Altus Group Limited Q1 2023 Earnings Call
Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today.
At this time I would like to welcome everyone to the Altice Group first quarter 2023 results conference call and webcast.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question during that time simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one once again.
Thank you and.
Ms Camilla Bartow Schade each you may begin your conference.
Yeah.
Thank you good afternoon, everyone and welcome to Altus group's first quarter conference call and webcast for the period ended March 31, 2023. The news release announcing our results was issued after market close this afternoon, and it's posted on our website and SEDAR profile, along with our MD&A and financial statements are present.
Patient to accompany our prepared remarks has also been posted to our website under the Investor Relations section.
Joining us today, our CEO , Jim <unk>, and our CFO carbon chopper, let's start with some prepared remarks, and then we'll move right into the Q&A session. If we miss any questions. Please contact me directly by email.
Some of our remarks today may contain forward looking information forward looking information is based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected these assumptions risks and uncertainties are detailed in our forward looking statements disclaimer in today's materials.
Please be reminded that Altus group uses certain non-GAAP financial measures non-GAAP ratios total segments measures capital management measures in supplement she and other financial measures as defined in national instrument 50 to 112.
We believe that these measures may assist investors in assessing an investment in our shares.
Provide additional insight into our performance readers are cautioned that they are not defined performance measures do not have any standardized meaning under hire for us and may differ from some newer computations as reported by other similar entities and accordingly may not be comparable to financial measures as reported by those entities.
These measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with IRS.
An explanation of these measures are detailed in today's IR materials, including the news release presentation and DNA. Another other filings with the Canadian Securities regulators.
I'd also like to point out that unless otherwise specified all of the growth rates will be referencing on this call are on a constant currency basis over the same period in 2022.
Okay over to you by then.
Thank you Conor and good evening to everyone on the call.
We had a positive start to the year, continuing a multi quarter trend of top line growth and margin expansion.
We are now on eight consecutive quarters of double digit revenue growth and three consecutive quarters of delivering margin expansion at the consolidated level.
Beginning with our consolidated first quarter results, although we had foreign exchange rates working in our favor sgabello pointed out unless specified the growth rates I will be referencing are on a constant currency basis.
Revenues were up 11% supported by double digit growth at both analytics and property tax.
Adjusted EBITDA was up 43% driving a nice 330 basis point improvement in margin, which stood at 14%.
Profit was negative $2 4 million, which is 9 million better than last year.
Reminder, Q1 2022.
We did an $8 $4 million restructuring charge.
One of 2023 reflects higher interest rates on our bank credit facilities.
Also incurred higher year over year expenditures related to the implementation of the new ERP and CRM systems.
I'm proud to say that our ERP went live in Q1 I'd like to congratulate the team for their hard work in getting us there.
Planned phasing of the project the CRM deployment continues through Q2.
Adjusted EPS came in at 33 cents.
And free cash flow was negative $34 4 million.
Free cash flow in the quarter reflects the impact of our annual bonus payouts.
It is related towards 2022 global restructuring program and increased working capital balances due to anticipated delayed billings as we cut over to the new ERP system.
As expected, we're seeing an improvement in April and collections working capital operations.
Turning to our business segment performance.
With analytics as you'll see in our results and momentum continued in analytics.
Revenue was up 12% and notably in recurring revenue was up 19%.
Analytics revenue is now organic.
To offer more color.
Revenue growth continues to be driven by strong recurring revenue performance, which is where our go to market efforts and investments are focused.
This includes growth across key revenue streams and software.
We ration magic installations and in data solutions are.
A high percentage of our recurring revenue growth continues to be driven by customer expansion and supported by the ongoing transition to cloud subscriptions and steady new customer additions.
Adjusted EBITDA continues to grow with higher revenues and improved operating leverage.
Overall, we're really pleased with the sustained momentum in our recurring revenue growth.
At $85 3 million in the quarter recurring revenues represented approximately 90% of total revenues.
It provides us with Denver Juliet revenue base.
The 740 basis point adjusted EBITDA margin expansion in the quarter reflects revenue growth and improvements in our operating model.
Those include focus go to market activities cross border salary leverage streamlined processes and better resource management.
We remain confident in our plans to expand margins in 2023.
Turning to property tax revenue growth was solid at 13%.
This reflects double digit this double digit growth in Canada, and the U K and steady performance in the U S.
In the U K, our pipeline of patients to be settled in the upcoming quarters as brown and <unk> remains robust.
We are now officially on the new 2023 rating laws that commenced on April 1st.
Through the investments we've been making.
We remain well positioned to the new cycle with a much better backlog.
Adjusted EBITDA benefited from the revenue growth and our margins are holding steady per our expectations.
Finally, appraisal and development advisory performed steadily in the quarter driven by development advisory team in the APAC region.
Turning to our balance sheet, we finished the quarter with a cash position of $42 9 million and with $351 million in bank debt the.
Funded debt to EBITDA leverage ratio as defined in our credit agreement was 2.21 times, while the lower limit of four five times.
Our cash and net debt to adjusted EBITDA leverage ratio was 2.13 times, representing a very healthy balance sheet.
Regarding our capital allocation priorities will continue to reinvest in the business to scale effectively opportunistically pay down debt and maintain financial flexibility should attractive acquisition opportunities materialize.
With that I'll now turn it over to Jim.
Thanks, Kevin.
As we're sitting in for Joe Tonight, I wanted to start with good luck to the main beliefs.
As many of you know.
I am hesitant to say I live in Florida.
My colleagues around he said I was not allowed to buy a ticket to the game.
Struck me as odd but okay.
David.
Alright, let's get to it.
I'd like to start by thanking my colleagues for a productive start to the year their efforts and commitment to our mission of driving the growth of the company.
Our ongoing transition from on premise software to Argus cloud is tracking to plan.
We ended the quarter was 67% of our Argus enterprise users contracted on the cloud and expect to finish the year with a large majority on cloud.
We're growing the number of users on our platform and now have over 10 million valuation models in our environment, representing an estimated 960000 unique properties modeled on Argus globally.
As we expand our advanced analytics capabilities. The large volume of models in Argus cloud will provide us with exceptional asset level of intelligence that we can leverage to enhance the value we bring to our clients.
Okay.
Turning to new bookings.
And as noted in the name this metric only captures new business.
This does not include renewals or assets added to current portfolios, which we service.
Although our pace of new bookings growth slowed in Q1, we continue to grow from a larger base of clients and with low churn.
The majority of our quarterly bookings occur in the third month of the quarter and the.
Banking sector made headlines in early March.
This macroeconomic news slow down the decision making of some of our larger clients.
Unbalance, New bookings benefited from continued addition of portfolios in our Vms business and strong Argus enterprise bookings performance throughout the quarter.
Our software pipeline continues to grow in line with our historical base. We remain optimistic at the same time, we continue to keep an eye on macroeconomic conditions, and we will throttle our investments accordingly.
Last week.
We held or all disconnect client conference. The first since the start of the pandemic.
You all disconnect conference had a terrific turnout.
Tenants of many senior professionals validates the growing strategic importance of our offers across their organizations and the altice trusted relationships in the market.
The conference featured parallels on a variety of topics and included a solutions cafe, where we held product demos, including the new office market insights offer which is powered by the altice performance platform.
Overall, it was great to connect with our clients on important topics affecting commercial real estate in the foster dialogue about the topics most relevant to our industry.
Actionable intelligence is a table stake requirement today intelligence and information are key to being nimble and responsive to changing market dynamics and investor and regulatory requirements. We.
We deliver the combination of data technology and expertise to our clients as offers this is intelligence as a service.
We left our oldest connect conference with renewed conviction in our long term strategy.
As the conference clients in market experts from within and from outside of this discussed at length, the challenges and longer term opportunities created by the current macro environment.
A consistent message from the experts is the significant need for transparency and actionable intelligence.
Our mission to help our clients drive portfolio Alpha and manage data has never been more relevant.
We continue to successfully navigate this dynamic business environment to position ourselves strategically for the longer term opportunities, we know that volatility in the market drives demand for our advanced analytics offers.
Our business model is resilient and provides us with stability across various economic cycles.
Reiterate one we are a diversified revenue base of authors.
Griffey at across various customer segments.
We have a strong recurring revenue base in analytics, and highly reoccurring and repeatable client engagement at CRE consulting.
And finally, we have expense levers that provide us with the flexibility to respond to the macroeconomic conditions, our restructuring activities in FY 'twenty two it provided us with the ability to invest for future growth, while continuing to expand margins.
As we stated in our February business outlook.
We're well positioned to grow our consolidated revenue and adjusted EBITDA for full year 2023.
We have multiple paths to deliver on our plans and remain confident in our ability to reach our goals.
Okay lets open the lineup for questions operator.
Thank you.
And as a reminder, if you would like to ask a question Press Star then the number one on your telephone keypad and we will pause for just a moment to compile the Q&A roster.
And we will take our first question from Yuri Lynk with Canaccord Genuity. Your line is open.
Hey, good evening everyone.
Okay.
Jim I'd love a bit more color on on the macro and what you saw in the quarter.
I'm wondering if if the banking issues we saw were.
In terms of the impact on on purchasing decisions in bookings for you I mean do you feel that.
Those issues served as a distraction or was it more causing a more fundamental of slowdown due to say tighter lending conditions and CRE and stuff like that just just a bit more color.
Sure Great question Gary.
I wanted to start on that.
Not an economist.
We listen closely to our clients last week as I know you did as well.
And we heard.
Consistently across the board that the.
The news in early March credit put everybody into a pause while they go wait what just happened.
But the fundamentals of CRE, especially at the various segment levels.
Not as you know not all CRE.
Segments are the same.
Uh huh.
The fundamentals are strong the cash flows are strong.
Why this is such an attractive asset class and will always remain an attractive asset class. So.
No.
We're watching it carefully will react right now we're hearing mostly it's a pause.
We're watching the rise of private debt funds. So the balance between the use of debt and equity and then the application that will have on pricing.
May adjust but our clients have a significant amount of dry powder on the sidelines.
Well.
No.
They are engaging with us as soon as it got announced.
They engaged with US immediately to go deeper on valuations, which is good for us.
<unk>.
They immediately wanted the data on what's going on which is in the market and what are we seeing across.
Hundreds of thousands of properties.
It's great to be in that position with them. So we see it as a pause.
Until the fundamentals changed interest rates, obviously tweak up which.
It's either.
Which will be reflected in different.
Pricing of the assets.
But we don't trade on the price of the assets and we our revenue is not a function of transaction volume and just maybe to add to that what is clear to me coming out of the connect meeting with our clients are looking for a trusted partner to help them navigate through the current and upcoming volatile.
<unk>, which I think will be a positive for us in regards to.
And being able to help people manage outside of data.
Yes, I mean.
The <unk>.
I was talking to a lot of the same people you were in I mean.
Sometimes you walk away and you feel like they might be because of all of this uncertainty heavier users of of your services.
But that's not what we saw in the first quarter, but that was obviously at the onset so.
I guess, just a follow up to that I mean, given what youre seeing in your bookings.
Do you have any expectations of.
Throttling back investments.
At this point.
Okay.
Yes, So let me let me comment on what we saw in Q1.
We saw a rise in the number of assets that we service in Vms.
We saw a rise in the number of Rguest.
Users in total as well as Argus cloud users. So we did see growth in Q1, it's the bookings number at the end of March where we're saying well, let's watch and see what the what impact that will really have on maybe 2024, if any but when we're talking about multiple.
Past, so about multiple paths to our internal cash flow targets.
And that's.
That's where we're that's why we remain optimistic.
And yes it did.
This absolutely can provide.
It was a bookings pause it could absolutely lead to.
Higher volumes for us not from a number of assets, but from reliance on our analytics and data.
And we are certainly getting more and more engaged and being asked to engage in that valuation.
So whether it's from deploying that capital or whether its from looking at implications.
Implications of already underwritten assets.
It actually we think this is going to open up several market segments for us.
To your point on bookings and then.
Pulling back or throttling investments.
One the Argus Argus bookings remained strong.
Throughout the quarter and with that same profile of many of the bookings come in later in the quarter. So.
<unk>.
It's just our guess is just a very privileged position for us to be in.
Course, throttling the investments as you know.
We had.
<unk> 200 bps margin expansion in Q4 year over year, So that gave us the capacity to add or that gave us the financial ability to add capacity in 'twenty three because as Ed commented.
Commented on throughout FY 'twenty to every metric we had told us too.
Go to market capacity, particularly LTV to CAC ratios and we werent doing it until the model proved out we were also holding back in FY 'twenty, two because of the volatility of the market the geopolitical and the inflation.
Aspects of last year. So we held back then we message that we would be increasing that significantly this year, which is why we talk.
We talked about 300 bps expansion when we think about how we allocate across our portfolio.
Obviously.
The restructuring we did last year, the operating efficiency from last year, the pricing lift we get from the move to cloud gives us a lot of flexibility in our EBITDA. So that's what we're talking about when we sort of get throttle investments. So we won't go as fast in the sales capacity, but we will still add some because we are.
Investing for 2024.
Okay.
Okay great.
I'll hop off thanks, guys.
Thanks, Gary.
And we will take our next question from Stephen Macleod with BMO. Your line is open.
Yeah.
Great. Thank you good evening everyone.
Just wanted to follow up a little bit on the new bookings.
Can you just talked about how sort of that was trending up until March because it sounds as though.
That's pretty a press release headlines just sort of became more.
Or noisy.
In the beginning of March and then I was just wondering if there's been any change that you can report on on a quarter to date basis.
So.
Steve.
We did our Q4 earnings call February 24 at somewhere around there.
On there I commented that our Q1 pipeline and our coverage ratios were stronger.
They were <unk>.
One month, two we're tracking along at a nice clip.
It's really just the reaction to the March headlines I think as the market takes a deep breath and goes what just happened.
So we will pace ourselves accordingly, with what we see in the market.
Again going back to last year.
If we run relatively flat of new bookings.
That gets us to our the plan that we are.
That we have in place for the business.
Yes, as far as quarter to date.
That would just.
Typically not something we jump into right now.
What we do track is I had a comment in there about our pipeline built.
So what we track.
Is at.
Specifically on Argus enterprise level. The number of leads that go into our pipeline for a week, we are expecting to see that trail down in March and April and it is almost dead on.
Our weekly trend for the last two years.
Okay.
Yes, it's Steven just okay.
Okay.
Two thirds of our sales typically happen.
Three of our corner.
And so given the timing of it use it obviously had an overweight impact in regards to this to the finish and so.
So just a little bit of.
Color.
Okay. Yeah. Thanks, that's helpful.
And then and then I guess in terms of the new bookings.
Do you.
Is that coming from existing or new customers.
The slowdown that you saw I guess is it is it really or is it a mix of both.
It's a mix of both we still put out I'm looking at the team here couple of hundred couple.
A couple of hundred new logos, so not as many new logos, we've been running in that $2 50 range.
But.
We are we added just over 200.
During the quarter.
So it's more of a scale ended the market, it's Alex and what we really saw it.
It could be the large funds are the first ones to reach out and engage us but when.
When the banking news hit at the beginning of March there was those large funds as deep trusted relationships, where they they immediately called us in.
Yes from an analytical perspective.
I see I see and I just want to clarify one thing as other Jim did you say that.
If you run flat in new bookings that will still get you on plan to where you want to be for this year.
Alright, we were saying that all through last year is that we didn't need like if you ran basically the same so we.
Obviously, Steve we need to make up the March piece of it but that's where we were not seeing opportunities fall out of the pipe for the year.
And then pushed to the.
The second half.
Part of that.
It could come together and second quarter I think our sales team is being conservative and say well, let's put it in the second half and that's good for us because.
We plan our investments accordingly.
Okay that makes sense, okay, great. Thanks, guys appreciate it.
Thank you Amy.
And we'll take our next question from Christian <unk> with eight capital your line is open.
Hi, good evening and thanks for taking my questions. The first one I wanted to ask as a follow one of Steves question and maybe it's been asked in other words.
But do you get the sense and conversations with customers that in March they were frozen up maybe pushing out the decision caused to June the third month of this next quarter or two.
Do you think.
Maybe they're getting more thoughtful about which offers their solutions are going to pick up.
And if they.
I want to subscribe to the same sorts of solutions is it a push out would you say or more of like a halt at this point.
Alright, Thanks Christian.
Again, I'm going to go back to some of the stuff that you heard from the stage last week from clients for me.
Our clients are in the business and deploying capital.
So.
Hey.
They don't love an uncertainty so.
They've got a fair decision yesterday.
They get they can get visibility across the broader banking sector.
It will be keeping a close eye on bank balance sheets and the implications there.
So do we do we think.
The transactions are gone forever, absolutely not.
It feels more like a pause to us right now.
Yes, but it's not a it's not an indefinite pause I mean back to the Argus enterprise bookings.
<unk> to be strong.
No.
That.
Alright, thats can be attributed to Argus is quite a powerful tool not just for acquisitions or dispositions, but for also analyzing the performance of an asset.
So.
As our clients are evaluating the current pricing that's out in the market.
Is there going to be using August to do that they're going to be using.
The new tools that we have.
Insights.
Market insights to do that.
And eventually they're going to deploy capital and price it as I said pricing capital structure might change with interest rates, but there is still an economic formula.
That makes commercial real estate attractive.
Yes, Christian just in my conversations with the sales team as well as Canada.
There is clearly.
Prudently measured response from our from our clients and more chapter the headlines with the opportunities that the key opportunities that we were keeping an eye on are still in play so trailing more just.
Slowdown.
Okay got it and then on the <unk>.
Cloud adoption rates that trended up in the quarter I know, that's a big part of the narrative and getting customers to move onto the cloud and without the new cloud based products. So my question is.
Those conversations changed at all would you say the pieces are still in place for a lot of your customers continue migrating through the year, how do you see that all trending.
Hi.
We know our clients are watching our cloud growth, we know that our clients listen to these calls. So we're really proud to report that 10 million models number and that is unbelievably powerful, especially at this moment in time.
960000 unique properties that is quite the per view we have.
Not that we can take we don't take clients Peyton and put it out there but.
It does give us.
Data derivative view that Doug.
For the clients that.
Have given us those derivative rights, which is a significant amount of them and we're seeing more.
Opt in to giving us those rates because they want the analytics that comes from that type of massive.
Massive data.
And they also know that.
Hundreds of millions of dollars over the last two years to be able to turn that data into insights.
Okay.
Got it got it.
Thanks for all the color Jim I'll pass it on here. Thank you.
Thank you.
And we will take our next question from Richard Tse with National Bank Financial Your line is open.
Hi, This is James Brian sitting in for Richard.
I was just wondering do you expect to still be on track to driving the 300 basis point improvement in Nox analytics margins by year end, despite the heightened investments.
Yes, as you can see.
We were 710 bips higher than Q1.
So.
Youre seeing the restructuring activities the operating model changes the pricing changes the retirement of old platforms. The platform economics, we've been talking about you can see you can see that in Q1.
And so.
Is that coming off of that base.
This.
It gives us a lot of room for investment even in this macro environment to invest.
For growth and still get to the 300 bps absolutely.
Okay, and just a follow up on that so do you think that the like should we expect the margins really tick up in the back half of the year because I think the yes. The margin was about 21.4% this quarter, so you'd need a significant uptick for the remaining three quarters.
Absolutely.
Remember when thinking about the seasonality of the business. There is millions of dollars of employment taxes that kick in in Q1.
That most of them.
Hit their thresholds.
Q2.
So if you look at the analytics numbers, Alex revenue numbers $5 million is a significant amount of work that's not all analytics as the majority of Thats analytics and.
That's a significant number of deaths in the quarters, Yes, I mean, we.
We always plan for <unk>.
Lower margins in Q1, just came in with what Jim said this was in line with our expectations.
Actually the margin was higher because we did throttle right a bit.
<unk>.
Okay, great. Thanks, I'll pass one.
Thank you James.
And we will take our next question from Gavin Webinar with core Mark Your line is open.
Oh, Hi, there. Good afternoon, you you touched in your prepared remarks on increased demand from lenders and credit funds given the environment. Maybe you can just provide a bit more color on that and also discuss.
The finance octave product and kind of where we're at on bringing that to north American and take that and that cross sell.
Sure.
Thanks, Kevin.
The increased demand was as you could imagine.
Many of our clients are on both the equity and debt side.
The majority of our revenues come from the equity investors.
So in this environment, where youre sitting with.
It's across the large investors it's also.
Cross the bank.
The smaller banks, where 60% to 70% of commercial underwriting happens.
<unk>.
Those are that's all greenfield for us those are not segments, we typically get involved with.
Some of our larger clients are working with.
Those smaller banks and this they need valuation.
What's happening with their portfolios are they need visibility now.
They need to make sure that they're maintaining their capital requirements and their balance sheets. So.
It's been it's been a fascinating.
Few weeks to see the inbound engagement for us and watching our teams react it's a different level of valuation is not the same level of precision that youre going to do for LP reporting in a private fund let's say.
Right now, they're they're more in a triage mode.
We're in a position to help them.
That's great and then just for my follow up I'm, hoping you could touch on R&D kind of resource allocation. Obviously, a lot of work went into the new platform. You've also moved.
Towards no longer supporting some of the on Prem version, So I guess I'm curious how much how many of your people are now kind of focused on.
<unk> innovation versus kind of the the performance platform in older versions, and how has that changed over the past six or 12 months.
Right.
In September and October .
That's where in some of our restructuring charges. There was restructuring of development skill sets that didn't apply to the cloud.
So.
<unk>.
In rough terms, we look at is our historical R&D spend if you think of the on Prem legacy platforms versus the cloud we were probably.
We were roughly 80% of our R&D spend was going into may maintenance or we call. It <unk>.
Current engineering.
At about <unk> <unk>.
15% to 20% was going into innovation, great. It's a nextgen.
We've pretty.
Pretty much flip that on its head with that restructuring.
Then the other move we made was we had.
A build operate and transfer type contracts with a firm in India, and we exercised that option.
Late last year to bring those folks in house most of them have been with us.
They're associated with us for quite a while.
<unk> talented team.
We wanted to give them career pathing opportunities.
With us and build out our presence there. So they came in in house gave us very current market skills and it also gave us some cross border salary arbitrage.
That's helpful. Thanks, so much.
Thanks, Kevin.
Okay.
We will take our next question from Scott <unk> with CIBC. Your line is open.
Good evening and thanks, Thanks for taking the question.
I wanted to.
A follow up just on the comment Jim you made about the bookings sort of impact in 2024 can you just remind us how what the typical <unk> for both the recurring and non recurring bookings to end up starting.
For when they start to hit the revenue lines.
Yes, Scott.
The typical time is one to two quarters, but when the bookings flow through by 2024 comment was.
We do need to add sales capacity, because we see this as a as a short term blip the macro market conditions.
My.
Oh, yes, it is 30 years experience.
To round that down but I can't.
Is is that when you are looking at eight to 12 months to get our sales.
This person up to fully productive.
So we do need to be thinking about our growth next year, especially since we think this is a short cycle of.
The pause here, so we need to invest for that and again to James's question earlier, we have plenty of capacity in the analytics P&L to support that.
Through through all sorts of market environments right now.
Okay.
So theyre going a bit slower that we wrote into our plan.
But we are we are adding capacity there.
You can think of it as it's more of a re allocation or the turbines as P&L geography, So we've reallocated resources.
Where we had efficiencies so put it towards capacity.
But where the 300 bps, we're very comfortable with it.
Including adding that capacity for 2004.
Okay. Thanks.
I did want to ask just another question on the working we're working capital changes in the quarter. It sounds like the ERP system, but some billing glade, maybe if you could just help us understand what we should expect for the cadence of working capital for the rest of the year.
Yes.
Yeah I'll.
I'll take that question.
So peyton.
Some billing delays associated with our <unk>.
Transfer over to the new system.
In line with our expectations keep in mind, we made a we made a hard cutover. So is any transformation gathers or change or if it goes there.
Timing period, where.
Ladies and delays and we're looking at.
April relative to where we were in Q1, where we're back on pace in terms of our working capital operation. So it was just really more of a transition over.
That caused a temporary delay.
Okay.
First of all like all things considered.
Yes, it's we're not really viewing it as an event here.
And Scot as Kevin pointed out we do pay bonuses in Q1 also so we are trying to have that.
<expletive> in there as well.
As I mentioned, we got we haven't got bonus payment. We also add that restructuring program as well I'll tell you that we paid out in Q1, so that it wasn't necessarily are related to the anticipated delays in several of our shipping that happened in Q1.
Okay. Thanks for the color.
Okay.
As a reminder, it is star one if you would like to ask a question.
Okay.
And with no further questions at this time.
I do apologize we did just get a question from John <unk>.
Sooner with RBC Your line is open.
Hi, John on for pulp driver sorry about the last question here.
I'm curious about the <unk>.
Our it consulting and specifically.
Pay property tax business.
Can you set expectations for what's like a reasonable outlook for property tax revenue in Q2.
Plotless Q1 or.
A typical seasonal rod lift out of the UK billing cycle that we should expect.
So the.
The Q2.
Numbers. So our Q2 is normally a spike in the U K.
Our UK team, let me just start with.
Absolutely crushed it in Q1, our UK tax team. So they were focused on working down the last of the 2017 valuation list.
So as as we book those.
<unk>.
We when you book in the U K and you win an appeal you win it back to the start date so.
We overemphasized our efforts there throughout Q1, because that drives backlog that has seven year revenue implications right.
Very very nutrient rich backlog that we picked up in Q2, you shift to the reset.
So we'll have that natural decline of the annuity.
So we're going in with a stronger backlog than we originally anticipated.
Okay.
Okay.
That's helpful. Thanks.
Yeah.
As a reminder, the star one if you would like to ask a question.
Okay.
And with no further questions at this time I will turn the call back to Mr. Jim Hannon for closing remarks.
Yeah.
Alright, thanks, everybody. Thanks again for joining the call this evening I'm.
Im guessing everyone's going to be wrapping up and heading out to the game at this point so.
Thanks, again, Barry team Youre, saying <unk> go.
As always please don't hesitate to get in touch with us through Camilla.
Or if you have any other follow up questions. Thank you for your time.
Okay.
And ladies and gentlemen, this concludes today's conference call and we thank you for your participation you may now disconnect.
[music].