Q3 2022 Procore Technologies Inc Earnings Call

Since 2019.

I am also looking forward to meeting in person with our analysts and shareholders at our inaugural Investor day on the ninth.

The team has been working incredibly hard on ground break and we hope that you will benefit from the insights we plan to provide.

So with that let's jump into some business updates we're going to begin with briefly updating you on the demand environment, which I know remains top of mind for many of you.

Continue to stay close with our customers on this topic and from our vantage point customer sentiment towards the environment remains consistent and positive.

Internally, we have yet to see a change in buying behavior or customer demand.

Our customers continue to watch the environment closely and in some cases, they are taking a variety of steps to counter short term volatility such as focusing more heavily on planning or pre purchasing materials to secure pricing.

But our customers remain optimistic overall about the long term outlook.

Most of our customers have strong backlogs in sectors like nonresidential and energy continue to perform well.

And many of our customers anticipate project inflows from various infrastructure builds globally.

All of this combined with our continued healthy pipeline and performance leads me to feel positive about our business.

Of course, we've all seen that the news and some economic reports appear mixed and some pockets of construction are already or may eventually feel pressure should economic conditions deteriorate.

As we've shared before and we will discuss next week not all sectors of the industry behave the same during boom and bust times with demand in one sector wins, we often see demand grow in another.

We have a very diversified portfolio of customers. These customers often run diversified portfolios themselves. So we do not anticipate excessive exposure to one particular segment.

Speaking of customers that run diversified portfolios. This quarter I am pleased to share that brasfield and glory one of the largest privately held general contractors in the U S expanded significantly with us.

Brasil, the gory managers, a highly diverse mix of projects that span across many different sectors, including aerospace and aviation commercial energy health care and multifamily residential just to name a few.

After a competitive evaluation brasfield in Gori selected <unk> to scale across the enterprise because of our superior end to end platform and our shared people first culture.

As they continue to grow <unk> will help them streamline their processes drive efficiencies and enable them to leverage data, which will drive better business outcomes.

In addition to general contractors, we continue to expand relationships with notable owners, including a fortune 100 retailer.

This customer originally bought <unk> to manage all of their projects, including new builds store Remodels merchant transitions and special projects. Since then our relationship has remained strong with the customer deciding to expand with us after their initial multi year term.

This customer has built over a dozen complex integrations with broker, allowing them to flow data to and from their various critical systems, indicating a strong commitment to our platform and its relevance across their business there.

They continue to invest heavily in their capital assets and they expect to build even more in 2023 and beyond.

We are delighted to continue partnering with them on this journey.

Not only are we continuing to expand relationships with customers. We're building new ones. The city of New Orleans is a new public owner customer with a population of almost 400000.

City of New Orleans manage critical infrastructure projects, including a $2 $3 billion program to restore damaged infrastructure in the aftermath of Hurricane Katrina.

In order to better collaborate with other public sector partners, they chose to consolidate their existing system and standardized across brokaw.

By adopting <unk>, they benefit from more efficient processes, better controls and improved visibility into their infrastructure program.

We are thrilled to have developed this relationship with them very city, where we're hosting groundbreaking at our Investor Day next week.

Not only will be supporting the industry's efforts to transform the way. It operates we are reflected upon our own operations.

As I've shared in the past few quarters I have been focusing a lot of my energy on hiring Derate leaders to set <unk> up for success in the immediate and long term. So that we can scale our operations for future growth.

The specific area of focus has been our executive team and what our company our employees and our customers need during this next chapter for <unk>.

Last several months, we've welcomed to our executive team Joy drilling our Chief data Officer, Steve Davis, our president of product and technology and today I am very excited to announce that augur kibler will be joining <unk> as our chief people officer.

<unk> joins us with over 20 years of human resource leadership experience at several market, leading software companies, including <unk> nine and <unk> and.

In addition, our chief revenue Officer, Dennis Landrus will transition into a new role as special adviser to the CEO , where he will focus on certain areas of strategic importance to <unk> future success, including international expansion and scale.

Brokers go to market team is very strong and has been executing very well. This year as you can see from our Q3 results.

We believe we have the right strategy and the right team in place and this is an ideal time for Dennis to shift his focus to advise me in specific areas of the business, where he can add the most value.

Dennis has been instrumental to the company over the last several years. He has directly contributed to leading protocol from $10 million in revenue to hundreds of millions today. He was critical to our evolution from serving general contractors to owners and specialty contractors as well as our international expansion in this new role I expect Denys to continue to provide it.

Outside of the impact to me and to the company.

While we began searching for a new revenue leader for this next phase of growth the talented leaders from our sales marketing and customer success organization will report into me.

So before I hand, it over to Paul I'd like to conclude by reiterating what an incredible position <unk> and today, we have tremendous trust and deep relationships with the construction industry and we continue to hear from our customers and industry experts that our platform and solutions are the best in the industry and we are helping our customers manage risk and.

One better businesses.

<unk> is performing very well as you can see from today's results. Our executive team is expanding with excellent leaders to help us scale to the next stage of our growth.

So I want to conclude todays remarks by letting you know how incredibly proud I am of everything we've accomplished and I am so excited to see what the future holds I can't wait to share more with you all next week.

And as a reminder, this will be <unk> first in person ground breaks since 2019, and our very first ever Investor day, it's going to be amazing and I look forward to seeing many of you there.

Now I'll hand, it over to Paul.

Thanks, Julie and thank you to everyone for joining us today.

As Tim described we had a very strong performance in Q3, I'm very proud of our results and I'd like to share some highlights.

Revenue in Q3 was $186 million.

Up 41% year over year, and up 35% organically when excluding levels at $8 $5 million contribution.

Total <unk> in Q3 with $715 million with short term arpaio, representing approximately 70% of that and growing 40% year over year with two points of contribution from level set at.

Our non-GAAP operating margin was negative 7% in Q3.

As it relates to our recently announced material financing program you can find information on the activities of that program included in the investing activities section of our cash flow statement, we would remind folks that we are still in the early stages of that opportunity and are not expecting material revenue contribution from that initiative. This year.

As such we do not anticipate providing regular quarterly updates on the appropriate.

This reflects our deepening relationship and footprint within the industry as well as the significant remaining opportunity for growth.

<unk> performance was strong across the board from a stakeholder and customer size perspective, we did have disparities in performance by geography International comprises a small portion of the total business today, yes, we acknowledge the strengthening of the U S. Dollar has created foreign exchange volatility globally and as a result, our Q3.

Results were impacted by currency headwinds, specifically on a year over year basis, FX contributed approximately seven points of headwind to international revenue growth in Q3.

Therefore on a constant currency basis.

International revenue grew 40% year over year.

Additionally, our international business continued to experience inconsistent productivity and we expect these internal dynamics to persist in the near term we do not believe the international performance is primarily driven by external factors related to the broader demand environment. Rather these are internal growing pains related to how we better scale.

The operation and enablement across all the countries, we operate with them.

Given this is the second quarter of lower than expected productivity, we are evaluating the international operations and structure and expect this dynamic to reverse sometime next year.

Fortunately the U S business has been performing very well its performance is more than made up for international and is a testament to just how much more opportunity the company still has domestically.

Finally, hopefully shareholders appreciate our improving expense management in this quarter as compared to the second quarter, we continue to identify ways to efficiently invest in our growth, while ensuring we are well positioned to execute on our long term opportunities.

This approach should lead to continued margin improvement over the coming years.

But at an appropriate pace, considering our global opportunity.

With that let me move on to our outlook.

Before providing specifics I'd like to share some additional color on our guidance philosophy.

We acknowledged the broader environment remains highly dynamic and ever changing <unk>.

Consistent with the approach we've taken in the prior two quarters. The conservative guidance, we are providing today factors in this external uncertainty and potential for weakness.

That said I would reiterate <unk> remarks pertaining to the fact that we have not yet experienced this volatility in our business today.

With that background, here's our guidance for Q4 and full year 2022 for the fourth quarter of 2022, we expect revenue between $189 million and $191 million.

Representing year over year growth between 29% and 31% Q4, non-GAAP operating margin is expected to be between negative 10 and negative 11% for the full fiscal 2022, we expect revenue between 707 and $709 million.

Including a contribution of $30 million from levels that representing total year over year growth between 37 and 38%.

non-GAAP operating margin for the year is expected to be between negative 11, and negative 12% an improvement of 200 basis points from our previously issued guidance last quarter.

Please note that Q4 will represent level thats fifth quarter as part of <unk> and will be considered organic within the total reported results we disclosed within our Q4 financials. Therefore, our total reported growth rates. When we report Q4 should naturally be closer to our current organic growth rates.

And finally, while we are expecting to have a strong Q4 shareholders should note that Q4 may be affected by both the large deals that were closed early in Q3 as well as the fact that 2021 in Q4 with excellent and serves as a challenging compare period. This means that in Q4, you should expect euro.

Year to year growth in short term RPM to normalize closer to what it has looked like in each one of 2022.

Before I wrap up building onto his commentary I'd also like to reiterate your invitation to join US at our Investor day, taking place in conjunction with groundbreaking next week on the night in New Orleans.

Please reach out to our Investor Relations team, if you would like to attend.

I'd like to close out by again thanking our customers partners employees shareholders and the industry as well as the communities we serve for giving US this opportunity with that let's turn it over to the operator to begin the Q&A session.

Thank you.

We'll now begin the Q&A session, if you'd like to ask a question. Please press star followed by one on your Touchtone keypad.

For any reason you would like to remove that question. Please press star followed by two again.

Again to ask a question press star one.

We will pause briefly to allow questions to generate in Q.

The first question is from the line of Sterling Auty with Moffat Nathanson you May proceed.

Yeah, Thanks, Hi, guys.

You did a great job I think describing the macro environment, but I'm wondering if you could just maybe compare and contrast, the environment that we're in now versus what you experienced in March of 2020, and how maybe you might be managing the company differently.

Well, it's certainly great to hear your voice by the way.

So let me start by saying in March 2020.

It was a different world right, so I actually think that.

Did everything right that year, we raised towards profitability and.

And we decided that we were going to do everything we could to serve the industry. So we put our focus in those areas, particularly just to make sure that the industry was okay and our employees were okay, but when I talk to customers back then.

We're very concerned just like everybody else was on this plant is what was going to happen now when I talk to our customers.

You have a little bit of concern around the short term.

And they are doing things like they are they are focusing a lot of our energy more on pre construction. So they can they can be ready for making sure that project and well Theyre also pre purchasing materials. So we're doing a few things to make sure that they're setting themselves up for success, but really across the board. The sentiment is is that they are very optimistic about the mid term.

And the long term.

And their backlogs remain very full so they have more work than they know what to do it.

And so.

They are.

They are out there trying to get as many projects go into Sicad. One of the biggest problems is that they have a challenge finding labor as you well know so theyre not really worried about the next job theyre actually worried about finding the person to build the job that they haven't signed up for.

That makes sense and one quick follow up Paul for you can you give us a sense. When you look at the end customer, meaning the GC versus the subcontractors versus owner operators is there any change in terms of the demand environment by customer type based on what's happening in macro.

Short answer is now we continue to see strong performance across all of our different stakeholders and we remain really bullish on the opportunity we have with each of them.

Excellent. Thank you.

Thanks, Charlie.

Thank you.

The next question is from the line of P. J Hynes with Canaccord you May proceed.

Yeah.

Hey, guys nice results here congrats.

Two questions I'll, just ask them concurrently I think are pretty straightforward.

Can you just remind us of your relative exposure to residential commercial and infrastructure spend and then the second.

It sounds like Youre rethinking kind of the international strategy. After a couple of quarters has been consistency.

What in your view needs to happen there.

Yes.

Let me start TJ by I'll talk about the exposure to any particular sector. This is interesting and we're going to talk about this more next week at the Investor Conference but.

The industry is way bigger than most people think and a lot of people start with residential which is just that it's not it's just one of many sectors. When people forget that construction includes like courts, and bridges and highways and <unk>.

Well as all of the other residential industrial commercial warehousing. So we're all of our customers, which by the way remember owners Gcs and clubs all run diversified portfolios themselves. So.

And I will talk more about that actually can give a couple of examples. So we find ourselves not exposed to any one particular sector.

The diversification in our portfolio.

Maybe the only thing I'd add to that is remember that when we talk about residential the area. We don't really participate in is really small ti like work. The area. We are much more involved in things like mixed use multifamily the areas that we do expect there to be.

Need for growth.

Maybe touch on the international one.

I'll chime in.

So on the international front.

I think it's clear to take it.

Wanted to note that we are impacted by the FX side as we talked about the business. If you look at it from a constant currency standpoint still performed well it grew 40% year over year, but the reality for US is that we believe we should be doing better and we can be doing better and so as we think about the opportunity ahead of us we're really going to be focused on how we execute how we have.

When you think about structuring that business, knowing that what hasn't changed for US is our belief in the long term opportunity and our belief that <unk> has a huge growth potential ahead of us when it comes sooner.

Let me be Super clear, we believe that this is all internal dynamics. This is not about external demand or the or.

Or the external.

Need for our products, we have great product market fit.

And in the international opportunities remains massive so this is all us tuning and.

And rethinking how we do things on the international side, but it's all internal not external.

Okay very clear look forward to seeing you guys in New Orleans next week.

Thank you.

Thank you.

Next question is from the line of Adam Borg with Stifel. You May proceed.

Hey, Brian This is Mike Richardson on for Adam Borg with Stifel. Thanks for taking the questions.

Maybe for Teri on the materials financing program.

More of an update on how it's going what the customer sensitivity to it is and what the roadmap looks like in the coming quarters. Thanks.

Yes.

So Mike Yes, absolutely love to talk to you as you know on our last earnings call. We did announce that we were starting this business inside of protocol.

We're going to talk a lot about this more next week, but I will say that this is a this is a business that we're growing from the ground up let's say, it's a very small portion of what we're doing right now and we're really in that learning phase of the business. So we want to make sure everybody doesn't over index on it now while we're growing this business kind of from scratch, but the.

Early.

Early results our customers seem to.

See the value in what we're offering but again, we're still learning as we go I know Paul you are close to or do you want to just.

Just bring you back to the prepared remarks. This is something that we're early days in learning investing it is certainly something as we shared in the last earnings call that we believe has a lot of potential and a lot of synergies with what we're doing but we'll remind you all that this isn't something we plan to talk about on a quarter over quarter basis, because it is still something that is just so early days.

Super clear thanks for answering the question.

Thanks, Mike.

Thank you.

The next question is from the line of Dylan Becker with William Blair You May proceed.

Hey, guys nice job on the quarter here, maybe I wanted to dig into some of the puts and takes that you talked about with the customers kind of accelerating their investments in landing larger is that kind of somewhat counter to what we've heard from other software businesses here I guess, how are you guys thinking about this is further validation of confidence in the platform investments you have been.

Making given the early stage opportunity as well as again some of the quantifiable ROI benefits here as they think about strategic prioritization of software investment.

Yes, so by the way as I mentioned earlier and I think as you are picking up on.

Very very close to the industry and we have seen that there is just a broad secular demand for our construction globally.

And by the way, we always mentioned that even in economic downturns.

Yes.

Theres a lot of stimulus that comes into the market right now we have the one two trillion.

Infrastructure Bill in the U S.

Amongst theres, a chip still too so we're one sector kind of wane. The other one expense, but what we're seeing is at the highest growing and it's growing across all facets of construction. The other the other thing that is driving our success is the product market fit we've been we've been heavily focused on this for years and our platform provides a tremendous amount of value to our.

<unk>, where they say they can run 48% more business per employee by running protocol.

And frankly, I want to give a shout out to the organization for strong execution.

It takes a lot and it takes a lot of coordination across a very large organization to deliver those kind of results.

So I do want to give credit to the team.

Appreciate the color and maybe one other one too as you think about maybe global Bim mandates in animal how much is maybe placement to the international component as well but.

How does it plays into customers Digitization efforts and maybe how important is that been piece to actual project management software selection do you think about customers that move from that initial design.

<unk> three or to project execution.

Well yeah, maybe this is a great opportunity for me to sell the met pro quarters in the <unk> product, we have we managed and files.

And really we do the things that the folks in the field to actually do the building really want which is assignment of flash detection. It's.

It's real time real time visibility on an iPad or where you are in the job and what what's going on so.

Let me, let me then say that.

That is not that's not the driver internationally, what we're finding is that.

The International ISO 9650 standard is one that comes up a lot which is more around document control the MIM and.

And we are we're building a solution along those lines to help solve that so.

I guess the answer on the broad side is that that's not something that we're seeing as being a real driver in deals and so and if it was we have the products that.

That support it.

The only thing I would add is international similar to the U S is still trying to solve the most fundamental basic problems. They are still working on getting the right people to the right place with the right information that is more appropriate as always shine and it's something that gives us that conviction and to know that we still have this massive opportunity ahead of us with a customer.

Got it thanks, guys Congrats again.

Thank you.

Thank you.

Question is from the line of Ken Wong with Oppenheimer You May proceed.

Great. Thank you for taking my question.

So <unk> you mentioned on the macro side you guys haven't seen any of the pressures on the business, but you also called out that sometimes you have got pieces of construction that work kind of trend down and then other pockets that might start to surge up any any.

I guess any.

Indicators that some of those other pockets that typically are countercyclical. That's started to pick up have you started to notice that in the business.

Yes, so one of the areas that we've noticed is as I mentioned before the one two trillion.

Infrastructure Bill in the U S I've talked to a lot of our customers who are gearing up to have their teams to go after those projects because that's basically found opportunity.

And that means that they will dial back areas, where they may be seeing some challenges so.

Maybe in commercial so again they run these diversified portfolios and the good news is it really does seem as one sector wanes. Another one just grows and so it always seems that the pie tends to be growing.

Our customers are just trying to make sure they have the right mix across a diversified portfolio.

And maybe what I would add one other way that we think about showing this within our own businesses and our expansion.

Something that we've seen.

Incredibly well and so as our customers may see one pocket Wayne what theyre coming back to us and saying is there are still finding more work in other areas and they can meet and their businesses are still growing nicely and we see that in our own continued improvement in the expense.

We're slightly this one which is our customers they think about the macro but remember they are running at 2% to three year backlog.

So finding that next job is really not what we're in the mode. It's finding the skilled labor skilled resources to put on the jobs that they've committed and contracted chip that starts next week, that's where the real challenges lie.

Got it got it Super helpful. And then just quickly on the margin side I recall last quarter you guys. Maybe you got caught off guard a little bit by but <unk> in this quarter you guys made some pretty good improvements on the spend discipline.

Should we think about the the focus as we as we look further out being a little more balanced in terms of growth or or again more and more of a kind of a catch up this quarter versus what we saw last quarter.

<unk>.

Can I just want to start by saying the new mantra around protocol or was that the new module, but it's a mantra that I can't go to a meeting and not have stated which is efficient growth.

Maybe years ago. It was all about growth, but pro core it is in the DNA now efficient growth and I think youre seeing the results of that yeah. I would just build on it that we're really proud of how the quarter came in we believe that we've talked about this a bit over the previous quarters, but we've done a lot over the last few years to invest in this business. We believe we've hit this point.

Where the business truly has hit a scale, where we can continue to deliver great growth investing in our long term opportunities, while showing scale and efficiency you've seen them start to do that this quarter and it's something you should expect from us going forward.

Great. Thanks, a lot guys.

Thank you.

Thank you.

The next question is from the line of Brent <unk> with Piper Sandler you May proceed.

Good afternoon, and look forward to seeing the team in person next two things stood out for me this quarter I guess, what I wanted to drill down into one.

Just the strength of the backlog build in the quarter and then obviously the positive free cash flow TUI for you on the backlog build short term RPM was very strong again this quarter.

<unk> changing here as you think about the composition of.

New and expanding business is it really just.

New areas are you seeing broader attach rate on the product side I'd love to drill down on that a little bit more color on what drove the surprising strength specifically around those two segments and quick follow up on the cash flow.

Awesome, so yes by the way great to hear your voice and really I'm looking forward to seeing you next week it'll be fine.

I think the thing Thats. So gratifying is that we saw we saw strength across a lot of different vectors. So it wasn't just one thing, but I would point out that we had some very large deal momentum sorry, we had a lot of large deal momentum that really contributed to it but we also saw growth across all of our stakeholders and all the different customer segments.

So.

The other one that we look at is our.

Expansion, both through our construction volume as well as selling new products. We saw those both performed very well and then on top of all of that as you have.

Pointed out.

We've really.

We really focus on expense management, and we delivered both topline growth and bottom line results that we were hoping to.

Yeah, and maybe just touch on the cash flow piece, we did see a positive cash flow from an operating perspective, so continue to see some dynamic negative.

All I would really say on free cash flow is reiterating what we've said in previous quarters and to expect the same as to what we called out last quarter.

Yes.

Listen I look for us the next week.

<unk> efficient growth I think there's a narrative out there we'd like to see more software companies in this space talk about thank you so much.

We trademarked it to that.

Thanks, Craig.

<unk>.

Thank you. The next question is from the line of Joe Goodwin with JMP Securities You May proceed.

Great. Thank you so much for taking my question you called out the win with New Orleans, and the public sector can you talk about your efforts serving the public sector, maybe how large that segment is today and how you see that opportunity developing over the next few years.

Yes, happy to public sector fits within our broader owner stakeholder, it's something we've talked about here for several years is a big area of growth for US public sector is an area that we continue to focus on we believe there is a big opportunity. There obviously, we've talked a lot about the infrastructure bill in the different areas that are going to continue to drive growth there.

But in general it's just one of many sub sectors that owner business and something that is pretty well diversified inclusive of the broader other business, which is why are we so frequently call out when we think about exposure or own diversification that we have a really healthy mix across commercial across infrastructure cities.

And all the other types of fortune 500 segments that exist in the world and by the way.

Just calling that out because we keep looking at appropriately they don't often think about our customers as being municipalities, but but we have such a diversified portfolio, but that is just one more example of how construction touches everyone blocks.

Got it. Thank you and then just a quick second one it.

It seems like the level set acquisition is performing better than expected can you just talk about maybe what's going on there what's driving some of that strength.

We continue to be pleased with that acquisition as we've talked about in the past there were a lot of the driving factors behind that acquisition and the big ones really for us were around how we bring together this new massive datasets use it coupled with pro forma data set to think about some of these really interesting fintech opportunities, we have as well as how we bring together there.

<unk> <unk> solution with our compliance solution and accelerate the ability to help people get paid so overall in general we continue to feel like that was a good addition to the overall portfolio and we remain bullish on everything that has to come in as a result of that.

And on that last piece I would highly encourage you next week to listen closely because there is some fun stuff coming.

Got it will do looking forward to next week for sure. Thanks, guys.

Thank you.

Thank you.

The next question is from the line of Brent Thill with Jefferies. You May proceed.

TUI anytime software company goes through a sales leadership challenge there is little little weight turbulence, if you will.

It takes time to clear out I guess, maybe give us a sense of why maybe you don't feel not happened tiers or ways that you are minimizing.

The turbulence post <unk> transition.

Then Paul can I just ask a question just what caused those deals to come from Q4 to Q3 was it just you just had in the pipe and they wanted to sign early was it.

They wanted a free pass to the conference next week.

Got it close I'm kidding, obviously, but.

Was there anything behind that that are really close.

Some of it was just really good execution on the sales team being able to go out there and bring deals forward for folks who are excited to get started some of it had to do with renewals that were slated to happen in Q4 and whether these folks wanted to look to new software, whether they actually needed more volume early or whether they were just trying to get ahead of their own year. So at the end of the day.

It was a mixture of reasons, but all positive things that led to those deals are coming forward and something that continues to give us conviction on the opportunity ahead of us.

Brian on your first question, yes. So.

Privilege I've had as I've been able to look at and see the talent that Dennis has assembled underneath them.

And obviously the execution has been really really good so I've been watching these folks perform for a long time now. So I'm also really really looking forward to getting closer to portions of the business.

Because I will have one.

Step closer to all of these folks.

I wanted to chat a bill Crawford, who is our SVP of sales has been running the U S book of business for several years now he comes from Ceridian, ADP, where it's about 20 years plus experience.

He's just been doing a wonderful job in that role and I'm really proud of everything he has done and I think he's going to have a big impact not only on helping to continue to grow the U S market, but now that he is over sales globally, our international business as well, so really excited about the future and Dennis isn't going anywhere so.

Theres not a lot of turbulence I was just hoping he'll be doing another role and I think we're all looking forward to.

To the next shopper.

Thank you.

Question again to ask again to ask a question dial Star one. The next question is from the line of Jason <unk> with Keybanc you May proceed.

Hey, Paul two questions for me both related to jobs.

As it relates to the.

Your customers, but I know theres been a labor shortage.

Sorry, I missed that.

Have you seen any relief or are your customers seeing any relief on that.

Any of these labor shortages.

So by the way Joe Hey, we are hiring and I was just I would not offer new job.

The.

No.

I really do wish I can say that yes that our customers are seeing relief now is not to say that there aren't a lot of things that are happening I want to give a shout out to our <unk> dot org are giving arm.

We're partnering with Ace venture programming.

NCR and Apple to bring.

Bring high school kids aware of awareness around how great. It is to work in the industry. We're promoting limited construction, we're trying to do everything we can to bring a diverse workforce and.

But theres only so much we can do and unfortunately, the industry is still really struggling with this labor shortage.

<unk>.

Okay Perfect and then second related question have you changed any of your hiring plans.

It looks like the <unk>.

Margin improvement just want to make sure not related to this.

Adjustments on that side. Thanks.

Yes, actually we had a great quarter when it comes to hiring and we continue to be really bullish on our opportunity to go out and find amazing talents. We've been investing heavily in places like go to market to meet the demand we're seeing in customers and of course like all other companies, we're being really thoughtful about where we allocate our head count and how we drive to the best most useful investments we can.

But in general when we think about the performance of the quarter. This really was about that scaled efficient growth about ensuring that we're thoughtful about where we allocate expenses and that we really continue to drive something that's sustainable over the long term when I say that I have the privilege of every two weeks joining our new hire class just to welcome everyone to <unk> and what.

I'm struck with is the just the caliber of the talent that we're able to attract to the business people that have been at scale that are just frankly I'm honored to work with so it's really exciting.

Okay.

Perfect well look forward to seeing both next week.

Thank you Kevin.

Okay.

Okay.

Thank you.

There are no additional questions waiting at this time.

That concludes the pro core technologies fiscal year 2022, Q3 earnings call. Thank.

Thank you for your participation today and enjoy the rest of your day.