on.
The quantitative aspect of it it's something which you know they just settle down and we don't really expect.
Anything further to go beyond the 2021 as far as that transition is concerned.
Okay. Thank you.
Yes.
Thank you next we have David Grossman from Stifel. Your line is open Sir.
Thank you good morning.
I guess the first thing I just wanted to ask is about the bookings I know you don't disclose bookings or.
It all or quantify them, but.
That's you could provide some qualitative color around net new bookings year to date on a year over year basis.
You didn't comment on the backlog and how that's been trending as well.
Sure David So look I think the demand pipeline for US is very very strong and it's strong both in operations management and in analytics.
Looking at the numbers.
The operations management pipeline has gone up.
You know very meaningfully so it's gone up.
Close to about 50% over the last.
Toyota was sold.
Analytics pipeline has actually more than.
You know what.
More than doubled in terms of size, so that's something which.
It's very very strong as well.
I think the other part that seems to be happening is that the sales cycle is shortening and that's something which has.
It is helpful for us to be able to grow our business much more rapidly.
And the deal sizes are medium to large size deals. So that's again very chunky and very significant.
From a bookings perspective, we don't really.
Sure any data for it but getting to the bookings.
So it's difficult to kind of talk about it, particularly when it comes to.
Transaction based pricing and outcome based pricing.
All of these are of course driven off.
Delivering b.
Output for the customer.
So it's very difficult to measure that or to provide any kind of.
Color on that the other part is the pipeline is strong across all the verticals so across insurance healthcare emerging analytics.
It's fairly broad based and strong across so.
Very pleased with.
The quality of the pipeline as well.
Okay.
Just.
The follow up question is really yeah.
I think.
It's probably going to ask a question that was asked earlier, but a slightly different way and it's about the margins.
Curious whether.
How you view the structural impact.
The hybrid work model.
The screen historically is.
Pretty quickly.
Efficiencies that could pass through and I'm just wondering.
How you how you feel about the hybrid work model and the benefits.
And how enduring if you will those benefits may be.
Yeah.
When we look at the.
The benefits from the hybrid model I think.
We think of it a little bit.
Benefits, but there's also related close to it.
When you look at the benefits obviously, if you've got a significant portion of your workforce working from home youre going to youre going to be able to optimize a number of different costs going forward and we've talked about that median you'd get probably you can optimize to a certain extent real estate you can optimize some of your transportation costs and a <unk>.
Q other kind of costs that are more office related but on the flip side, we are spending a good amount of money on technology costs.
Really protect.
To create that work from home environment, that's well protected in terms of data security.
And just overall.
Ensuring that that work environment is very similar in terms of security to be in the office. So when you. When you look at the benefit versus the costs really going forward theres, a little bit of a trade off there.
That we're factoring in really going forward and we have been investing in technology and we'll continue to do so going into 2022, so that's a bit of an offset to.
Those benefits.
The new environment that we're working on it yes.
Yes, Dave.
Just add a little bit to what a motor to the fed.
When you think about margins from our perspective, the three broad categories, where we would see a significant movement on margins one is operational efficiency.
On operational efficiency, we had signaled a couple of years back but that is something that we would tighten up and we would start to manage our business in a much more disciplined manner.
And that is something that we have consciously and deliberately done and that is something which we believe will be sustainable going forward.
The second is really pertaining to COVID-19 and work from home.
Oh lets see articulated.
There are puts and takes to it and that does shift around.
There are some costs that will come back in 'twenty, two particularly around travel around working from the office in a much more significant manner.
And those costs will offset some of the other changes.
And the third part is probably more fundamental and thats the business mix.
From a business mix perspective, as we continue to do more work around digital more work around data analytics, where they're delivering greater value to the customer.
We think we should be able to you know.
Improve our margins on the basis of the value that we're delivering to our customers.
And that's.
Probably a longer term secular trend that we would need to make sure that we can execute upon.
But I hope that that's the only way to put some perspective on.
The three broad buckets of margin contribution.
No it does.
The third point about mix should we use that.
The data analytics business as a proxy for that mix or is it really blended both through O N E.
Olympics.
Yeah. So.
The analytics business.
Suddenly one part of the proxy but more.
Cost of the digital work that we're doing is all being embedded and infused into operations management and as that business becomes a lot more outcome driven business as well as.
Our digitally infused business.
I see.
Changes taking place in that margin structure.
Got it great. Thank you very much.
Okay.
Thank you. That's my last question for today, Ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.
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