Q2 2022 Dye & Durham Ltd Earnings Call
Good afternoon, My name is Pam and I'll be your conference operator today at this time I'd like to welcome everyone to the giant Durham second quarter fiscal 2022 earnings call I would now like to turn the call over to Mr. Ross Marshalls Investor Relations on behalf of Giant Durham. Mr. Marshall You May begin your conference. Thank you operator, and good afternoon everyone.
Welcome to the Dine Durham Conference call before we start we'd like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated.
Please note that statements made during this call may include forward looking statements and information and future oriented financial information regarding dine Durham, and its business and disclosure regarding possible events conditions or results that are based on information currently available to management, which indicate managements' expectations of future growth results of operations business.
Performance and business prospects and opportunities.
Such statements are made as of this date hereof, and dine Durham assumes no obligation to update or revise them to reflect events disclosures or circumstances, except as required by applicable securities laws such statements involve significant risks and uncertainties and are not a guarantee of future performance or results.
A number of these risks or uncertainties could cause results to differ materially from the results discussed today.
Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward looking statements and information and future oriented financial information section of our public filings without limitation in our MD&A and our earnings press release issued this afternoon for additional information.
Joining us on the call today are Matt proud dine drum CEO and <unk> <unk> CFO a question and answer session will follow the former remarks for research analysts there is a slide deck on dine dirhams Investor site that you can download to follow along with today's remarks, I will now turn the call over to Matt for his opening remarks.
Uh huh.
Thanks, Ross and good evening, everyone. We're pleased to be here with you today to review recent developments the gyn derm as well as our financial and operating results for the second quarter of fiscal 2022, and that's for the period ending December 31 2021.
I mean, the second quarter was that was a big quarter for dine it laid the.
Groundwork and creating a global leader in the <unk> software and services space its services legal and business professionals. They recently announced the acquisition of tell us financial solutions.
Link group demonstrates our deep commitment to enhancing our product capabilities for our customers by adding products, which improve their efficiency and productivity.
These equity and it's also brought in the product set suites for existing customers dramatically expand our customer base in the U K and Australia markets I'll address linked with further in a moment.
Starting on page three of the presentation recapping on the business, we built a highly reliable platform that generates digital infrastructure light cash flows.
The annuity like nature of our revenue and relatively fixed nature of our cost base provides for a tremendous level of predicted predictability both for revenue and adjusted EBITDA. It also allows us to drive the high EBIT margins, we do because revenue can scale dramatically without a corresponding cost increase.
Acquisition models are often faced with customer churn, but this is not the case for Dieter.
Net revenue retention is more than a 160% in the quarter demonstrates our ability to retain customers and grow with them as we optimize the value of the platform.
You should see it generates for the people that use it.
Today, the business is dramatically larger than it was at the time of IPO 18 months ago.
The last 12 months, we generated revenue of $376 million and adjusted EBITDA of 212 million, we continue to constantly drive to deliver an adjusted EBIT margins above 50%. Despite the strong growth.
Our products are used for a wide array of underlying transactions across major western English speaking economies, we integrate workflows and processes that legal and business professionals use every day, sometimes multiple times a day into one convenient platform.
With the tell us financial solutions, and link announced that we had expanded our value proposition to customers by extending our reach into adjacent markets and their ecosystem and deepening our relationship with financial institutions.
During the quarter, we entered into a definitive agreement to acquire linked group, which trades on the ASX to approximately $3 $2 billion Canadian.
Lifestyle enduring linked providing mission critical software servicing more than 6000 clients globally across the financial services and corporate business segments.
Calculation positions Guy in Germany, as a leader of the <unk> software application services space with significantly larger scaled in Australia, and UK markets and a more diversified revenue mix.
We also closed the acquisition of tell us financial solutions, which complements <unk> existing real estate business in Canada with new capabilities that we intend to offer through the platform in the future.
Tell us financial solutions is also the factor of national payment infrastructure in Canada servicing consumers and businesses in all market segments.
These acquisitions broadened our product offering with a complementary set of solutions that sort of adjacent markets to our existing products extend our finish along the value chain with law firms and financial service providers. This creates opportunities to cross sell into each of those two customer base.
Between November 2021 and January 2022, we did implement price changes within our real estate business in Canada. These.
These changes have generated significant levels of pressed for us to be clear. These changes support a significant product enhancement and product investments. We've made in the platform during the past year, we deliver a highly efficient means for our customers to execute transactions.
<unk>, we charge a relic are a relatively small portion of the total closing costs and real estate transaction.
To ensure an efficient and secure housing transaction, which is likely the most important transaction and most canadians' lives.
We believe our platform is by far the most advanced real estate financing software in the world.
We also believe customer should pay a fair price for our best in class product it significantly enhances their practice.
It also drives real financial values, but their business as well.
Now turning to slide six.
Slide six describes our strategy acquire good assets integrate them.
Efficiently and drive EBITDA, we put this strategy to work as a private company prior to 2020 and now officially yet very effectively since the IPO.
We successfully raised.
Equity and debt and deployed that capital into accretive acquisitions to drive $212 million adjusted EBITDA in the last 12 months as I previously mentioned.
Upon the closing of the link group acquisition.
It will be signet it'll be a significant step forward towards built with $1 billion growth strategy.
That progress towards build to $1 billion as highlighted on slide seven.
Starting on the right hand side, we plot diagrams.
One year forward consensus of 358, and adjusted EBITDA, we add to it the consensus estimate for link group and financial 'twenty to 'twenty, three as well as the $125 million in synergies that we announced at the time of the transaction.
Some of those two figures totals more than $700 million and adjusted EBITDA, meaning we're well on our way to the $1 billion target.
No.
Let's take a look at the announcements the announced transaction with grip in some more detail.
The link acquisition positions <unk> with significantly larger say at scale in the Australia, and U K and a more diverse revenue mix and it provides highly recurring revenue compared to the highly reoccurring revenue.
Nathan revenue we have.
Today's real estate transactions that we process.
The terms of the agreement the acquisition represents a 15% premium to the closing price of link at the time of announcement at $50 and 50 census trillion per share, which implies an acquisition multiple eight eight.
<unk> eight nine times EV to EBITDA, excluding link stake in Texas.
With this transaction, we continue to target five times EBITDA post synergies as we've clearly and as we clearly demonstrated we can deliver on that post synergy acquisition multiple time and time again.
Now turning to where we are at the process to close the acquisition.
We have now submitted all the major regulatory submissions with the relevant authorities in Australia, the UK Europe , and India was a hit to this agreement to acquire Lake.
German links management teams are also working together on integrating integration planning process with the two companies for the transaction to close it will require 75% approval from linked shareholders.
This shareholder vote will happen after we received approval from the required regulatory authorities.
Yeah.
Links board of directors unanimously recommended that linked shareholders vote in favor of this transaction, we expect closing the transaction in the third quarter of calendar 2020 to work sooner.
Yeah.
Turning to slide or page 10 of the presentation.
This acquisition positions us to go to market with the businesses with three businesses of significant scale, each exceeding more than $300 million in revenue.
Our existing real estate and legal solutions software platform links corporate market business, which provides a shareholder management and analytics and shareholder engagement software and links retirement and superannuation solutions platform, commonly called RFS, where services pension funds in Australia, New Zealand and the U K.
Additionally, the list link owns an approximately 43% interest in <unk> Group limited.
As a publicly traded on a FX under the symbol <unk> and <unk>.
It seemed to be an ASX 200 company.
<unk> operates Australia is leading digital property exchange network and helps lawyers convey answers in financial institutions settled transactions and file documents electronically.
From accounting perspective, Texas, not consolidated the Link's financial statements and therefore, the EBIT numbers being presented today do not include any shares taxes EBITDA for financial performance for that matter.
The two additional business that link operates banking <unk> credit management and fund solutions are considered non core to us. These assets are divestiture candidates either prior to close or post close specifically the banking <unk> credit management business is expected to be divested prior to the close of this transaction and the.
<unk> solution business is expected to be divested by US post close and is expected to be recorded as an asset held for sale on our balance sheet at close.
These businesses are highly complementary linked group enhances our product offering without any duplication from products. It serves its services similar or the same customers in many cases, which provides us with opportunity to cross sell this is particularly true in their corporate market segment.
Talking about corporate markets in the corporate market space law firms awfully influence the selection and stock transfer agents and ship and service providers and we have an established relationship with most of the large law firms in Australia, Canada, the U K links corporate market offer.
It is industry, leading and its products are ideally aligned with this audience.
The link group acquisition gives us significant financial operational scale across core geographies in Canada, Australia, and the U K on a combined basis will grow to approximately 8000 employees I'm just 200 at the time of the IPO 18 months ago in 2020.
Less than 20% of our revenue will be generated from Canada with approximately 50% coming from Australia, and approximately 20% from the U K.
This profile speaks to the diversity and breadth of our business that we built.
The vast majority of our current revenue is primarily transactional in nature and it's tied to the real estate market.
The revenue that's highly likely to reoccur. This revenue is highly likely to reoccur from a very sticky customer base.
The link group acquisition expands our ecosystem beyond legal and real estate and further penetrates our reach into financial service providers.
<unk> of our revenue streams to more than half of the combined revenue of the go forward business combined comprising of recurring revenues. When you look at it on a pro forma basis.
In an effort to help paint a picture of what we'll look like on the close of this transaction, we plotted out the pro forma EBITDA profile of the combined companies on slide 14 of the presentation.
The gray bars represent historical figures of <unk> at home.
For the future period, we've assumed the acquisition closes on July one 2022 and link starts contributing from that point forward. We've used the market consensus EBITDA for each of dying Darrin link for the future periods and combine them to give you a better sense of the company's pro forma performance.
Based on the equity analysts modeling adjusted EBITDA, including the $125 million in synergies I mentioned earlier, we achieved more than $700 million and adjusted EBITDA in fiscal 2023, which is a significant step towards our build to 1 billion strategy of achieving more than 1 billion and adjusted EBITDA.
That's without any consideration for future acquisitions and growth.
As for acquisitions.
We believe in we believe scale and the market is important on slide 15, you can see the scale of the pro forma businesses is evident on this graph with this acquisition <unk> will become a global leader in <unk> software and services rivaling the largest technology issuers on the T. S X and our growth rate, which is highlighted in pink on the table stands.
The pack since the 2019 with an EBITDA growth CAGR of nearly 130%.
On slide 16, we illustrate another way to think about growth relative to the peer set here, we plot revenue growth on a Y axis and adjusted EBIT margin across the X axis, you can clearly see where we perform in the upper right hand quadrant relative to the peer set which is clustered towards the middle of the four quarters.
Zinc is a transformative acquisition for us as we continue to scale the business globally further demonstrating the Canada. The Gaiam Jerome is an unparalleled Canadian success story with that I'll turn it turn it over to apogee.
Yeah.
Thank you, Matt and good evening, everyone. Thank you for joining us today.
I'm very excited to announce that it was another record quarter for us.
We reported revenue of $109 6 million during the second quarter, which tripled from revenue of $33 7 million a year ago.
We also generated an adjusted EBITDA of $62 $6 million up from only $17 1 million a.
A year ago or 267% growth year over year.
In addition, we continue to maintain our strong EBITDA margins coming in at 57% this quarter, which is in line with our target range of 50% to 60%.
Significant topline growth has been fueled by the acquisitions, we've completed along with the integration activity and our organic growth, which includes the realization of synergies from high price adjustments.
Total operating costs, which include direct path technology, and operations costs, and G&A and sales and marketing costs were $47 million for the quarter or 42, 9% of revenue.
Compared to $16 6 million for the second quarter of prior year.
The increase in direct cost is directly tied to our revenue and will increase proportionately as our revenues increase.
Increased other operating costs.
Two cost acquired from the acquisitions completed during the period and our continued investment in human capital or scale.
We expect our operating cost to continue to be within the 40% to 50% range.
Net finance costs for the quarter was an income of $22 million to $3 million compared to cost of $3 1 million in the second quarter of prior year.
Included in the final court or changes in fair value of convertible debentures contingent consideration and derivatives and a write off of previously capitalized transaction fees.
The refinancing of debt.
During the quarter, we recorded $8 1 million of net non cash finance costs on changes in fair These fair value, including $4 $3 million loss on change in fair value of our convertible debentures.
As a reminder, accounting rules require us to mark to market or fair value of these instruments each quarter. So we do expect this variability in our finance costs to continue.
Acquisition restructuring and other costs for the quarter were nine 8 million compared to $5 8 million in second quarter of last year.
Acquisition of linked group and tell US financial solutions business were the primary drivers of the acquisition cost during the quarter.
These costs will also continue to fluctuate depending on the transaction activity each quarter.
Yeah.
Now onto slide 21.
We've built in resilient statement on this slide you can see the consistent growth we have delivered on our adjusted EBITDA during the past five quarters.
And our growth we have delivered in the last 12 month period.
We've managed puts and take during this period to deliver outstanding performance.
As we all know one hand headwind, we continue to conquer is that real estate market.
It has cooled off on a year over year basis.
And sequentially quarter over quarter basis.
We took decisive action in short order and manage through this environment.
Why we lower real estate market transaction, our adjusted EBITDAR growth stayed strong.
Short term example of how we can manage the business cycle, while still delivering shareholder value.
Slide 21.
Turning to balance sheet, we have a proven track record over the past many years of leveraging our strong cash flow and balance sheet to acquire an integrated company that will accelerate our organic growth and adjusted EBITDA growth from synergy.
This slide really shows the strategy at work as we identify strong acquisitions that are complementary to our existing business and provide enhanced value to our customers.
On close of the link acquisition.
Our leverage ratio will be around four times net of cash and net of investment and Blackstone.
As we've mentioned many times before our cards business is like.
Digital infrastructure type Douglas.
It makes business that Matt mentioned no different.
This gives us a highly predictable cash flow stream, enabling us to delever quickly.
On close of the linked transactions I mentioned, our leverage is around four times net of cash and matter of fact, playing basketball.
And as you can see it quickly drops below three times within one year and around two five times within 24 months after close.
The key takeaway from this slide as we deploy capital and drive incremental adjusted EBITDA, our net debt ratio rises in the short term until the incremental EBITDAR comes through and as we drive synergies.
Which we have a track record of executing on quickly the net debt ratio become back in line within short order.
Based on the annuity like attributes of our cash flows were very confident in our ability to deliver and maintain at reasonable leverage ratio.
With that I will turn it to the operator for Q&A operator.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone.
You will hear a three ton prompt acknowledging your request on your questions will be pulled any order their receipt should you wish to decline from the polling process. Please press star followed bite you.
A speaker phone please lift your handset before pressing any keys. Your first question comes from Robert Young with Canaccord. Please go ahead.
Hi, good good evening.
I didn't see any update to the guidance you provided after the <unk> acquisition and the release Serena materials is the minimum $350 million of adjusted EBITDA is that still a relevant expectation for I think it was fiscal 'twenty three.
Yes that is correct Rob.
Okay and in the <unk>.
They're really shelf, so said that T M group.
Impact.
Either way no matter, how the regulatory process progresses, it's not material to the business and so should we think of that.
That guidance as being relevant.
Spectrum of how the TM group.
Assessment goes.
Yeah got it yes that that is also correct that its probably on a on a go forward basis.
Annualized TM group or regardless of what decision was made as part of it.
CMA investigation, it is not expected to impact our results materially whatsoever.
Okay.
And then you said that.
You've seen a little bit of volume headwind in the real estate markets and I was wondering if any commentary there on the organic drivers.
Drivers in Australia, U K, Canada season.
Seasonality going into the March quarter, usually sees a dip.
Are there any thoughts that you'd like to share around where you see volumes going in the short run.
So historically, if we look at the month of December primarily in Canada, Australia, and but you kept the three markets. We do see a dip in transactional volume primarily driven by all the holidays and in the different regions.
We do think that's a deck that seasonal we are starting to see volumes come back up that being said the volumes are still lower than what they were a year ago.
And we're managing through it and.
And we are confident that we will be able to deliver on the guidance that we provided.
I mean is that something that's relevant for Australia, and the U K, Canada, and all regions or is it one that's stronger or weaker than the other.
I would say Australia region is staying strong yeah continues to be strong in and have not dropped in previous years compared to previous years, whereas the Canadian market. We are seeing slowing down from a transaction volume perspective, there is still significant demand in the market, there's just not enough.
Supply, resulting in lower number of transactions that we do expect based on all the expectation in the market. That's around real estate, we do expect the market to pick back up and go back to our historical levels of transactional volume.
In the U K there as you know there was a stamp tax duty holiday that expired on June 30 of last year. So we did see significant volume.
That Uh huh.
It happened before June 30 of last year, which dropped slightly post June 30th now, we're starting to see that level of activity pick back up again.
Okay.
Maybe one last question just around the tell US acquisition I know, it's still early yet I don't think there was any contribution to this quarter. You just reported maybe you could talk about the integration and I think that you were.
Looking for an opportunity to expand your presence in Quebec, maybe you can talk a little bit about that and whether you're seeing any benefit from tell us and opening up Quebec, and then I'll pass the line.
Okay, Robert Matt I'll take this one.
So if it comes to two two at the performance there was a small amount of it would be close to that.
Early December correctly.
So so there was a small amount of financing requirements attributed from hotels in the financials, but it's only roughly three weeks.
As it comes to integrated planning look we're going to that process of planning.
And verifying.
The process will look we have a.
It goes through the same process in every acquisition so its pretty repeatable.
But like does that person gets closed so it will take some time to kind of finalize everything and start start.
X gene, but somebody thats already underway.
So if there's like a work in progress.
As it relates to Quebec, I mean tell us and the <unk> product, we built up them.
It is a highly embedded part of the real quick close up in Quebec.
And are you involved in almost every transaction so it really Samantha.
And part of the real estate value chain.
But we look to <unk> to be part of and so from that perspective. It does open up in Quebec market for US, which is one of the major markets in Canada.
Okay, great and just to.
The benefit investors.
Investors just like how big was your presence in Quebec before this.
When it came to <unk> to real estate, we had no presence whatsoever.
I mean, it was kind of low single digit revenue revenue billions in revenue and.
Now we go to being proposed I think almost every real estate transaction that market.
Okay. Okay. Thank you very much personal lines.
Your next question comes from Kenneth Smith, Colas with BMO capital markets. Please go ahead.
Hi, good afternoon.
Regarding the timing of link.
You're saying you expect to close in calendar Q3, I think prior guidance had been for Q2. So can you just clarify that's a change that you alluded to July 1st as well so any color youre thinking kind of earlier in Q3 years later in Q3. Thanks. So.
We did say Q3 or earlier I think like we said before like it you know it could be anywhere really between kind of late spring to early summer Ah. It does take time to go through the regulatory processes and then you have the shareholder vote after that.
So it's it's it's that timeframe is the same I think we had a word it differently.
Oh, Okay. So to be clear did not signal that there's been any change versus prior expectations.
Correct.
Yes.
Can you give us an update in terms of where you are in integrating your Australian assets I mean, I know that you're kind of limited in what you could do there because of the CMA order then they got lifted so what's the status of the Australian integration.
It's ongoing and you know where we're going to that process right now so.
So it's you know to schedule.
Yeah.
The only thing I'll add to that Matt is we it's.
Actually progressing really well.
We have been able to integrate majority of the employees the businesses, how we interact in the market from front end and the back end systems I think within the next few months, we should be near completion there.
So we should be thinking about.
The full integration being complete everything done within 12 months. So by my count It yes, sorry next fiscal year, we anticipate the whole thing being complete which is yes there'll.
There will be one year, one year type of thing.
Okay, that's great.
Yeah.
Just going back to your comments about PM group, not being material as far as the potential outcome.
Can you just remind us what your materiality threshold is.
Okay.
I don't think we've made public a materiality threshold, but it would not change the guidance, we've given you know what.
If we if we totally got rid of you know we did not who did not and we sold a TM group or another business of equal size, we have it would not impact that number.
Okay.
But is that because you have other levers or because you had to work with other M&A or what.
It's just not.
Yes.
Okay.
The PM group contribute.
Less than a double digit to our to our EBITDA and revenue numbers.
Talking about mid single digits type of impact which is not material.
Okay. That's helpful.
Alright, I'll pass the line thanks, guys.
Okay.
Your next question comes from Stephen Boland with Raymond James. Please go ahead.
Yes, just a couple of questions.
One of your comments.
<unk> for the regulatory hurdles for Lake mentioned antitrust.
Do you expect any kind of further diligence from the Australian regulator maybe.
Maybe with the legal solutions business, you're just going to dance do they look at what's happening in the U K and maybe into a little bit more digging.
And does that review include the ownership of peso, which I presume would give you.
<unk> dominant market share if you did get control of Texel.
So we've been advised that you know.
Other regulatory process that would be going through will not will not impact. This regulatory process one of the regulatory regulators. We do we are we are.
Dealing with is the a triple C in Australia because of the competition regulator, but.
We will not have a.
We're buying a minority stake in that business.
At present, we don't anticipate any any issue in achieving that that regulatory approval based on legal counsels.
Okay.
And maybe just.
The negative press, obviously with the price increases in Canada.
We can all make our back of envelope estimates in terms of how this impacts.
Your your guidance.
Where the price increases included in that previous guidance.
Have you had any pushback from any of your larger customers.
Yeah.
So yes there.
The guidance that $350 million one year forward number of EBITDA is included the impact of various pricing changes that that.
That that we've made.
I think I'll go back to the customer point at two two to the comment I made earlier.
Look.
Our platform is the most of that advanced.
Taking anything sort of one in the world by far.
Our view.
We also believe customer should pay a fair price for our best in class products that enhance their practice and it really does drive financial value for that too.
So we we I mean.
Obviously, you had some customers complained that it's been in the press.
But we don't anticipate any material change in this.
Okay, and just last one for me.
Just on the U K with this regulatory.
You're going to the second phase and we're specifically looking at the real estate I guess convenience business, which I thought was fairly decentralized and and the U K, but just this review impact your longer term goal of consolidating that market or do you have to look outside of.
The strictly real estate conveyance market and looking to your environmental searches maybe.
Commercial searches things that are maybe not just in the core market that theyre looking at it is that a fair comment.
I think it is like I mean look obviously, there's a there's a very narrow scope of what they're all fairly narrow scope of what you're looking at it relates to certain product and the market share of that product, but it doesn't necessarily impact are there other parts of the value chain that we may be interested in so I think yes that is a fair comment.
Okay. Thanks, guys.
Okay.
Ladies and gentlemen, as a reminder, if you do have a question. Please press star one.
Our next question comes from Stephanie price with CIBC. Please go ahead.
Thank you.
Hoping you could talk a little bit about future M&A as you kind of worked to close link and integrate the acquisitions should we expect a bit of pause here on M&A or how you are thinking about.
Look I mean, this link acquisition will be transformational it's going to you know what.
We're gonna take us time to integrate it it is a bit more is it different than other acquisitions as you're putting two businesses of equal scale together financial scale and they have more people than us and so in.
Some parts will be reverse integrating other partners that are integrating to us.
Will take some time, but I didn't really get a pause M&A M&A still has a great is a good source of growth for us in it.
Our strategy works.
But our focus will be the initial period post close towards integrating the businesses that would be probably number one we'll continue to do tuck in M&A to keep growing the business.
That's good color. Thanks, and then I wanted to circle back on your comments on leverage can you talk a little bit about your target leverage ratio and how high you could go for a larger deal.
Look I think I mean, obviously you touched on it a.
A couple of minutes ago, if you look at that kind of pro forma consensus adjusted EBITDA close.
You know youre looking at four times when you back off of it.
Yeah.
The the stake in <unk>, which is a cash item.
Quickly goes down to two and a half 24 months later getting below three in a year. So this business can handle significantly more leverage than that.
This is a digital infrastructure like assets as infrastructure like characteristics.
It can handle a lot of leverage.
That said.
Thank you.
Nonetheless, using per pack size is more than manageable.
And and it's for the right solution. This time, given what our cost of capital is.
To use that on the side of it.
Okay. Thank you and I think as and I think as we've said before some updates.
We like to operate at sort of upper ends of three and a half time.
But when it makes sense, we're not afraid to go over that limit as long as we can bring it down to within their operating rates very quickly.
As Matt.
Just talked about we can quickly delever. This from four times at close to around two five times within a very short period after close.
Okay. Thanks, and just final one from me in terms of the 75% shareholder approval. This year with HTC distributor just wondering if you've had any indications of what major shareholders are thinking here.
That's what I can comment on.
Alright. Thanks.
Your next question comes from Paul steep with Scotia capital. Please go ahead.
Yeah.
Paul you may have us on mute.
Sorry about that.
Until the synergies can you.
Come back and just remind us the core assumptions there.
Looking back the prior comments, you've talked about it having very high or very similar margins to your business. So.
Maybe talk about that goal to get to those synergies as well as just fresh us on the timing because I think to the original transcript might've been a little muddy does take calendar fiscal quarters.
Yeah. So the synergies from the <unk> acquisition are combined with the synergy of our product offerings that we have today.
So we don't look at it on a standalone synergies, but we looked at on a combined basis.
And as we mentioned before the EBITDA margin on Palisades is in line with what we have today.
But we do not break out synergies by acquisition.
Got it okay. So then onto U K seasonality with the end of the stamp duty.
Are you thinking about in terms of the number because obviously.
End of the year.
Calendar Q2.
Our fiscal Q2 saw a significant drop in transactions you mentioned the holiday period, but it seemed to be exaggerated this year.
Your expectation I assume what does it look like sort of next year are you assuming back to normal.
Or do we think theres sort of a lasting impact here.
No we are actually already starting to see transaction volumes come back up back to normal levels. We viewed the stamp duty tax holiday in the U K is a onetime event that sort of pulled a bunch of transaction volume upfront that are that are used up over a period of the last six months.
Timeframe, we are starting to see volumes come back in line with the historical trends.
And then just finally I know, it's a small launch, but you had a new registry in one region launch obviously not all the functionality is there, but not any feedback or thoughts around.
Now how customers looked at that it was an option.
Dave.
Think of that.
What's been the initial reaction to that borrowings with the other situation going on there but how.
How people thought about it or is it mainly it's business as usual.
So you're talking about the corporate registry, Ontario District clarity, yes.
Yeah look I mean.
There was some issues with the launch.
Well look we work to kind of you know collectively and vary.
You know I would say well with government and in addressing the issues with the registry the launched we provide support.
The government.
It really kind of act as a.
Part of the front end of that registry.
So it was dealing with customer customer customer calls and helping customers processed transactions.
You know there was some but obviously worked through a lot of them with the government and it seems to be getting better.
But.
It was a real accurate correct for our whole team and and I think everyone did a good job but.
Unfortunately, it happened, but everyone to work the hardest spirit and it seems that that's behind us.
Yes, sorry, the thought was more around yes understood you guys got through it and things for 12. It was more around the thought of potentially people going direct and it was going to be a small group of clients.
Is there any any feedback Oh, Oh Snapchat terms it just I mean with what they had already maybe was born.
Totally word it yeah, I mean look we thought that what we've seen so far is that.
We continue to come through us, there's really been no change in in kind of what the.
People could go direct which is often kind of BDC customers we.
We continue to process really the inland transactions now is even before we had thought that it may drop away in kind of consumer would go direct but they seem to be still going through us.
That's not a material amount of revenue.
Our EBITDA just for clarity are you talking low single low low single digit millions.
Perfect. Thanks, guys.
There are no further questions at this time Mr. Marshall you May proceed. Thanks.
Thanks, everyone for joining us this evening and we look forward to updating you on our Q3 call in May you may now disconnect.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a great evening.
Okay.