Q4 2021 Hackett Group Inc Earnings Call
Yes.
Yeah.
Welcome to the Hackett Group fourth quarter earnings Conference call your.
Your lines have been placed in a listen only mode until the question and answer session.
Please be advised the conference is being recorded.
Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO .
And Mr. Rob Ramirez, Chief Financial Officer.
Mr. Ramirez you may begin.
Thank you operator.
Good afternoon, everyone and thank you for joining us to discuss the Hackett group's fourth quarter results.
Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett group and myself Robert Ramirez CFO .
A press announcement was released over the wires at four or five P. M Eastern time.
For a copy of the release please visit our website at Www Dot the Hackett group Dot com.
We will also place any additional financial or statistical data discussed on this call that is not contained in the body of the release on the Investor Relations page of our website.
Before we begin I would like to remind you that in the following comments and in the question and answer session. We will be making comments about expected future results, which may be forward looking statements for the purposes of the federal Securities laws.
These statements relate to our current expectations estimates and projections and are not a guarantee of future performance.
Involve risks uncertainties and assumptions that are difficult to predict which may not be accurate, especially in light of COVID-19.
Actual results may vary.
These forward looking statements should be considered only in conjunction with the detailed information.
Particularly the risk factors contained in our SEC filings at this point I would like to turn it over to Chad.
Thank you, Rob and welcome everyone to our fourth quarter earnings call.
As we normally do I'll open the call with some overview comments on the quarter I will then turn it back over to Rob to comment on detailed operating results cash.
Cash flow is also as well as to comment on outlook. We will then review our market strategy related comments after which we will open it up to Q&A.
When we started 2020, we were aggressively ramping headcount in anticipation of increased demand only to be disrupted by the COVID-19 pandemic.
Although the disruption was significant and swift.
We have experienced increased client engagement since Q3 of 2020.
Consistent with our pre Covid expectation, we are experiencing strong demand for our services.
It is clearly evident that organizations have recognized the need to embrace digital transformation as a requirement to remain competitive.
And the rate of digital innovation and related change is clearly unprecedented.
Before I move to our quarterly results, let me start by congratulating our associates for their outstanding 2021 performance our revenues were up 18%, but more impressive was our record world forma EPS of $1 31, which exceeded our prior year results by 90% and.
Our 2019 pre COVID-19 results by 31%.
Given the circumstances I wanted to acknowledge their performance at the outset of our call.
Moving onto our quarterly results.
This afternoon, we reported net revenues up $69 8 million and pro forma earnings per share up 33.
Both above our quarterly guidance and up strongly on a year over year basis.
All of our groups experienced strong demand and contributed to our results.
U S results were up 18% driven by the strong performance of both our SMB and E groups.
Nearly across all of our U S practices.
Our SPT group was up sequentially for the sixth consecutive quarter with improving rates utilization and gross margins on a year over year basis.
Additionally, our IP based higher margin executive advisory offerings grew at a higher rate than our SVP consulting services and are expected to continue to grow at a higher rate into 2022.
Our growth was driven by strong Oracle and one stream growth.
We also saw improved European performance, which is expected to carry over into the first quarter of 2022 as well.
Strong demand for our services, along with increasing leverage our high margin IP bets based benchmarking executive advisory and Ipass ipass offerings as well as the efficiencies from our virtual sales and delivery business model are expected to continue to contribute to our performance this increased momentum.
Should allow us to perform at the higher end of our long term growth and profitability targets.
Additionally, the investments we have made to fully digitize all of our IP and the development of our digital platforms, which include quantum leap our state of the art Global benchmarking platform at our proprietary Hackett digital transformation platform or DTP are allowing us to highly differentiate and expand our offerings and are important.
<unk> of our long term growth.
These platforms are allowing us to develop new relationships and invest in rapidly growing cloud workflow automation and process mining technology providers across all areas of the enterprise.
We believe these new and potential relationships are key to our digital transformation strategy and are important components of our growth strategy.
It is worth noting that our reported results were achieved without any additional ipass relationships in the quarter.
Which we believe should benefit our future results.
On the balance sheet side, our ability to generate strong cash flow from operations has allowed us to increase our dividend and our buyback program. We also plan to expand our current credit facility to fund acquisitions, we identify and to buy back stock, while continuing to invest in our business.
With that said, let me ask Rob to provide details on our operating results cash flows as well as outlook I will make additional comments on strategy and market condition.
Following robs comments Rob.
Thank you Ted as I typically do I'll cover the following topics. During this portion of the call an overview of our 2021 fourth quarter results along with an overview of related key operating statistics.
Overview of our cash flow activities during the quarter and I will then conclude with a discussion on our financial outlook for the first quarter of 2022.
For purposes of this call I will comment separately regarding the financial results of our strategy and business transformation group, where S&P T. R. P M.
ERP and analytics solutions group or EEA, our international group and the total company.
Our F&B to group includes the results of our North America IP as a service offerings, our executive ICU programs and benchmarking services.
And our business transformation practices, our EEA solutions group includes the results of our North American Oracle and SAP solutions, and one street practices alright.
Alright, Nashville group includes the results of our SMB and our E resources that are based primarily in Europe .
In addition, please note that all references to net revenues represent revenues, excluding reimbursable expenses.
University of all expenses are primarily project travel related expenses passed through to our clients that have no associated impact to our margin or profitability.
Given the limited amount of business travel, resulting from the pandemic. We encourage investors to continue to focus on net revenues to SaaS revenue growth and margin trends.
During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information to investors. We included reconciliations of GAAP to non-GAAP financial measures in our press release filed earlier today.
Additionally, my comments today are all based on results from continuing operations.
Before I move to our fourth quarter results I would like to discuss a few highlights regarding our annual performance for fiscal 2021.
Annual net revenues from continuing operations totaled $277 6 million.
An increase of 18% over the prior fiscal year.
Annual pro forma earnings per diluted share were $1.31. It increased 90% over the prior fiscal year and an increase of 31% when compared to the pre COVID-19 2019 fiscal year.
Pro forma EBITDA for the fiscal year was 61 million an increase of 88% over prior year and represented 22% of net revenues for fiscal 2021.
For the fourth quarter of 2021, our net revenues increased to $69 8 million up 18% when compared to the prior year, which was above the high end of our revenue guidance range as we can.
To see strong demand for our services throughout the quarter.
This is also up nine 5% when compared to the pre till the fourth quarter of 2019.
The Q4 2021 Reimbursable expense ratio on net revenues was 0.7% as compared to 0.1% when compared to the prior year Reimbursable expenses have been significantly reduced in 2020 in 2021 due to our transition to a remote service delivery model.
Our U S operations, which represents 91% of our total company net revenues in the fourth quarter were also up 18% when compared to the fourth quarter of the prior year. This was also up 12% when compared to the pre COVID-19 fourth quarter of 2019.
Net revenues for our F&B T group were $28 4 million, an increase of 22% when compared to the same period. The prior year, reflecting the continued demand for enterprise digital transformation initiatives.
Net revenues for our EEA solutions group were $34 8 million, an increase of 16% when compared to the fourth quarter of the prior year.
Year over year increase was driven by the growth in our Oracle implementation service offerings.
Fourth quarter also had higher than expected SAP software sales.
Net revenues for our International group were $6 6 million, an increase of 14% on a year over year basis. This momentum as Ted mentioned is expected to continue until the first quarter of 2022.
Total company International net revenues accounted for 9% of total company net revenues as compared to 10% in the fourth quarter of the prior year.
Our recurring revenues, which include our executive advisory IP as a service multiyear benchmarks and Ams groups accounted for approximately 21% of our total company net revenues and approximately 28% with total company practice contribution in the quarter.
Total company pro forma cost of sales, which exclude reimbursable expenses totaled $48 million were 58, 5% of net revenues in the fourth quarter of 2021 as compared to $36 8 million or <unk> 62, 1% of net revenues in the <unk>.
Year.
Total company consultant headcount was 1072 at the end of the fourth quarter as compared to total company consultant headcount of 1049 in the previous quarter and 928 at the end of the fourth quarter of 2023.
The year over year increase was primarily a result of hydro activities and increased utilization of subcontractors, resulting from higher demand.
Total company pro forma gross margins on net revenues was 41, 5% in the fourth quarter of 2021 output compared to the prior year of 37, 9%.
F&B T gross margins on net revenues were 51, 4% in the fourth quarter of 2021 up as compared to 44, 8% in the fourth quarter of the prior year.
The increase was primarily due to increased revenues, resulting from higher rates higher utilization and revenue mix from our higher margin IP service offerings, partially offset by increased head count and incentive compensation accruals commensurate with improving demand.
EEA gross margins on net revenues were 32, 5% in the fourth quarter of 2021 up as compared to 31, 7% in the fourth quarter of the prior year. The margin increase was primarily due to increased revenues, partially offset by the incremental use of subcontractors and increased head count commensurate with it.
<unk> demand.
International gross margins on net revenues was 46, 2% up as compared to the prior year of 42, 7%.
Primarily due to increased revenues.
Pro forma SG&A was $14 4 million or 26% of net revenues in the fourth quarter of 2021 as compared to $12 5 million or 21, 2% of net revenues in the prior year.
The year over year absolute dollar increase was primarily due to increased incentive compensation accruals associated with increased company performance.
Pro forma EBITDA was $15 4 million or 22% of net revenues in the fourth quarter of 2021 as compared to $10 8 million or 18, 3% of net revenues in the previous year, primarily resulting from increasing revenues.
Total company pro forma net income for the fourth quarter of 2021 totaled $10 9 million or <unk> 33 per diluted share, which represents a year over year increase of 43% and pro forma diluted earnings per share and was above the high end of our earnings guidance range.
This compares to pro forma net income of $7 4 million or <unk> 23 per diluted share in the fourth quarter of 2020 pro.
Pro forma diluted earnings per share in the fourth quarter of 2021 is up 38% when compared to the pre COVID-19 the fourth quarter of 2019.
GAAP diluted earnings per share were <unk> 56 for the fourth quarter of 2021 as compared to GAAP diluted earnings per share of <unk> and.
In the same period in the prior year.
GAAP results for the fourth quarter of 2021 included a seven 7 million or <unk> 23 per diluted share tax benefit related to the exercise of outstanding share appreciation rates.
GAAP results for the fourth quarter of 2020 included a $5 5 million or 12 cents per diluted share restructuring and asset impairment charge, primarily related to the reduction in the company's global office space requirements, resulting from the emerging work from home delivery model.
The company's cash balances were $45 8 million at the end of the fourth quarter as compared to $52 9 million at the end of the previous quarter.
Net cash provided by operating activities in the quarter was $19 9 million.
Primarily driven by net income adjusted for noncash activity increases in accounts payable and accrued expenses in contract liabilities, partially offset by decreases in income taxes payable and increases in accounts receivable.
Our DSO or days sales outstanding at the end of the quarter was 66 days as compared to 63 days at the end of the previous quarter.
The company has $45 million credit facility remained unused during the fourth quarter of 2021.
During the quarter, we repurchased 1 million shares of the company stock for an average of $19 83 per share at a total cost of approximately $20 million, primarily driven by the net settlement of tax obligations associated with the exercise of stock appreciation rights that we discussed last quarter.
Our remaining stock repurchase authorization at the end of the quarter was $11 2 million.
In November 2021, the board declared a quarterly dividend of <unk> 10 per share, which was paid in December 2021, making this the second dividend payment made in the fourth quarter.
At its most recent meeting the company's board of directors authorized a 10% increase in annual dividend from <unk> 40.
To <unk> 44 per share to be paid quarterly.
And declared the first quarterly dividend of <unk> 11 per share for shareholders of record on March 25th to be paid on April the <unk> 2022.
Before I move to guidance for the first quarter of 2022, I would like to remind everyone of the seasonality of our business relative to cost as we move sequentially from Q4 to Q1.
Specifically consistent with our first quarter guidance provided in previous years, our first quarter guidance from 2022 will reflect the sequential increase in U S payroll related taxes, and the sequential buildup of our vacation accruals.
As Ted mentioned in his comments demand continues to be strong. The company estimates total net revenue for the first quarter of 2022 to be the range of $70 million to $72 million.
We expect year over year total revenues to be up 10%, 13% with increases across all three groups.
We estimate pro forma diluted earnings per share in the first quarter of 2000 to 2022 to be in the range of 31 to 33.
At the midpoint this would represent an increase of 19% over the first quarter of the prior year.
We expect pro forma gross margin on net revenues to be approximately 38% to 39%.
We expect pro forma SG&A and interest expense for the first quarter to be approximately $13 8 million.
We expect first quarter pro forma EBITDA on net revenues to be in the range of approximately 20% to 21%.
We expect cash balances, excluding the impact of share buyback activity to be temporary due to the payment of 2021 performance related bonuses and the payment of employee income tax withholdings triggered by net vesting of restricted shares.
At this point I would like to turn it back over to Ted to review, our market outlook and strategic priorities for the couple of months. Thank you Rob.
As we look forward, let me share our thoughts on the near and long term demand environment and on the growth opportunity. It offers our organization.
As I have mentioned, although the pandemic created unprecedented demand disruption. It also created heightened awareness that accelerated that accelerated the demand for digital transformation initiatives.
This means that digital innovation and enterprise cloud applications analytics, and infrastructure, where full automation and process mining are dramatically influencing the way businesses compete and deliver their services.
Transformation is redefining all activities at an accelerated pace, forcing organizations to fundamentally change and adopt these new capabilities in order to remain competitive.
The strong digital transformation demand.
I have mentioned is also resulting in increased competition for experienced talent. Unlike we have.
<unk> seen in a very long time, we.
We believe that the emerging service delivery model.
Should help us address the short term recruiting and retention is concerns as we hope to be able to attract associates from a broader pool of global candidates.
The emerging service delivery model I'm mentioning is our ability to deliver our services virtually the way we have for the last couple of years.
We are also hopeful that we are now finally on a path to our next normal which results in a highly engaged client base with our sales and delivery model, which provides our clients and our associates with greater personal flexibility to perform their defined responsibility.
It will allow us to attract and retain talent that we struggled to retain many times because of the demanding travel requirements of our industry. We believe this is changing.
In order to increase our revenues across all of our IP led offerings, we will continue to invest in our IP platforms and increase our sales and marketing resources dedicated to this area.
This will include our Ips our service offerings, So partners that desire to license, our IP and brand permission to bolster their business case development and value selling and delivery efforts.
As we've said we have.
Over 10, such opportunities with formal proposals pilots launching <unk> contract negotiations. We believe these opportunities should further benefit our 2022 results.
We also expect to leverage our brand IP platform to launch a series of new vendor intelligence programs that will help assess and highlight the unique capabilities of technology and service providers across selected categories.
This is another key initiative that we believe has great potential to add high margin recurring revenue over the next few years.
Strategically our focus will remain the same which is to continue to build our brand with our new offerings and capabilities focused on digital transformation.
Round are fully digitized and unmatched IP.
This should allow us to serve our clients strategically increasingly remotely and whenever possible continuously.
Specifically, we will continue to redefine our global benchmarking leadership through enhancements in quantum leap, our digital benchmark software as a service solution.
This platform allows us.
To deliver more information with significantly less client effort. It also allows us our clients to leverage our IP to track the transformation initiatives over the life of their respective efforts. We believe there is no comparable platform in the market. We also know that it is a critical component of our ipass offerings.
We will also continue to enhance our digital transformation platform to further differentiate our unique IP and related solution design capabilities.
<unk> allowed us to fully digitize, our IP and align proven software configuration and organization solutions to help our clients drive transformational change.
DTP is a core asset to our benchmarking executive advisory Ipass digital transformation and cloud application implementation offerings. We are now seeing some of the targets that we've been discussing on the Ipass side.
Consider some of the solution and capabilities to be a unique element of some of the relationships we're trying to define.
As I mentioned on our last few calls we have added a 20 minute demo to our Investor Relations page of our website. So that investors can become more familiar with the capabilities of our two platforms.
Lastly, even though we believe that we have the client base and the offerings to grow our business. We continue to look for acquisitions and alliances that strategically leverage our IP and add scope scale or capability, which can accelerate our growth.
As always let me close by congratulating, our associates, our outstanding year and by thanking them for their tireless efforts and always urge them to stay highly focused on our clients our people, especially in light of any short term challenges we may encounter.
Those conclude my comments, let me turn it over to the operator, and let us move on to the Q&A section of our call.
Thank you Sir.
Our first question comes from George Sutton.
With Craig Hallum Capital Group.
Sir your line is open.
Hey, guys. This is James on for George Great quarter.
So every day, obviously you were seeing a lot of headlines labor shortages supply chain issues inflation, just a bunch of challenges that business are now facing now would just be kind of curious to hear sort of what some of the top challenges new or existing clients are coming to you you'll help themselves. Because I think you guys are sort of in a unique position to help with them.
The current environment.
So you can imagine.
Supply chain issues.
Tension higher wages all place.
Pressure on our clients operating performance.
So as we always say the way you address.
Those performance issues, we've always said, we believe 75% of that.
The answer comes from the deployment of technology workflow automation.
All of which we're seeing an unprecedented pace of of of such a technology being introduced into the marketplace.
The other remaining pieces to put the clients are properly consider if they are properly organized in order to take full advantage of the technology that they decide to implement.
Our job is to help clients understand what Smith, let's being oversold, and what is technology and organizational changes, which can be considered and implemented to help our clients remain competitive we think we do that incredibly well. So these kinds of pressures with this kind of technology innovation just.
Creates.
A very strong demand environment for us.
But those are the primary ways James that.
That we do that they come in and a lot of different tactical type requests, but its productivity pressures that are then address by.
Digitizing your business.
Leveraging new technology and understanding how to organize to make sure you have taken advantage of those investments.
Very helpful.
And then very encouraging growth across the entire business, obviously compared to last year and 2019.
Could you just provide some color on whether that growth is coming from existing clients new clients larger deal sizes or just some more color there would be helpful.
Well, we we first start by telling people that we.
We've worked with client a lot of different ways, but there is something we call. The Hackett network effect and these are the clients that utilize our benchmarking our advisory and consulting services, we touch a lot more corporate executives I believe it or not through our benchmarking and advisory services that that our implementation services because they are spread globally.
And they just always seem to be a little broader across the enterprise, we believe that the number of.
<unk> of people in that network is in excess of 80000 that we track back over the last five to 10 years. So a majority of our business comes from what we call that Hackett network. So if it's not from someone who has been directly exposed to hack it through one of our offerings. It's normally some lung who then picks up.
Phone or response to somebody who asked the question on how you're addressing some of these issues tell me what the art of the possible is what's the most efficient way to good to get a good trusted credible answer.
And.
We believe that's the way then we attract new clients. The last way we attract clients as you know we put out research that talks about.
The performance improvements that we're seeing around our global client base and we've come out with research that define what we call digital World class and that research has picked up.
Across all types of different mediums throughout the year we.
We will be mentioned in in any single year of we believe in excess of 365 times. So we think that when we are continuously putting that information out and it's being picked up by all sorts of different both business technology economic mediums around the world that that allows us to also be able to.
Promote our business pretty efficiently. So a combination of all of the three but the base the base. The big Big base are those that have been directly exposed to Hackett.
<unk> had a favorable experience no that's an efficient highly collaborative way to work with someone and they returned to us.
Gotcha.
And then just last one for me would you be able to quantify.
The contribution from the Oracle practice and one stream in the quarter.
I can't quantify it since we don't provide information at that level, but suffice to say that it grew very strongly.
High level, probably consistent with the growth that we reported in the overall quarter.
And then just to provide a little bit more color as you know our business.
It has just been on fire for.
Even throughout the pandemic, but clearly.
Since the middle of 2020 throughout that year.
That business took a little bit of a breather this quarter and so the performance in EMEA is primarily driven from the growth from Oracle and one screen. So you know it's very substantial.
Thanks, guys Congrats again.
Thank you.
At this time, if you would like to ask a question. Please press star one on your telephone keypad and record your name.
Again that is star one if you would like to ask the question.
Next question comes from.
Vincent Colicchio with Barrington Research your line is open Sir.
Yeah Ted.
Did you increase your offshore mix in the quarter and you know what is the labor dynamic look like.
No, India and South America, I think Uruguay are two offshore markets youre looking to expand in which the labour done dynamic looking like are you able to.
You know easily get the right people in those markets.
The answer is there's a few go back to the.
At the beginning of 2020.
Approximately 25% of our consulting our available resources were offshore or nearshore, but outside the U S and western Europe that number is now approximately 40%. So the move over the last few years has been very significant.
Bringing that resource on unfold has allowed us to be a very.
Very competitive.
And engagements that are a little bit more pricing sensitive and.
It's also helped us in competing for and winning larger engagements.
Across those businesses that are leveraging that those offshore resources. So it's been a meaningful part of our strategy.
And clearly contributing to some of the success that we're reporting on today.
And are you able to pass through any of your cost increases through increased pricing and also part of that are you thinking about building our inflation escalators in some of your contracts.
No we've oh over that same period that I just mentioned, we put through to price increases and we believe we are realizing.
Some portion of those increases.
So it's been part of that improvement that you've seen since the middle of 2020 and clearly in 2021 so.
No the marketplace understands.
That in order to get talented people is costing more they realize it in their own.
If you want to call it environments. So.
We've had.
Pricing has been favorable.
In light of those circumstances for us so it's another one of the contributors to our performance.
And your your your longer term financial targets.
The revenue I believe is 5% to 10% and if I remember correctly. The earnings is a 10% to 20% you had mentioned that you should be able to achieve your financial targets in 'twenty. Two we just referring to revenue in and or were you referring to EPS. If you were to refer in TPS don't have that number right.
The high end.
Yeah, the comment what I wanted what I, what I wanted to make sure people knew and lot of what we've reported in the guidance. We provided in Q1 is that the indications are that we.
We should be performing at the higher end of that and if you saw if you drive that to the higher end of that five to 10 and then you can go back and then take a look at it.
The leverage that it drives into our business model. So then it would move.
The EPS.
<unk> two.
To that upper side as well.
Just as a word of or just to comment and so that we don't forget.
Recall that our overall results benefited in the second quarter from that large Mcdonough said.
Which we reported that way so that people knew the win without but look.
Look the growth we experienced in this quarter what were guiding I mean is a combination of all of the things we're discussing today.
Strong demand improved execution.
More leverage of our IP and the services and in our IP based services.
For example, our executive advisory business, which as you know is a recurring part of our strategy and business transformation group.
The annual contract value or <unk>.
<unk> increases during the year.
We're in excess of 20%.
So we're just seeing we're just seeing favorable activity and that's why we made that comment Vince.
Thank you nice quarter Tim.
Thank you Beth Thank you Vince.
Okay.
Our next question comes from Jeff Martin with Roth Capital markets. Your line is open.
Hey, guys. This is ray on for Jeff here today, I just had a couple of questions. So for.
It seems like client engagement has been a key trend this year and you mentioned in the third quarter that it rose 7%.
Over 2019, I believe it was.
Can you talk a little bit to how that has trended.
And are there specific drivers beyond the broader trend of digital transformation that you've been experiencing.
First of all Youre correct on the 7% and just to put some context and then that trend when we go from third to fourth quarter.
If you'll recall when we provide guidance we talk about the fact that given the holidays.
Primarily in the U S 91% of our revenues are in the U S.
Between Thanksgiving and new year's that we lose and I'll ask Rob to check me approximately 9% of the available days in the quarter. Rob is double checking. So if that number is wrong here he'll stop me, but it's got to be some number in the 7% to 9% range I think it's going to be closer to nine but he will confirm it.
When you look at the sequential revenue.
We experience with.
With the loss of those available days, what it basically in first to us is that the.
The demand and trends that we were experiencing at that you mentioned into the third quarter continued into the fourth quarter and given our guidance into Q1.
It looks like that momentum, we're able to carryover into 2022.
So look it's been favorable.
So a client engagement.
We've talked about it as a way of describing the recovery of the client activity from mid.
From the third quarter of 2020 through the end of 2021.
We specifically have changed that commentary from if you want to call. It recovery of client engagement to really just simply describe that as a favorable our strong demand environment. Since we believe it's.
We're now beyond recovery, even though obviously, they're still most of our clients and ourselves.
We're not in offices, but that virtual delivery model and client engagement remains very high.
So to answer your question right.
Definitely helpful. Thank you.
Are there any strategic initiatives that could accelerate that trend going into 2022 and 2023.
Well to us the one does that one the one that we've been working very hard and we expect.
We expect that to contribute 22 has been the ipass related relationships.
Which as I've mentioned, we have many.
I'll use the word percolating, but there are in all stages. So that's why we continue to speak to the fact that we expect those relationships.
To start materializing in 2022.
The second one that I think it's important to note, which was I think rather new commentary.
Our research advisory business has been focused on corporate or enterprise clients historically.
And.
If you recall, we had a significant relationship with.
With one of the large cloud infrastructure companies.
Which came in in the latter part of the year and as a result of the feedback we got from that very significant client, which was they wanted our help with research and support with client related initiatives.
Their feedback was that they believed that our ability to provide research to support vendor related initiatives to evaluate technology.
And competencies and take them to the marketplace.
It is really very significant.
So you will see us make a very big we are and have started to make an investment in hiring individuals and youll see us launch a series of new programs in that vendor intelligence space throughout 2022.
Which we believe could be.
Very significant as I mentioned in my comments I would say those are two third one could be the fact that we continue to add some cloud implementation partners. I think you may have seen in our release the announcement of our relationship with and a plan that is new.
We're also evaluating a couple of others.
On the strategic enablement side some on the implementation side. So just think about it we've got two sides of our business.
So.
We think all these.
All of these activities are important growth drivers and that's why we mentioned them, but what thats why I mentioned on our script that haven't mentioned them over the last few quarters, but the vendor intelligence ones.
Highlights for the first time. This time is a new one and we believe has meaningful potential.
Great. Thank you that's super helpful.
Thank you Ron.
And then you did I didn't hear something mentioned in the call. Unfortunately, I got dropped.
Dropped from the call.
I'll back in but.
Can you talk a little bit about the strategies that you're employing to both acquire and retain talent.
And then also what's the current pricing environment are you seeing opportunities to offset them.
Any wage inflation with improved pricing.
If you didn't hear me a little earlier.
Ray we did mentioned that pricing was favorable and that over the last 18 months, we had put through a couple and we think we're realizing some of those pricing increases on the employee.
Or retention and ability to attract.
Look we are facing.
More competition for talent than we ever have I've said that in the comments.
But I think it's equally important to understand that we had some headwinds that were structural pre COVID-19 and those headwinds were significant the primary reason that we had turnover or ability to retain people for a longer period of time, where the travel requirements that were imposed by our business, where the majority of our people are a large number.
I would get on an aircraft on a Monday and come back on Thursday, and work from home on a Friday.
And.
Is that.
Becomes pretty significant and in some cases it becomes an issue.
As some of our individuals start a family or the family expands or who knows what responsibilities.
Change at home, we think that we will come out of this pre Covid post Covid environment. This next normal will not have nearly the same travel requirements that we experienced pre COVID-19 .
For a combination of reasons one is that.
Our clients will not want to pay the reimbursable client expenses that come primarily when we deploy people on site, but I think also we've learned.
That we can have a very effective meeting virtually and I think the number of meetings, where the number of people that attend the meeting we will actually come through in a more efficient manner, what that means to our people is one.
They can utilize the time that they were spending getting on fly to making arrangements getting to and from clients to serve clients.
Same for those who may not have had travel but may have come to an office to do their work again some of those benefits will accrue to them as well.
We've tried to be very flexible with our people that we want to find the best and optimal way to serve clients as well as be responsive to their individual.
Personal and family requirements.
We think that provides significant opportunity for us to one attract globally attract talent pool and deploy it globally and I mentioned the number of restart the increase of our offshore niche or nearshore resources, how much that had an increased over the last.
Eight.
The combination of those things are favorable so.
We expect the fight for talent.
But we think we provide an outstanding work environment with great flexibility ability to work with great clients and a great team of people and we're not too Big where you lost your playing a meaningful role in our client.
You know people know each other and if they don't personally they know they can reach me or some of the other leaders and and you hear back immediately virtually on any question that they have we think all of those things are will accrue to us and that we will be able to deal with the talent demands both in.
Okay.
Cost.
And as well as ability to provide flexible and favorable work environment that will allow us to attract and pain.
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More favorably than it was pre Covid, we hope were correct because it's absolutely critical to our success, but so far so good.
Great. Thank you and then one more question if I can.
IP as a service offering has seen pretty strong interest over the past 18 months are there any recent developments and maybe any anticipated developments that you can share with respect to the potential contribution from IP as a service.
Well first I said on the call that in the increase results from this quarter and just under recent quarter remember we had.
The significant infrastructure.
Cloud infrastructure.
That we that came in during the third quarter that impacted our third quarter, but we didn't have any new IP as a service clients in the quarter, but when we look at the activity that we're having.
Across those that we've been working with over the last year or.
So and those that are new since we have.
We have new inquiries coming in I'm going to say.
You know a couple per quarter I was going to say one per month, but let's just say no let's say.
Two per quarter.
We believe that IP as a service revenue contribution relationships will expand throughout 2022.
Great. Thank you so much I appreciate it.
Thank you Brad.
Yeah.
There are no further questions in the queue.
I would now like to turn the call back over to Mr. Fernandez.
Thank you operator, let me first again.
Congratulate our associates on an outstanding 2021.
And thank everyone for parties participating on our fourth quarter earnings call and we look forward to.
Catching up with everyone again, when we report the first quarter.
Thank you and good night.
That concludes today's conference. Thank you for your participation you may disconnect at this time.