Q2 2022 Genpact Ltd Earnings Call
Okay.
Good day, ladies and gentlemen, welcome to the 2022 second quarter Genpact Limited earnings Conference call. My name is Lisa and I will be your conference moderator for today at this.
This time all participants are in a listen only mode. We will conduct a question and answer session towards the end of the conference call. As a reminder, this call is being recorded for replay purposes.
Play of the call will be archived and made available on the IR section of Genpact, but.
I would now like to turn the call over to Roger Sachs Head of Investor Relations. Please proceed.
Thank you Lisa and good afternoon, everybody and welcome to our earnings call to discuss our second quarter results. This period ended June 32022.
You had a chance to review our earnings release, which was posted to the IR section of our website Genpact Dot com.
Speakers on today's call are Tiger, Thiago, Rajiv, our president and CEO and Mike Weiner, Our Chief Financial Officer.
Today's agenda will be as follows I gave will provide an overview of our results and update you on our strategic initiatives. Mike will then walk you through our financial performance for the quarter. So let's provide our current thoughts on our outlook for the full year 2022 Tiger will then come back for some closing remarks, and then we will take your questions and as usual, we expect to call them.
Last about an hour.
Some of the matters, we will discuss in today's call are forward looking and are Bob a number of risks uncertainties and other factors that could cause actual results to differ materially from those in such forward looking statements.
Risks and uncertainties are set forth in our press release. In addition, during todays call well refer to certain non-GAAP financial measures that we believe provide additional information to enhance the understanding of the weight management views. The operating performance of our business you can find a reconciliation of these measures to GAAP in today's earnings release posted to.
The IR section of our website.
With that let me turn the call over to Tiger.
Thank you Roger good afternoon, everyone and thank you for joining us today for our second quarter 2022 earnings call.
I hope all of you had the opportunity to attend our Investor and Analyst Day in New York City. This past June .
I had a chance to listen to the archived webcast available on the Investor Relations section of our site.
Our results for the second quarter reinforced our strategic plan, we laid out for the next several years.
We are pleased that the momentum we saw coming off of 2021 has continued through the first half of the young.
As we had expected strong demand for our Ddos attack, Yeah I saw that.
This was the primary driver of our 12% constant currency Euro where your topline growth for the quarter.
Digital operation services delivered a steady performance.
Our priority accounts grew 17% and represented 65% of total revenue.
In a challenging macro environment, our adjusted operating margin expanded 190 basis points on the back of several strategic actions are aligned to our long term plan and better agility for the future.
Specifically during the second quarter of 2022, we delivered total revenue of $1.089 billion up 12% on a constant currency basis.
They're not turnkey iconic shows revenue of $489 million up 22% on a constant currency basis.
Digital operation services revenue of $601 million up 5% on a constant currency basis adjust.
Adjusted operating income margin of 16, 9%.
290 basis points from the first quarter and adjusted diluted earnings per share.
70 cents up 6%.
Every company continues to grapple with numerous challenges, including 40 or higher inflation rising energy costs ongoing supply chain disruption and high levels of toddler nutrition.
In response.
We are engaging with us to navigate the short term and better resilience for the long term, particularly in areas such as supply chain sales and commercial and risk.
As we move into the second half of the young overall demand remains healthy as reflected in our high quality pipeline.
With all this macro uncertainty we are seeing clear signs of shifting client priorities with cost taking center stage.
Bookings during the second quarter remained strong and in line with our expectations.
The majority of our deals continue to be long term in nature with almost 70% being annuity base.
Nearly half of them, but you're going to be sole sourced.
We converted a number of small and medium size deals this quarter that grows faster than before.
And I'm sorry.
Cycle times trending down over the last four quarters, our clients are looking for faster payback and it investments.
Also signed three new large engagements during the second quarter with total contract value exceeding $50 million each.
One in banking wanted to insurance card and high Tech.
Additionally, we added 30, new logos up from an average of 26, new logos in the last 12 months period through March 31st of this year.
Total revenue for the quarter was up 12% year over year on a constant currency basis and growth was broad based across all our industry segments in particular financial services delivered strong double digit growth.
As we discussed at our recent Investor and Analyst day.
We have to service that work together to deliver tangible outcomes for our clients.
The first is data Jackie I services.
We design and build solutions using data on modern technologies.
Transform our clients businesses and operations.
These address our clients' key problems better alignment with our strategic goals and deliver an improvement in their outcomes.
The second is <unk>.
Good operation services, where we transform our clients' operations and run them globally to deliver higher levels of performance.
Although our business has evolved we have reassessed, how we would report our results to be more in line with our clients' needs and how we think about our business internally.
Going forward, we will report revenue by these two subtypes.
Checking yard and digital operations.
Also retiring the GE global client bifurcation as GE is now less than 9% of our revenue.
During the second quarter did not take AI services grew 22% year over year on a constant currency basis fueled by the ongoing momentum we are seeing in our emerging services like supply chain management sales and commercial and risk.
<unk> contributed 45% of total revenue for the quarter up from 44% in the first quarter of this year and 42% and the full year 2021.
Physical operation services continued its steady growth, increasing 5% year over year on a constant currency basis broadly in line with the first quarter of this year and up from a decline of 1% in full year 2021.
Digital operation services contributed 55% of total revenue for the quarter.
Let me share a few examples of how our services are helping our clients deliver better outcomes.
First our global food and beverage company was facing in terms of volatility in demand leading to much higher than expected inventory write offs for perishable products.
Design and build.
New demand forecasting models for these product lines, leveraging machine learning and analytics to significantly improve supply and demand planning and supply chain efficiencies that lead to better margins as well as a $400 million reduction in inventory.
We now run with your supply chain operations for them.
Second.
The companies are trying to adopt new business models transitioning from best to consumption based revenue models.
These companies are experiencing challenges from customer churn and revenue leakage and license revenue for one such client we have built proprietary analytical models that combined internal data such as customer booking unlicensed usage with external data such as competitive products and wallet share to alliance.
<unk> 9000 strong sales force because the right opportunities at the right time with tailor made offerings and pricing.
This drive material improvement in customer renewals and profitability for the client.
Lastly, our large global equipment manufacturer with long term service and maintenance contracts.
Dealing with rapid inflation impacting more than 50000 box used to replace and repair equipment serviced in the future.
We build complex algorithms to optimize its service and maintenance pricing models, leveraging external economic and competitive data and internal box cost margin and reliability data.
This dynamic market based pricing model is expected to improve the client's overall revenue growth and profitability.
All of these examples address challenges and are extremely relevant in today's macro environment.
Highly replicable across clients and across industries.
We are disproportionately investing in our priority accounts our portfolio of clients that are on significant transformation journey. When we see the most opportunity to drive meaningful outcomes for them that we believe have significant growth potential for us above company average.
During the second quarter, our revenue from a variety of accounts grew at 17% and represented 65% of total revenue in line with the first quarter of this year.
During the 12 months period, ending June 32022, we grew the number of relationships with annual revenue of over $5 million from $1 37 to $1 54.
For more than $25 million in annual revenue increased from 27 to 34.
Clients with more than $50 million in revenue increase from 12 to 14 <unk>.
During the quarter, we initiated several strategic actions to align our cost base.
Long term plan, while also building agility to better respond to the macro environment.
As part of our continuous evaluation of our business, we have sharpened our portfolio to focus on services, where we see the greatest opportunity and our deep prioritize assets that do not align with our strategy.
Luckily impact long term profitability.
We have identified a small business that we expect to divest <unk>.
I believe there is potential to better maximize its value under different ownership. We have classified this business I've held for sale, allowing us to better deploy our resources capital and leadership bandwidth to more sharply define strategic opportunities.
Next we have been implementing a long term flexible on hybrid global delivery model.
<unk> incorporates a mix of offshore onshore nearshore and remote working based on the needs of our clients type of services regulatory concentration and employee preferences.
This has allowed us to further optimize our real estate footprint by consolidating sites, leading to future cost savings and importantly, giving us more flexibility to help clients drive tangible outcomes.
The sharpening our cost focus caused us to take certain deliberate employee actions in the second quarter largely tied to rules related to a non strategic services all right shoring of Roes no.
Non strategic services currently represent approximately 10% of our normal revenue down from 21% in 2018 and growing at less than company average.
As a result of these actions we recorded a restructuring charge during the second quarter, Mike will cover the financial impact of these actions on both the quarter as well as our updated full year outlook.
Let me spend a few minutes on talent.
As we had expected we saw an uptick in our quarterly attrition to 38% versus 33% over the prior three quarters.
We've all witnessed an increase in attrition during the second quarter post our annual bonus payout that occurs in March each year.
This attrition was primarily concentrated at the lower end of our organizational pyramid, where we are.
Able to quickly fill roles to meet demand.
Our attrition rate includes all employers who lead the company regardless of their tenure or even <unk>.
Adjusting for both involuntary attrition as well as employees and training with less than three months of starting at attrition for the quarter would have been 34%.
We've always said, we manage attrition at the individual skill and geography level for example, attrition in our call centers in the Philippines, and the Americas has always been higher than company average on the other hand, our attrition in the midst senior level and specialist expert groups is the same as pre pandemic levels.
Given our global talent management practices and to enable us to hire reskill and redeploy employees at scale, we did not see any impact to our clients' engagements on our own.
Our ability to convert new bookings.
During the quarter, we hired almost 10000, new team members across the globe, reflecting genpact powerful brands.
A very competitive environment.
During the quarter, our employees completed more than two and a half million training hours.
Leveraging our online on demand learning platform genome up from approximately 2 million training our last quarter.
Using our internal redeployment platform with.
We have successfully redeployed almost 6000 reskill their employees to support the changing needs of our clients.
Cherokee to Reskill, and Upskill and provide new opportunities for our employees.
Critical to managing attrition employees, who are active on genome and employees, who moved to different roles and currently have at least 50% lower attrition rates than the company average. This is a competitive advantage that we bring to our clients, particularly in today's macro environment, giving our clients themselves are struggling to find that.
<unk> talent.
As we enter the second half of the year I believe we are well positioned to continue to address the changing needs of our clients.
Through our strategic investments over the past several years.
We have diversified our service offerings to include many of the margin services on top of the strength of our core services like finance and accounting.
This wide range provides our clients with access to capabilities that help them manage a variety of challenges associated with today's highly volatile environment, while also enabling them to build resilience for the future.
This includes cost working capital growth risks and supply chain challenges.
All of which are non discretionary means.
Across these areas, we are able to partner with our clients to deliver better outcomes for them.
At the core of this is our agility and nimbleness, which allows us to take these different services to our clients to partner with them at speed and scale.
With that let me turn the call over to Mike.
Thank you Tiger and good afternoon, everyone. Today I'll review, our second quarter results and provide an update on our full year 2022 financial outlook.
Total revenue was 1.089 billion up 10% year over year or 12% on a constant currency basis and in line with our expectations scatter check AI services revenue, which represents 45% of total revenue increased 20% year over year or 22% on a constant.
Currency basis, largely driven by our cloud based data solutions across notable focused areas, including supply chain sales and commercial and risk.
Digital operation services revenue, which represents 55% of total revenue increased 3% year over year or 5% on a constant currency basis, primarily due to deal ramps from recent wins.
From a vertical perspective financial services increased 17% year over year, largely due to fintech and digital banks, where we're helping them navigate various regulatory challenges and scale their operations as well as continued demand for our risk services with traditional banks consumer and health care increased 9% year over year.
Largely driven by sales in commercial and supply chain engagement versus the very strong prior year growth rate.
Our high Tech and manufacturing increased 13% largely driven by supply chain finance and accounting engagements with both new and existing clients.
Adjusted operating income margin was 16, 9% down 100 basis points from the second quarter of last year, but expanded 190 basis points sequentially. Our performance in the second quarter included the positive impact of classification of certain non strategic assets as held for sale that Tiger referred to.
Earlier, given our intention to divest the divested a small business. Additionally, adjusted operating income margin during the quarter benefited from growth related to operating leverage and the impact of our cost containment initiatives, resulting in lower SG&A as a reminder, a higher than normal adjusted operating income margin level during the second.
Quarter of 2021, largely resulted from lower travel expenses and the delay of certain planned R&D and sales and marketing investments to the second half of 2021 due to COVID-19.
During the quarter, we recorded a $39 million restructuring charge. This primarily related to approximately 1 million charge included in other operating income line of our income statement related to certain lease properties, we're no longer and plan to occupy and $17 million of severance costs related to employee actions.
We anticipate the majority of these savings from these actions will benefit us in future results.
The restructuring charges are excluded from our second quarter adjusted operating income and align with the margin drivers we outlined at our recent Investor day.
Margin for the second quarter was 34, 4% excluding restructuring costs I just mentioned gross margin for the quarter would've been 35, 2% compared to 35, 8% reported in the first quarter of 2020 to the sequential decline is largely due to the elevated attrition in the quarter.
Above the normal seasonal increase reflecting the current market environment as well as higher travel costs, partially offset by off cycle pricing adjustments and better utilization from our ongoing demand of data Tech and AI services, we expect gross margin to improve as we progress through the balance of 2022 is data Tech AI.
Services continue to scale.
SG&A as a percentage of revenue was 21, 4% up 70 basis points year over year, largely due to the impact of investments in sales and marketing and R&D that we dialed up in the latter part of 2021, partially offset by G&A leverage excluding the impact of restructuring charges I mentioned earlier SG&A as a percent.
Revenue would have declined 10 basis points year over year.
Adjusted EPS was <unk> 70 up 6% year over year from 66 in the second quarter of last year. The <unk> increase was primarily driven by higher adjusted operating income up to the.
The impact of lower outstanding shares too.
Lower taxes and net interest expense of two.
Partially offset by two seven impact from lower FX Remeasurement gains recorded in the quarter compared to the same period last year.
Our effective tax rate was 24, 8% compared to 24, 2% last year. The increase was primarily due to the mix of lower benefits recorded in the current year, partially offset by some new lower tax rates in certain jurisdictions.
Turning to cash flow and balance sheet during the quarter, we generated $102 million of cash from operations that compares to $161 million in the same period last year. This was lower than our expectations as elevated interest rates caused several clients to reevaluate their historical payment patterns, resulting in dsos expanding to 84.
From 82 days in the first quarter of 2022, and 83 days from the second quarter of 2021 overall quarter quality of our portfolio remains unchanged. Additionally, cash flow from operations. During the quarter was also impacted by severance payouts that are part of the restructuring charge I discussed earlier.
Cash and cash equivalents totaled $460 million compared to $862 million at the end of first quarter, largely driven by the repayment of our $350 million bond in the second quarter of 2022, our net debt to EBITDA ratio for the last four rolling quarters increased to one seven times from one five times.
At the end of the first quarter of 2022, reflecting the impact in the second quarter restructuring charge that is included in our EBITDA calculation.
With the Undrawn debt capacity existing cash balances, we continue to have ample liquidity to pursue growth opportunities and execute on our capital allocation strategy.
We continue to expect our net debt to EBITDA ratio will remain in the preferred one to two times range as we discussed during our recent Investor day, our capital allocation priorities to drive long term shareholder value are as follows first we are investing in our businesses to support organic long term growth initiatives next we will.
Turning to pursue strategic and disciplined M&A to add to our domain capabilities and our strategic focus areas and lastly, we're committed to a robust return of capital program with 45% to 50% of operating cash flow earmarked for share repurchases and dividends to help drive tsi.
During the quarter, we continued to execute on our program of a more regular cadence of share repurchases and purchase and bought back approximately one 8 million shares for a total cost of $76 million and an average share price of $42. We also paid out dividends totaling $23 million.
Capital expenditures as a percentage of revenue was approximately one 2%. We continue to expect the percentage to be approximately one 5% to 2% for full year 2022 with the higher spending during the remaining part of the year as employees return to office as part of a hybrid delivery model now.
Now, let me update you on our full year outlook given.
Given the strong start to the year, we now expect revenue to be between 432, and $4 37 billion, representing reported year over year growth of 7.5% to 9%.
This incorporates a larger than expected currency headwind of $21 million than we provided you on our full year outlook last quarter, reflecting the strengthening U S. Dollar. This also includes approximately $28 million of expected full year revenue associated with business held for sale compared to a similar amount in 2021 now.
We expect total revenue growth to be between 9.5% to 11% on a constant currency basis compared to our prior full year outlook of 9% to 11%.
Given our year to date performance and the positive impact from strategic actions. We outlined earlier, we now expect our full year 2022, adjusted operating income margin to be towards the higher end of our prior 16 to 16, 5% outlook range.
We now expect adjusted earnings per share for full year 2020 to be between $2 68, and $2 74.
Lastly, we now expect to generate full year cash flow from operations closer to $500 million as clients increasingly maximize near term cash flow the lower cash flow expectations not related to any business slowdown or overall.
Overall demand remains strong with that said, let me turn the call back over to you Tiger.
Thank you Mike.
Our first half performance highlights the resilience of our business model, our durable competitive advantage and the relevance of our services in the market.
This is evidenced by our continued strong bookings and expanding pipeline of opportunities.
The intimacy, we have built with our clients, particularly across the C suite beyond just the CFO and CIO gives us deep insight into what is happening in their businesses and industries, allowing us to pick up signals and take early action to drive value for them. This is particularly relevant in an environment where deals tiger.
Times are shortening our clients are looking for a rapid payback to their investments.
Our ability to combine our deep expertise across industrial domain with a strengthened operationalize and insights to actions that lead to tangible outcomes.
As a part as a strategic partner that can help clients navigate the challenges they face today and better resilience for the future.
We continue to be recognized by leading industry analyst firms and partner for the capabilities. We have built and invested in for example by IDC for a proprietary and unique data and analytics certification program data rich.
A largest upskilling data program of its kind in the world with more than 58000 employees trained.
By Everest group as a leader in its 2022 supply chain management services.
Advanced analytics and insights services as well as financial crime and compliance operations peak metrics.
Bye now.
2022 financial services global partner of the young.
Hff's, recognizing our experience business right point in the winner's circle of its top 10 employee experience nervousness 2022.
And number one for outstanding voice of customer.
And finally by Microsoft naming right point averaged 2022 U S partner for Europe , our employee experience and runner up for its worldwide partner of the year for employee experience.
We also continue to be recognized for our commitment to ESG initiatives with equal wireless.
Warning us a platinum rating, putting us in the top 1% of more than 95000 organizations across sustainability power meters.
We've also recently honored with the <unk>.
So 50 award on the sixth year in a row for our continued excellence in cyber security.
Our performance this quarter aligns to the multiyear strategic plan, we laid out at our recent Investor day.
Through 2020 six we expect to drive sustainable, 10% plus organic revenue growth expand our adjusted operating income margin at a more meaningful pace than in the past and continue to deliver strong cash flows.
We are confident that given our strong position in attractive high growth and Underpenetrated market, where we have significant recurring revenue and deep client relationships.
Our operating leverage strong free cash flows and healthy balance sheet allow us to continue to make strategic investments in our areas of focus including services capabilities and client accounts.
We look to the rest of the year and beyond we are confident in our ability to execute against this plan and create even more durable value for our stakeholders with that let me turn the call back to Roger.
Thank you Tiger, we'd now like to open up our call for your questions. Lisa can you. Please provide the instructions.
Yes. Thank you.
As a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
The first question.
It's coming from.
Milan.
I'm, sorry, Maggie Nolan of William Blair. Please go ahead.
Thank you.
Tiger you made a comment on client decision cycle times trending down and I believe you said that in the recent past as well I'm curious is that showing up disproportionately in either the data tech AI or digital ops segment.
Maggie I know actually it's showing up equally in both.
Data take AI as well as digital operations.
Alright.
Interestingly, it's showing up both in.
Large deals as well as obviously in smaller and medium deals one would expect it to be faster cycle.
In smaller deals in medium size deals, but it's also showing up in larger deals I guess.
I mean, the simple reason for that is our clients are very focused.
These days no surprises.
<unk> is a big agenda item.
And they want payback of their investments very quickly so I'm, a little not surprised but we've seen this trend for consistently for about four quarters.
Okay, Great and then can you give us a little more information on what is the nature of the business that you were.
Investing.
And why it's non strategic and then just to clarify that.
Believe you said, 10% of raws is kind of non strategic revenue is that inclusive of this business or incremental to the business you've already flagged to divest.
Yes, I think.
I'll take the last part of the question that includes this business, but what we're really talking about is a specific business.
Asset solved so maybe Mike you can answer the specifics around the business itself.
Yes were not really disclosing the specifics around around the business itself, but this is a business. We've invested in we've built for a number of years.
It's in a good position right now to be.
Be in better hands, and we're able to continue to fund it and invest in the business on a go forward basis.
And we look to hopefully consummate a deal.
In the not too distant future from that perspective, and we provided some financial information in our press release.
Size of the deal and again, if you want to think about it from the outset as your first question was it said about 10% of our business, we're over $4 billion business $4 billion.
That's about $400 million and of this is about 21 million. So its a very very small business for us.
Okay and is that the remainder of that 400 million being actively evaluated.
No no no no no.
Great question. The remaining piece of that $400 million is continues to be managed and invested in an appropriately. So again. This was a subsegment of that $400 million that was specifically tied to a freestanding asset a freestanding business there where we think we're in a good place right now to monetize as it fits in line with our future strategy.
Got it thanks for taking my questions.
Thanks, Mary Kipp.
Okay.
Next question comes from Black Fox of BMO. Please go ahead.
Alright. Thank you for taking my question I wanted to dive in on the pricing comments you mentioned some benefit to the gross margin line could you just provide some color and commentary on how those conversations are progressing with clients and if you're able to quantify any impact that pricing.
Having the benefit.
Gross and operating margins.
Any color on that thank you.
Yes, Brad we when we when we thought about.
The overall pricing environment in the inflationary environment for the yard.
We had factored in.
Some element of price increases in conversation with our clients.
And we have actually factored that in and it's going as far our expectations. The key to understand you heard of that these take time.
These are against long term annuity contracts that we have.
And a real <unk>.
Discussion that we have with our clients is how do we create a win win situation by driving.
More value often it's increasing the scope it sometimes finding opportunities to drive automation and change in analytics and insights that drive incremental value and the outcomes that get delivered and getting paid for those outcomes. So there are a variety of ways. We do this because it's always in partnership with our client.
So it takes time and we're very pleased with the way it's progressing.
Through the year so far.
Rajiv elusive.
Yes. Thank you.
Okay.
Okay.
The next question next question.
Coming from Ashwin.
<unk> of Citi. Please go ahead.
Thank you Hey Tiger Mike.
To hear from you.
Hey, Ashwin hi.
Okay.
I guess my.
My first question is.
And you mentioned this at the Investor day and of course repeated it today the nature of demand is changing with more focus on cost.
Could you sort of review, how you expect that to.
<unk>.
Your new segments.
In terms of demand.
If you could kind of go through that.
Great question Ashwin.
I would say both segments.
The data Tech AI services as well as digital operations services.
Enough ammunition.
To help our clients navigate.
Cost improvement and cost take out situations and we are therefore seeing the tailwind of demand come through.
With cost being the agenda on both types of services, having said that one of the incremental advantages of data Tech services is that it also tacos.
Risk.
It also tacos.
Sales in commercial particularly for example, the example, I gave around tech businesses that are trying to convert themselves from an asset based business into a consumption based business.
If you can think about tech business is trying to do that that's a big change youre talking about renewal cycle Youre talking about how do I get to the customer at the right time, how do I make sure that my churn rate drops in an environment, where I'm not getting new growth. So that failed in commercial services in that very significant growth agenda in our data.
And then of course supply chain.
There is no question at one of the biggest conversations we are having amongst all our services or supply chain services across across a range of manufacturing consumer goods life Sciences technology customers. So I would say cost of an agenda, but they're not taking I havent incremental lots lots of other things that fit.
There that allows even more growth.
Got it thank you and then.
Just a modeling question as we are.
Look to incorporate the new segment.
<unk> in our models.
Key Q4 Q.
Anything to look out for.
Either from a seasonality perspective.
Sure.
Any any any other perspectives from modeling perspective.
Anything to watch out for these two to particular segments should they stay in that.
One of them in the 5%, 6% range and the other in the upper teens to low twenties.
Yes, I think thats, probably a fair way to answer it but we're also as a man and create an opportunity to look at it when we disclose the last 10 quarters of the bifurcation of our revenue that way.
So you can look at the historical patterns as well.
Okay got it thanks.
Gotcha.
We can go to the next question.
To ask a question. Please press star one on your telephone.
Yeah.
The next question comes from.
Jaret.
Levi of <unk>.
Cohen.
Okay. Yeah. This is gerard on for Brian with GE understanding that youre not breaking it out but is that account performing in line with how you expected it to in the first half of this year I mean any change in your second half you there.
We're not really addressing GE, specifically as we move forward as Tiger alluded to it's less than 9% of our business, but no nothing has changed from what we've communicated earlier, we bifurcated GE versus global client.
So from that perspective now.
And the way to think about.
It's incorporated within our manufacturing and high Tech.
Segment that we report and as Mike referred to it has prepared remarks that segment grew in the quarter, 13%. So so we've got a good overall growth in that segment on GE is now incorporated into that segment as one of our clients.
Yeah, Okay, great and then in terms of wage inflation has that improved at all following that stabilization you saw at <unk>.
Yes, I think the best way to answer that is it stable.
It has remained stable.
Has it improved meaning if inflation down the answer is no.
It hasn't.
But it has not gone up which is a which is a good news and.
The typical skilled in cohorts, where we have seen the most pressure are the usual suspects that we talked about last time as well which is.
Digital technologies.
Data science data analytics.
Specific supply chain services, some technology services, all the usual areas, where our clients are.
And everyone has a lot of demand with them.
You can go to the next question please.
As a reminder, if you have a question. Please press star one one on your telephone.
There are no more questions in the queue.
Okay. Okay, well. Thank you very much for joining us today and I look forward to speaking to you again next quarter. Thanks, so much.
Thank you for your time.
This concludes today's conference you may all disconnect.
Yeah.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Yeah.
Okay.
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