Q4 2022 Resources Connection Inc Earnings Call
The conference will begin shortly to raise your hand.
Good afternoon, ladies and gentlemen, and welcome to the Resources Connection Inc. Conference call. At this time, all participants are in a listen only mode.
We will conduct a question and answer session and instructions will follow at that time.
A reminder, this conference call is being recorded.
At this time I would like to remind everyone that management will be commenting on results for the fourth quarter ended may 28 2022.
We'll also refer to certain non-GAAP financial measures an explanation and reconciliation of these measures to the most comparable GAAP financial measures are included in the press release issued today today's press release can be viewed in the Investor Relations section of <unk> website, and also filed today with the SEC.
Also during this call management may make forward looking statements regarding claims initiatives and strategies and the anticipated financial performance of the company such statements are predictions and actual events or results may differ materially. Please see the risk factors section in our GPS report on Form 10-K for the year ended May 28.
2021 for a discussion of risks uncertainties and other factors that may cause the company's.
Results of operations and financial condition to differ materially from what is expressed or implied by forward looking statements made during this call such discussion. We will also be included in the risk factors section in <unk> report on Form 10-K for the year ended May 28, 2022, which will be filed today.
July 28 2022.
I'll now turn the call over to RGB CEO J P. Shane.
Thank you operator.
One.
We're very proud of how we've been performing strongly.
They delivered exceptional Q4 results with double digit revenue growth.
Gross margin and profitability levels reached in well over a decade.
As a result, all exceeded the high end of our guidance.
Specifically Q4 revenue was almost 26% higher than prior year gross margin more than 170 basis points over prior year to 41, 3% gross profit.
More than 31% quarter over quarter and adjusted EBITDA margin.
40 basis points to 15, 4% over prior year.
We have communicated throughout the year that we have.
On the top line, including pricing and managing costs.
David at the beginning of fiscal 'twenty, two but our goal is to deliver mid teen adjusted EBITDA margin over the long term.
In Q4, we exceeded this goal while also investing in the business.
And kicking off a major technology modernization projects.
Performance trend reflects the hard work.
Yes.
Increasing shareholder value.
These financial accomplishments also demonstrates that we're on the right path.
And our strategy.
We have successfully built the business model for agile.
An expert talent wants to work.
So in a different way.
Meeting with agility is more relevant and essentials than ever in today's macro environment.
We work across five core areas of expertise.
Finance and accounting risk and compliance.
My chain and people experience.
We already told you project execution, Barnwell project management change management and subject matter expertise for many of the world's most beloved brand.
A myriad of transformation and optimization initiatives.
I need to build deeper and broader client relationships to gain mission critical data.
And drive reoccurring revenue.
We made a strategic decision to divest the plasterboard business in Germany at the close of the fiscal year.
At May 31, 2022.
Business back.
Leadership of passports.
Two primary reasons.
First as part of our earlier restructuring initiative in Europe , We made the decision to focus on project execution in our strategic client segment, which is.
Large global enterprises with wholesome transformation agenda.
This client is not aligned with the task force middle market client strategy and the interim management.
Second RGB consulting engagement, while primarily agile is built on a suite of benefits and professional development that is different and the platform approach of creating a network of independent.
Going forward, we will invest in building strategic client account GB, Germany for healthcare and financial services practices.
Next I wanted to spend a few minutes outlining our strategic plan for the next three years and how we are breaking the pantheon HDD enterprise objectives.
<unk> 2003, our strategic plan has five Corporately, Danny digital brand to operational excellence, which we first outlined at our Investor day.
<unk> is designed to modernize our EQ aligns with today's workforce.
Needs for both talent and clients.
We began to invest in digital transformation three years ago, and it's only growing in priority in fiscal 'twenty. Three we will work to advance three projects the commercialization of Hugo which is expanding into the California market this quarter.
The execution of project Phoenix, which is the modernization of our core technology stack.
And the continued improvement of consulting experience through digital means.
The brand work for fiscal 'twenty three people.
Refreshing our brand voice to align with hybrid.
Experience strategy.
And where our clients need us.
Execution with subject matter expertise as.
As we have shared previously our business models align well to the needs of modern professionals.
Control choice and transparency in how where when and on what they work, we empower our talent by giving them access to high value work on their terms.
Our employee brand proposition is built on shared value empathy controlling choice from a client perspective, our business also aligned well.
Now with leading companies access to critical expert talent to accelerate project with efficiency and better outcomes.
Well fiscal 'twenty.
I'll also be refining our brand architecture to make our services easier to buy and sell.
Within our five core areas of expertise and engage with our clients and key primary those.
<unk> consulting and on demand talent.
Within project consulting engagement management consultant.
They opened a leading projects.
How execute project to help evolve defined by our client strategy team.
With respect to project E and working to better focus our delivery capability.
We can move faster in closing goodness.
We will continue improving our go to market design and strategic proceeds to deepen client centricity.
We have trusted relationships with our largest client and the goal is to deepen and broaden the NIM.
We ended marquee account and industry vertical program.
And established a new emerging account segmentation to serve the long tail of the business in more efficient ways, including an omnichannel approach with Hugo.
For fiscal year 'twenty, three we have established a strategic pricing team looking go to market to them.
Sure we are applying a value based approach to pricing.
Business jet transformed over the last 10 years from primarily on demand talent support to primarily project consulting pricing strategy still has ample room to TV.
Finally, as we reviewed in our Investor Day, We will proceed strategic and disciplined tuck in M&A to strengthen areas of practice.
<unk> market opportunity.
Believe we have compelling opportunities in certain areas, including digital people experience in finance and accounting Advisory services.
These strategies and enterprise objectives, I've outlined will serve to strengthen our business in the face of high inflation and recessionary pressures in the macro environment.
With me today is much more diverse than during the great financial crisis of 2008, and nine let me focus predominantly on finance and accounting staffing work, including Sox.
Today, we serve the needs of large and midsized organizations to continue to move forward with multi functional transformational initiatives, even as they entered choppy waters.
Growing pipeline demonstrates that transformation and operational excellence initiatives remain imperative for our clients.
In addition.
Facing macro uncertainty and reluctance to increase permanent head count.
Our model presents an attractive alternative to execute our mission critical work.
Recent headlines declared at well known companies are putting the brakes on full time equivalent hiring and bringing more agility and to their workforce.
This foundation of shift.
And talent strategy for greater resiliency is a favorable tailwind for our business.
Our growing pipeline metrics and improving win rates reinforced the relevancy of our business model in today's economic environment.
It's also worth noting that even for clients that don't alter your hiring plans in response to recessionary pressures persist.
Persistence of a tight labor market alone with our Gpus model, which allows clients access to high quality talent on a project.
The yen basis.
I will close with a story of resiliency from one of our consultants that help to explain our continued strong performance.
It reinforces why he described our culture at RTP as chairman first.
Okay. Thank how are people lead with empathy and care and a travel world.
Great.
Awesome.
Long term consultants from the Chicago market experienced a very serious medical emergency and her family.
<unk> suddenly diagnosed with a rare almost a required emergency brain and heart surgery.
Needed time off with financial protection to continue to care for him and their young son.
<unk> mobilized variety, while coordinating a PTO donation program that afforded greater the time off and peace of mind to care for her family. Her husband is now recovering very well and great to have this to say about her RGB experienced at the first post pandemic in person Chicago consultant event.
Last week.
Hi, Paul.
One of the themes of Opex from yesterday was the value of our GP from a consulting perspective every single one of us with screening from the mountaintop how much we are value here, not just us, but our entire family unit.
Yes.
To be heard.
Boarded and cared for truly a guest.
So I never leaving thank you for opening your hearts in so many ways I cannot begin to express.
Okay.
This story exemplifies why we are attracting the best talent in the marketplace by taking great care of our people who are then able to take great care of our clients and one another.
Getting stickier with exceptional client and consultant is our goal I'll now turn the call over to Tim for an update on operations.
EBITDA and good afternoon, everyone.
During the fourth quarter, we saw continued strong revenue growth operational metric the margin performance in.
In fact with marked the seventh consecutive quarter of sequential growth.
One is deal flow remains robust and the momentum we have noted at the end of the third quarter continued throughout the fourth quarter and into June and July .
Revenue increased by 27, 5% over prior year quarter on a same day constant currency basis.
Top of the funnel activity with strong fortifying the pipelines going into fiscal 'twenty three.
<unk> performance in the quarter were consistently strong across our core business with strategic accounts Asia Pacific Europe , North America healthcare, Kathy Inveracity outperforming what.
But some of the recessionary worries in the current macro environment, we continue to encounter strong demand profile across our portfolio propel back to make it operational focus.
So we shipped a total of a rate on important initiatives.
We see that continuing in our client base, both with new and existing clients, who are undertaking transformational projects at a faster and faster pace.
This change and the desire to partner with an agile project execution firm has provided the backdrop for increased opportunities, including expanding work within the same initiative, winning adjacent work based on delivery power and being utilized in new ways, it's quite long standing, albeit previously narrow relationship.
In the third quarter I highlighted a large technology clients undergoing a transformation, which included a carve out and standup governance.
The initial deployment of the project implemented ERP and related application utilizing a blended team comprised of client and RGB personnel at the functional and technical program.
That will continue and our footprint has increased to support the documentation and optimization of key global business processes as well as functional execution within our supply chain organization.
As the artistic team have continued to demonstrate partnership and capabilities.
Continues to grow.
Further opportunity with other key functional areas.
It was a new client that has continued to embrace co delivery and fully understands the value of RGB in helping them quickly meet their objectives.
Similarly at our new Watson financial services clients, we closed an initial whereas the engagement EBITDA workforce experienced and the relaunch of an internet intranet earlier this year.
That project against increasing to nearly double the initial proposal and relationship has rapidly expanded leading to lever at the engagement focused on redesign of existing technology implementation.
Additionally, we have begun to identify more core RGB work leveraging with initial breakthrough with gravity.
We have another client example, with a long term long term LNG plant, which is traditionally utilized RG people onto them.
Recently, we started to migrate their workforce strategy to utilize partners include delivery of important projects.
We have always appreciated our ability to fulfill different expediently and decided to widen the aperture to work with us on a delivery of a key technology implementation.
We have a team of nearly 2000 deployed in North America, Europe , and Asia, providing project management and functional expertise.
On the candidate side, we continue to attract strong talent to our company and have driven down attrition significantly during the year.
Okay.
But that will be the traditional employer, both in industry and about the professional services firm because we have the flexibility and control, while retaining financial security community learning pathways and other protections that have been all market traditional employment.
While the labor market continues to be tight our teams that are focused on talent acquisition and consultant engagement has done an incredible job attracting and retaining talent. We feel strong housing trends that continued throughout the quarter and our consultant count remains at the highest level in many years.
We expect this trend to continue given the shift in the way people want to work in there and we are rapidly becoming the premier destination for professional talent that has the knowledge flexibility a daring to work differently.
Included in our overall consultant count already been re infection in China used for alumni, who the turbulence.
We have room left for the award of a private company that didn't materialize.
For example, one of our consultants joined RGB in the fall of 2020.
Immediately hit the ground running demonstrating billing experience a pig chart file and the ability to <unk> the <unk>.
Clients have noticed an elevated <unk>, an even more prominent role in our finance transformation.
Todd on the projects you continue to be approached by both the client and other companies about joining our team.
Finally in the spring of 2020, once you've elected joining a fast growing start up.
Later, she returned RGB actually lift RGB flexible model with affordable RGB paid the challenge of new assignment and her ability to walk a hybrid schedule.
This example shows how powerful the desire for flexibility and control has shifted the mindset of the workforce that large plastic components demand agility and will move quickly to get.
Overtime, we expect this shift to broaden and accelerate increasing the number of roles and functions that are full financial.
Now, let me turn back to our fourth quarter operations.
During the quarter, we saw continued pipeline growth and velocity building, an exceptionally strong third quarter.
While the book that we continue to be very strong offer while we made progress with respect to pricing, increasing bill rates by 4% compared to prior year quarter and 2% sequentially.
Good to see pricing leverage and opportunity across the enterprise and we remain focused on our strategic objectives.
Lead generation and opportunity identification of continued to be strong into Q1 and the earliest we believe fiscal year have showed strong positive trends in revenue pipeline and.
While we are cognizant of potentially broader macro conditions early revenue trends remained consistent with Q4 seasonal pattern typical of the summer months prior to the pandemic.
Finally, let me touch on operational leverage Hasnt.
As in prior quarters in Q4, we continued deposit by controlling costs and operating efficiencies adjusted EBITDA margin improved significantly both sequentially and compared to prior year.
We continue to operate in a hybrid fashion, but are committed to serving our clients based on what the situation dictates.
I will now turn the call over to John for more detailed review of our fourth quarter results.
Thank you Tim and good afternoon, everyone. We achieved the best financial performance in over a decade during fourth quarter revenue of 217 million exceeded the high end of our guidance and represented a 28% year over year growth after adjusting for currency and business day impact.
Thanks topline growth over the last seven consecutive quarters reflect our ability to execute and the relevance of our agile business model in today's changing workplace and macro environment.
In addition to excellent top line growth. We also successfully expanded our adjusted EBITDA margin by 340 basis points from the prior year quarter to 15, 4%, which is also the highest margin in over a decade.
We continue to see broad based growth across our core market client segments solution areas as well as industry.
Persistently tight labor market, we continue to support the needs of our clients and filling both their workforce gap and co execution demand.
Revenue in on demand talent, which we formerly called professional staffing increased 37% year over year, while our project consulting revenue increased by 21%.
Continue to drive growth within our strategic client accounts deepening our relationships to expand our services into more buying centers.
Revenue from this client segment increased 17% over the prior year quarter.
We saw strong growth across all of our solution offerings, finance and accounting risk and compliance and business transformation all grew approximately 30% year over year.
On the industry front revenue growth in healthcare financial services and technology industry also all well exceeded 30% compared to the prior year quarter.
Graphically our revenue in North America increased 30% year over year, while Europe , and Asia Pac grew 9% and 29% on a same day constant currency basis.
Gross margin in the fourth quarter was 41, 3% up 170 basis points over the same quarter a year ago.
Our ongoing efforts to enhance pricing will continue to pay dividend.
Enterprise average bill rate of 131 represents an increase of 4% compared to the prior year quarter, and 2% compared to Q3 of fiscal 'twenty two.
As a result, PDL ratio improved by 190 basis points from the prior year quarter, and 110 basis points compared to Q3, driving the overall gross margin improvement.
We believe there are abundant opportunities to continue to drive revenue growth and gross margin expansion through higher bill rates.
Turning to SG&A over the last 24 lines, we have made significant structural improvement in SG&A through our restructuring efforts to reduce fixed costs.
We've also made a number of operational enhancements to drive higher operating leverage.
Now coupled with significantly higher revenue this quarter.
Run rate SG&A expense for the quarter was $56 3 million or 25, 9% of revenue a 190 basis point improvement compared to the same period a year ago.
As a reminder, run rate SG&A, excluding noncash stock compensation restructuring charges contingent consideration and technology transformation.
We will continue to invest in our technology platform to build more automation and self service capability unlock additional operating efficiency and scalability in our business.
Now turning to the other components of our financial statements.
Our effective tax rate for the quarter was 26, 1% sustained.
Sustained profitability in our European entities contributed to the more favorable effective tax rate as a benefit from historical Nols were utilized.
Adjusted diluted EPS for Q4 was 67 per share compared to <unk> <unk> in Q4 of fiscal 'twenty, one which included a one time favorable impact of <unk> 39 per share relating to an NOL carry back under the cares Act.
We generated $27 million of cash from operations during the fourth quarter and ended the fiscal year with $104 million of cash and cash equivalents.
As Keith mentioned in her remarks, we completed the sale of path for subsequent to the end of the fiscal year.
<unk> did not result in any material financial impact in fiscal 'twenty two.
While our topline revenue in fiscal 'twenty, three will be adversely impacted by the divestiture. We expect there will be favorable impact on our enterprise profitability.
I'll close with our first quarter outlook, we believe the strength in our business is solid and the volatility in the macro environment consistent with industry and market trends, while we anticipate continued near to midterm revenue growth. The pace of growth is expected to normalize compared to the 28% year over year revenue growth, we experienced in fiscal 'twenty two.
<unk>.
As we mentioned during our Investor day, we see a range of 6% to 9% revenue CAGR from fiscal 'twenty two to 'twenty five.
Our first quarter revenue is expected to be in the range of $195 million to $200 million. This range includes the impact of the task force divestiture as well as our anticipation of pent up summer vacation impact this year.
Harrison our first quarter fiscal 'twenty, two revenue was $176 million excluding task force.
Gross margin in Q1 is expected to be in the range of 39, 5% to 40%, reflecting summer seasonality and a run rate SG&A is expected to need a range of 53 million to $58 million.
With that I'd now like to open it up for Q&A.
Thank you.
To ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
Okay.
Our first question comes from Andrew Steinman with Jpmorgan you May proceed.
Hi, John good to give.
Outlook into the first quarter.
The fiscal I was just wondering if you're expecting to see kind of normal seasonal trends kind of monthly.
June July .
Yes.
As you as you think about the quarter as a whole that's my first question.
And then my second question has to do with Hugo I was just hoping you could give us any quantitative figures of how the initial hugo effort going.
Within New York City Tri State market, particularly thinking about kind of the engaged professional side. The talent supply side that is using Hugo and just remind us if that grouping of Hugo professional talent supply is totally separate from <unk> existing professional database.
Hi, Andrew.
Your first question with respect to summer some of the impact yes, we do expect.
More from the impact of share you know travel overall has picked up and so we do expect more of the summer.
Through June July and August .
The second question on Hugo Yes.
Yes, we launched we launched it in in Tri State back in October of 2021.
And so far I think it's too early to share any financial results right now.
What I can share is that <unk> adoption is it.
And we've gotten favorable feedback from from all of our constituency.
And.
We do expect Q.
Al on the California market in fiscal 'twenty, three and so we'll have more to share probably later on this year.
And then the last part of that question.
Is it totally separate professional database.
Andrew its case it is almost 100%.
We're building that talent pipeline.
Gordon.
In the Philippines as well.
Okay. Thank you Kate.
Thank you.
Thank you and as a reminder to ask a question you will need to press star one one on your telephone.
Our next question comes from Mark Marcon with <unk>.
Robert W. Baird you May proceed.
Hey, good afternoon, and congratulations it's nice to see the progress.
So you've worked so hard to accomplish.
The results coming through can you talk a little bit about the bill rates.
And the gross margin expansion. It was nice to see the bill rates are up 4%. What are you seeing in terms of pay rate inflation and how how are you thinking about both bill rate and pay rate inflation as we go into that.
Not just the first quarter, but looking a little bit longer term.
Hey, Mark.
Tim I'll, let Jeff talk a little bit about the pay rate information. If you wanted more quantitatively, but let me just add let me add color.
<unk> to your question.
When we look at the bill rate side of our business. What we said this for many quarters that you believe that there is upside pricing leverage in our business a lot of that has to do with.
The way, we think about financing our projects and pricing to value.
Haven't done.
As good a job as we like to over the years that have started to make slow progress, but if you look over the last several quarters, we've been slowly increasing our average go.
Plenty of.
There is still plenty of feeling and opportunity there and sort of the pay rates. The pace has been actually pretty consistent this year, we haven't seen.
A significant increase.
Relative to some of the some of the economic factors or the tight labor market.
That could change a little bit as we go into next year, but I would.
I would say to you that the people who choose to work with us are taking into account a whole host of factors beyond simply compensation.
So as a result, what we've seen is that they are making a pretty holistic decisions our board joining us for employment.
And how would you anticipate that.
<unk>.
The strong gross margins and.
And that bill pay spread.
To evolve as we because we go through the year.
And both in terms of like the progress that Youre seeing now and then how that could end up fluctuating depending on what the macro environment's like.
Hey, Mark I can take this one.
I think I can say.
I mean, we see a lot of upside from a day rate perspective.
This year, even though it's been a tight labor market, we havent really been pay rate pick up.
That matches it.
It ticked up a little bit, but essentially it's pretty flat. So we do expect that this year the labor market.
He has to be tied that payment could could increase.
We do believe that our bill rate upside is both outpaced pay rate increases though.
Pay bill ratio should improve over the fiscal year.
Okay, Great and then.
The EBITA margin.
Expansion was was impressive I mean, it's obviously the best in years.
How sustainable do you think the.
The type of performance that we ended up seeing in the fourth quarter is how sustainable is that.
And was there anything.
That was kind of a one time factor that ended up helping to drive that because it was really great.
Yeah.
<unk> didn't have any holiday.
We're going to build as we go to equal three when it goes through the typical seasonality throughout the quarter and so Q1, you're really looking at it.
Not only to achieve 15% in Q1, just given the holiday as well as the.
Some of vacation impact on a full year basis, we set those during our Investor day.
This year heading into fiscal 'twenty, we expect our SG&A to continue to hold at the.
At the 27 ish percent, but we're also making some investments this year.
That entire business, making investments not just digital practice as well.
Our technology platform projects. There. So it is going to impact SG&A. If you think about fiscal 'twenty three Hasnt Hall.
Overall, as we continue to grow our revenue.
SG&A leverage is going to be continue to be favorable.
That's great and then can you talk a little bit Tim you mentioned the pipeline building.
Can you talk about what the source of the pipeline build is how much of that is coming.
In on demand versus project consulting.
And.
To what extent do you have exposure to.
Early stage companies that are going through financings versus.
Some of your more traditional.
Fortune 2000 type companies.
Yes.
First of all Dave.
The composition of our pipeline if you think about.
So the mix of our business between project consulting knockdown talent. This year on the that talent was probably was.
A little harder this year because of some of the.
Everyone have a great resignation and things like that there are a lot of companies that were and are still dealing with gaps in parts of their infrastructure that need to be so the <unk>.
When I look at it kind of mirrors that sale going forward.
I think there are a lot of there are a lot of <unk>.
Companies that are going through.
Important strategic transformative initiatives and so we're getting pulled into those.
But also positively because of some of the tightness in the labor market and it's not bouncing back on the professional Bob.
We're seeing a continued strength on the on demand side as well.
With regards to customer mix I mean, the majority of our the majority of our mix. We don't have a lot of exposure to U two early stage companies.
Outside of our casualty business.
It's still really strong.
Those are the way about sticky they are relative to the <unk> business has been tempered we're actually a critical math.
So the majority of the core business most of that work and what the pipeline is being generated from.
More of a fortune fortune 1000.
Clients that we have.
Great and then can you just give us an update on the big offices just in terms of.
How do you feel about the leadership across the board obviously.
The leadership in Chicago is.
Really standing out, but just wondering if you could talk about the Tri state Southern Cal Northern Cal Chicago Houston.
Yes.
I would characterize it as saying that I feel I feel very.
Very strong about our leadership there.
I think a big muscles or function as well.
I think youre right about Chicago, we have new leadership, there to an invigorated team northeast and southeast Paas strong leadership and have bookings would bounce back obviously over the last year that seems to have continued strength on the west coast.
Strong.
The new leadership in Houston.
But we are already starting to see progress there as well so.
Yes.
As optimistic as I've ever been relative to our prospects because of the leadership that we have.
Terrific that's great to hear thanks for the comments.
Got it.
Thank you one moment for questions.
Our next question comes from Marc Riddick with Sidoti You May proceed.
Yeah.
Hi, Good afternoon, I was wondering if you could.
Talk a little bit about maybe some of the differences that you're seeing as far as activity from your various industry verticals, particularly if there are any urban showing better strength more recently or maybe.
Impacted a little differently on the spending over the last few months given the potential for economic challenges.
Yes, Hi, Mark.
I'll give some color and then John wants to jump in if you can here, but I would tell you that we started really focusing on healthcare three or four years ago feed that continually growing strength.
We saw especially in this last year financial services and technology come forward.
Really strong pieces of our business and that strength continues relative to the pipeline that we're seeing.
Don't have a ton of exposure.
In retail or in energy sector.
Kind of.
The top three industries are the ones that I listed and they showed continued strength growing through the year and continues on into the physical.
Yes, Mark.
Oh standpoint, all three industry that Tim referred to health care financial services and technology.
There are in the mid <unk>.
35 30 percentage.
Range growth compared to last year.
Great and then I wanted to just.
A follow up on just from a from a timeframe of the <unk>.
Investment spending for for the upcoming years wondering if there is any.
Yes.
Hello, Good morning.
Yes.
Normal.
Oh, Okay, sorry, I'll repeat that I was wondering if you could.
Sorry, if you could give us a little bit of an update as to the timeframe of the vessels that you talked about at your Investor day.
And sort of how that might flow out through 'twenty three.
Yes definitely.
Yeah, Mark I think you're referring to the technology.
Modernization projects and spending.
And yet we are in the final phase of developing a detailed.
Road map and we should have more clarity at the end of at the end of August .
August the total investment that we planned as we stated on Investor day is between $25 million to $30 million and majority of that will.
Well when they start.
Actual implementation.
Beginning in.
September sales.
We could choose I expect capex will be elevated churn in Q2 of the 423, youre, probably looking at roughly around $3 million to $4 million.
Capex.
On a quarterly basis.
Okay, Great and then the last one for me I was wondering just as far as sort of how.
The.
The digital transformation picture looks for maybe.
The scope of the projects that youre seeing whether its weather.
Whether thats changed much from the beginning of the year.
Or the focus that youre seeing from customers whether.
<unk> seen any shifts as far as their their type of focus or projects that they're engaging and whether thats macroeconomically driven or otherwise. Thank you.
Yeah.
Yes, I think Mark we're seeing the same type of projects come through the pipeline.
A lot of transformational type initiatives mission critical work.
Competition.
The desire to automate and drive the Digitization is not changing in our client base.
We're seeing our project.
The value of our projects is increasing as well.
Excellent. Thank you for taking my questions.
Thank you.
Our next question comes from Andrew Steinman with Jpmorgan you May proceed.
Hi, John I, just wanted to jump a little bit more into the first quarter 'twenty three revenue guide of 195 to 200.
You could just mention how many business days, we have in this current quarter I think a year ago quarter was 63.
And then also in that 195 to 200, if you could just tell us how much FX headwind.
You're assuming and then if you could total it out for US you can imagine I'm looking for what's the implied organic constant currency same day basis.
Growth rate at the middle of the range.
Yes sure.
At the same number of business days.
Fiscal 2300.
63 to <unk> 63, so it is on the same day basis already so.
At the top end of the range of mid to top end of the range. You are looking at about a 14% growth year over year and we've already baked in.
Sex impact into <unk>.
<unk> entered the guidance and a gain of 195 to 200 and so on a constant currency same day basis.
Youre, probably looking at a 15% plus.
Both year over year.
At the top Andrei.
Correct, yes, okay. Thanks, John I appreciate it.
Thank you.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to <unk> for any further remarks.
Sure. Thank you operator and I. Thank you all for attending all we appreciate your continued interest in RTP and we look forward to sharing our progress at the end of Q1.
While we had this summer.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
The conference will begin shortly.
As Johan during Q&A, you can dial star one one.
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The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Dan.
[music].
Yeah.
Yes.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
[music].
Okay.
Yes.
[music].
Yeah.
So.
Hum.
[music].
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Sure.
[music].
Yes.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
[music].
Yes.
[music].
Okay.
So.
Hum.
Yes.
[music].
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Yes.
[music].
Okay.
So.
Hum.
[music].
<unk>.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].