i3 Verticals Inc. Q2 2023 Earnings Call
Good day, everyone and welcome to the <unk> three vertical second quarter 2022 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero today's call is being recorded and a replay will be available.
Starting today through May 17.
The number for the replay is 87734475 to nine and the code is 1617435. The replay may also be accessed for 30 days at the company's website.
At this time for opening remarks, I would like to turn the call over to Jeff Smith SVP of Finance. Please go ahead Sir.
Good morning, and welcome to the second quarter 2023 conference call for I three verticals joining.
Joining me on this call are Greg Daily, our chairman and CEO .
Clay Whitson, our CFO , Rick Stanford, our President and Paul Christians are C O O.
The extent any non-GAAP financial measure is discussed in today's call. You will also find a reconciliation to the most directly comparable GAAP financial measure by reviewing yesterday's earnings release is.
It is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial information.
non-GAAP financial information should be considered by each individual in addition to and not instead of the GAAP financial statements.
This conference call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements among others regarding the company's expected financial and operating performance.
For this purpose any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements.
You are hereby cautioned that these forward looking statements may be affected by the important factors among others set forth in the company's earnings release and in reports that are filed or furnished to the SEC.
Consequently, actual operations and results may differ materially from those discussed in the forward looking statements.
Finally, the information shared on this call is valid as of today's date and the company undertakes no obligation to update it except as may be required under applicable law.
Now I'll turn the call over to the company's chairman and CEO Greg Daily.
Thanks, Jeff and good.
Good morning to everyone on the call we're.
We're excited to present, our results for the second quarter of fiscal year 'twenty three.
This quarter, we set another record for revenue and adjusted EBITDA.
Which were up 20% and 27% over the same quarter last year.
Which reflected our improving margins.
We have been highlighting our transformation to a vertical market software business users payments to optimize the great businesses, we acquire.
Unlocking improved recurring revenue growth.
This quarter software and related services revenue overtook all other sources.
It accounted for more than 50% of total revenue.
Annualized recurring revenue grew over 20%.
Compared to the same period last year.
Driven by strong SaaS.
Software maintenance and payments revenue growth.
This quarter includes the first results of operation for <unk>.
Hi.
Their integration into the rest of our public sector has been seamless and we continue to be excited about the cross sell opportunities they unlock.
Last time, when we refreshed our senior secured credit facility was four years ago in may of 2019.
Since that time, we've grown tremendously and the quality of our credit has never been better.
Thanks to that and the excellent service from our Bank group that we are pleased to announce the closing of our new senior secured credit facility.
It has been interesting times in the credit markets to say the least.
But against that backdrop, we were able to achieve a fantastic result.
First.
We upsized, our revolving line of credit capacity to $450 million.
Which sets the table for future M&A over the next five years.
Next we added flexibility in our financial covenants.
A vote of confidence on our credit and execution from our bank group.
And finally improved pricing in our interest rate spread by a quarter of a point.
We are grateful to all of our banks, who participated in our facilities, including JP Morgan Chase.
The third.
Regions.
TD Bank Keybanc.
Michael <unk>.
First bank Raymond James.
First horizon and bank of America.
Now I'll turn the call over to clay and he will provide you more details on our second quarter financial performance.
Following Clay's comments, Rick will provide an update on some business related items and address M&A and then we'll open up the call for questions.
Good morning.
Following pertains to the second quarter of our fiscal year 2023.
As the quarter ended March 31 2023.
Please refer to the slide presentation titled supplemental information on our website for reference with this discussion.
[laughter].
We had another great quarter with record revenues and adjusted EBITDA.
Revenues for the second quarter increased 20% and $93 9 million from.
From $78 1 million for Q2 'twenty two.
Reflecting an organic growth and acquisitions.
Our revenue yield improved to 158 basis points for the quarter from 146 basis points for Q2 'twenty two.
Organic growth for this quarter was approximately 12%.
Benefiting from a strong quarter for sales of software licenses, which totaled $3 5 million.
Although small in the scheme of things, we keep highlighting this line because its an outlier from our otherwise highly predictable revenue and.
And explains many of the variations between quarters.
Annual recurring revenues totaled $305 7 million for Q2, 2003 compared to $254 5 million for Q2 'twenty two.
Growth rate of 20%.
Organic IRR growth generally runs a few percentage points above our total organic revenue growth.
Over 80% of our revenues in the quarter continues to come from recurring sources.
Software and related services remain the largest portion of our revenues representing 50% for Q2.
Payments represented 45% other 5%.
Adjusted EBITDA increased 27% outpacing revenues to $24 7 million for Q2 2003 from $19 5 million for Q2 'twenty two.
Selecting continued momentum in our software <unk> services segment.
Adjusted EBITDA as a percentage of revenues increased to 26, 3% for Q2 2003 from 25% for Q2, 'twenty, two reflecting margin improvement in our software <unk> services segment.
Pro forma adjusted diluted earnings per share increased to 38 cents for Q2 2003 from 37 for Q2 2002.
Again, please refer to the press release for a full description and reconciliation.
Segment performance.
Revenues in our software and services segment increased 24% to $60 8 million for Q2 'twenty three.
49 million for Q2, 'twenty, two principally reflecting growth in our flex flagship public sector vertical which represents over half of our consolidated business.
Public sector includes the education sub vertical which deserve special mention.
Revenues in our education vertical continued a strong rebound thanks to organic sales to new school districts and higher lunch in activity fees at existing districts.
Federal and state subsidies have decreased significantly since the pandemic.
Benefiting from strong license sales the segment's adjusted EBITDA improved 35% to $22 1 million for Q2 2003 from.
From $16 3 million for Q2 'twenty two.
Pacing revenues.
Adjusted EBITDA as a percentage of revenues improved to 36, 3% for Q2 'twenty three from 33, 4% for Q2, 'twenty, two reflecting high margin software and services acquisitions, such as Celtic over the past year.
And a return to traditional high margins in education.
The <unk> acquisition effective January one was high margin as well.
Yes.
Okay.
Revenues for our merchant services segment increased 13% to $33 1 million for Q2, 'twenty three from $29 2 million for Q2, 'twenty, two principally reflecting growth in our ISO isd and b to B channels.
Adjusted EBITDA for our merchant services segment increased 6% to $8 6 million for Q2 2003 from $8 1 million for Q2, 'twenty two with higher revenues, partially offset by higher residual expenses.
In keeping with our strategy since the IPO, we have steadily re directed acquisition and internal resources from traditional <unk>.
<unk> services, and the higher growth and higher margin software and services, coupled with integrated payments.
The balance sheet.
Greg mentioned, the completion of our new revolving credit facility.
I just want to reiterate that we were able to improve several aspects of the agreement.
First we expanded to $450 million from $375 million that had been upsized $100 million on October one of last year.
Second we achieved a 25 basis point improvement in our spread and we went from two leverage covenants to one <unk>.
<unk> covenant for total leverage.
Dropping the senior secured leverage covenant.
Which gives us greater flexibility as we think about our capital structure over the next five years.
Our strong balance sheet has allowed us to continue to execute our acquisition strategy on March 31, we had $267 1 million borrowed under our revolver.
<unk> of cash.
The face value of our convertible notes are $117 million as.
As of March 31, our total leverage ratio remained approximately four times.
The interest rate for the convertible notes is 1% while the interest rate for the revolver is currently around eight 1%.
Over time, we expect to convert roughly two thirds of adjusted EBITDA into free cash flow, which can be used for debt repayment acquisitions and earn outs.
We define free cash flow as adjusted EBITDA minus capex internally capitalized software cash interest and cash taxes.
Outlook.
Looking forward the strong first half to our fiscal year gives us confidence in the following guidance for fiscal year, 2003, which excludes acquisitions that have not yet closed and transaction related costs.
Revenues.
360 to 380 million no change there.
Adjusted EBITDA of 97 to 103 million, that's a $1 million increase at the midpoint.
Depreciation and internally developed software amortization.
9 million, we had not given specific premiums guidance on that number.
Cash interest expense net 22 to 23 million. This represents a $2 million increase from the midpoint given last November .
Main drivers include the <unk> fund purchase.
Fees associated with the new revolving credit facility.
Facility and higher unused fees with the larger $450 million credit limit.
Pro forma adjusted diluted EPS of $1 46 to $1 56, that's five slower.
Due to the higher interest expense.
From a seasonal standpoint, and the absence of new acquisitions. We currently expect Q3 revenues and EBITDA to look pretty similar to Q2.
With our customary step up in Q4, coinciding with back to school activity.
Quarters might vary based upon software license sales, even though our trend is generally toward more recurring revenue streams.
I'll now turn the call over to Rick for company updates and pipeline.
Good morning, everyone before I discuss M&A I won't comment on a few developments within them.
A couple of quarters ago, we announced the promotions of Paul Christians to Chief operating officer, and Chris Leisure to President of public sector <unk> been doing amazing job in these new roles and are far exceeding our expectations. We now have another important promotions I would like to share the board formally the CEO of our <unk> business <unk> has been.
Promoted to president of merchant solutions for all three.
Tom is a veteran in the payment space and is highly respected by his peers as long and successful history and his significant contributions to the success of our three merchant solutions, making him a natural fit for this job.
Beyond three merchant solutions Division develops and implements enterprise payment technology for the <unk> III vertical family of companies and the broader financial technology market. We're looking forward to seeing Toms many successes across the enterprise with merchant solutions.
As a result of a unified product offering success in public sector. We are replicating similar processes and structure across all primary verticals that are three. One example of this structure is a unified enterprise level of RFP team.
Which includes RFP management technical riders product personnel finance and cloud team members.
So the new team include improved response time enhanced response quality industry prowess and command of the RFP technology and process. These teams are comprised of individuals across the organization to maintain market sensitivity and domain expertise.
The next generation of Upi discipline is being deployed in public education, and healthcare sectors with enhanced infrastructure and development resources being pulled from within the vertical sub companies to strengthen sales product development operations implementation and deployment. These.
These internal customer facing market services are being bolstered by three teams focused on enterprise level infrastructure security cloud services development and project management.
The next evolution of public sector focuses on four primary sub verticals, including Justice technology, Our Justice Tech utilities, ERP and transportation.
Justice Tac is modernizing online CT systems with fully integrated digital solutions, including E filing CMS digital evidence management and attendant reporting for full scope state Court systems.
The utility sub vertical serves large utility clients and local utilities with unmatched data delivery Avi, our digital customer engagement and CRM solutions.
The transportation sub vertical both motor vehicle motor carrier and driver service solutions and.
And the ERP sub vertical includes GSA land records permits licensing and business tax solutions.
As the education sector continues to expand we deliver a fully integrated seamless user experience to our clients with school activities, reaching a post pandemic high our focus is on three primary sub verticals nutrition services, taking in events and payments.
The combination of <unk> and Celtic into all three transportation delivers a needed solution to meet the demands of the transportation market to new state contracts and transportation sub vertical grooves the market recognizes the depth and breadth of our solution suites.
In addition, the application of <unk> across the public sector and the three verticals family has proved to be a very well received edition.
As our three health care solutions execute <unk> strategy with unified sales marketing product and software engineering teams. The sector is accelerating our strategy to monetize payments across the revenue spectrum.
Throughout the portfolio subsidiaries are advancing their technology platforms to connect with patients through NFC payment text to pay E statements and payment portals.
Additionally, our three health care solutions continues to see the results of the Epo disciplines through the synergies of our practice management and EHR platforms targeted geographic expansion.
Our three health care solutions continues to recognize being breck ignite as a market leader, we are delivering revenue cycle management services evidenced by our recent award of a state level contracts provide RCM technology and services at the agency clinic and laboratory levels.
Demonstrating the sector's breath across the healthcare ecosystem three health care solutions also secured a contract to deliver software and consulting services to one of the top five U S health care payers.
Without saying, but an additional result of many of these structural changes that I. Just mentioned will also allow us to prioritize our product investment opportunities.
I'll now speak to M&A, while we didn't have a closing this past quarter. We continued to have discussions with multiple targets. The number of opportunities. We look at each quarter has not changed as you. All know acquisition timing can tend to be lumpy. This is driven by three dynamics.
We're reorienting our pipeline and we're looking for larger deals than we have historically.
We are searching for targets in new states and looking to take out potential competition in those new geographies and are dealing with a very fragmented market and three the trickle down of lower valuations in the current environment has not been realized by many prospects. We remain disciplined when it comes to multiples and as usual we continue to sell.
Source, our acquisition targets, we still believe we will be able to continue to complete four to five deals per year, and our pipeline remains healthy with opportunities for acquisitions in public sector and health care.
Concludes my comments operator at this time, we will open the call for Q&A. Please.
Thank you.
I'll now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, Okay, you're using a speakerphone. Please pick up your handset before pressing the keys.
Dan Your question has been addressed and you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Okay.
Our first question comes from John Davis with Raymond James. Please go ahead.
Hey, good morning, guys I just wanted to start off.
I apologize if I missed it but did you disclose organic growth in the second quarter.
Yes, it was 12%.
$5 million of software license sales contributed to that sort of the X factor every quarter.
Whether we're above or below that 10% mark.
Okay, that's great to hear and then Rick just wanted to follow up on your last comment about pursuing larger deals I mean, historically you guys have kind of been.
Under $5 million of EBITDA paying eight to 10 times. So just curious what you guys would define as larger deals and could.
Could we see.
<unk> plus million dollar deal just curious kind of what youre thinking there.
Yes, so historically J D. We've been between the two and 3 million, maybe four or five here and there, but we're looking at deals as high as 10 or $12 million in EBITDA.
So I think thats possible, whether we get there this year or this quarter I don't know yet, but the pipeline is healthy we've got a lot of businesses that we're talking to it's just getting them to that place, where we can generate term sheet never deal.
Okay, and then two quick follow ups for Clay one is just the revenue yield improvement up 12 basis points.
Year over year anything specific to call out there and then one last clarification clay when you said <unk> RASM EBITDA similar to <unk> I'm, assuming you meant on a dollar basis, but just wanted to confirm.
Yeah.
Yes on a dollar basis, both revenues and EBITDA.
Look very similar to Q2 right now.
But on the revenue yield.
Yeah.
Payments have come back, particularly in the education area.
So that's helped a lot with yield and then.
Just the greater share of software and services going above 50%.
Gradually improves our yield every quarter.
Okay I appreciate the color thanks, guys.
Thanks, Dan.
Okay.
The next question comes from James Faucette with Morgan Stanley . Please go ahead.
Great. Thank you very much I just wanted to follow up on.
The question around acquisitions et cetera.
I know that your targets typically arent.
The same kind of realm or domain as VC funded private but wondering what youre seeing from evaluation perspective.
It sounds like Youre pretty optimistic about being able to do larger deals, but how does the changing interest rate environment impacting how you think about where valuation should be.
And kind of funding mix or if there needs to be a bigger equity component and et cetera.
Well on the higher interest rates it it obviously makes us more sensitive to acquisition multiples and so.
During COVID-19.
We're generally paying 10 times for businesses.
We're now trying to pay closer to eight times for businesses.
Rick do you want to handle the other part as far as valuations.
We're self sourcing our deals so theres not somebody in these companies years, telling them how valuable they are.
At the same time, we're running into some prospects that have had valuations done in the third party that did the valuations done exactly what they were paid to do make them happy and tell them how valuable they are.
We hate to run into those kind of deals, but we haven't seen any change.
These smaller guys under $10 million in EBITDA.
I don't recognize that the value has changed in the market and the trickle down takes a lot longer to effect, but again, we're going to be disciplined we're going to not pay over 10, hopefully pay closer to eight and do a fair deal for us and the seller.
We walk a fine line.
These guys have worked 30 years. They built this may be there are 60 years old.
They never thought they would sell their business, we sell source that.
And tell them our story about what we're building.
And they agreed to join.
The company and so.
They like that story.
Timing is everything so.
So.
We've had some deals fall in our lap over the last five years.
We are.
M&A is a part of our DNA, so youll see a lot more of it.
And the last thing I'll add to that is these guys. They all want you to pay them for all of the hard work they've put in over the last 30 years and that's not what we're paying for we're paying for the strategic potential value being combined into our enterprise go forward. So theres net dot economy, we have to address all the time.
Sure.
That's great color and then I wanted to follow up on on the software.
Portion of the business, we've kind of been through this.
The extended period of normalization on the payment side and you mentioned just this quarter that you're starting to see the education come back as things like subsidized lunch from during Covid et cetera expire in different states. So how should we be thinking about that software piece of the business is it growing faster or at least more durably.
And then the payments portion I guess.
Outside of M&A, how should we think about the pace of software transition, perhaps on a more organic basis.
Well our IRR.
<unk> is a few percentage points above.
Our organic growth rates.
And that is we do expect more of that to come from software and services and from payments payment.
Payments has been through a normalization now.
And so it'll be pretty steady.
However, we haven't started adding payments to our health care vertical in a meaningful way yet.
And we will continue to penetrate more of a public sector, but over time, we do expect the software and services.
<unk> to grow from 50%.
The 60, maybe 65 over the next couple of years.
Got it got it that's really helpful. Thank you.
Okay.
Yes.
The next question comes from Charles Nabhan with.
Please go ahead.
Good morning, and thank you for taking my question I wanted to get I had a follow up on Rick's comments around some of the internal initiatives you guys have.
Pertaining to the RFP process.
As we think about that going forward.
Should we anticipate any sort of impact on either opex or capex as a result of.
Some of those projects you have ongoing.
No not meaningfully we're mainly reshuffling internal resources into.
Uniform team so that all of our responses are.
Taylor made and consistent.
We do make some efficiencies from time to time, but we're also always investing so I wouldn't expect so now the biggest point is sharing the wealth, we're going from a decentralized system to more centralized so we're putting people out of our sub companies to form enterprise.
Level teams that will assist all company's enterprise wide.
Got it and.
And just as a quick follow up I know.
The post Covid rebound in.
The post Covid rebound in education has provided a bit of a tailwind and should continue to do so over the next few quarters. It sounds like but as we think about 'twenty four.
And the lapping of some of those rebounds.
Should we anticipate any sort of a step down in growth as a result of lapping those comps or is it fair to think that some.
Some of the new business wins could provide an offset going forward on that.
On that in that business.
Well I do think the payments piece will level out.
Because we've sort of had a return to <unk>.
What we consider fully normal and the education group.
But we are always adding software and services products.
So that.
Education, we're always planning the year ahead as opposed to the year, we're and that's how the selling cycle works, we've got a <unk>.
<unk> experienced hand in that business, who is always full of ideas and understands our product.
Really well.
So no I don't expect a slowdown, but I do expect it to shift.
Less from payments and more from software and services.
I feel like we've got seven or eight.
Okay.
We sell some of our existing customers.
The $1 million or 15000 schools, yes, another product next year.
Greg makes a good point when we started our first customers in their first share generally buy one product and thats historically for us and the lunch product.
And then on average every year they add one more.
Software module and so there is a lot of cross selling to expect.
Got it and if I could sneak one more in.
If I caught your comments correctly, the increase to the EBITDA guide, which is roughly $2 million at the bottom end.
If I heard you correctly, you said that was attributable to <unk> does that is that correct.
Largely attributable to occupy them.
So we've added $2 million this year $1 million, we added last quarter and that was attributable to active fund.
We added another $1 million this quarter.
That is more attributable to the general demand environment, we're seeing mainly in public sector and Paul I don't know if you want to elaborate on that a little bit certainly.
As clay indicated generally we're seeing increased demand public sector and as we we look at that we believe it's really tied to.
Positive budget levels and trends with property tax revenue for our client sales tax revenue.
Still some American rescue plan.
And that had been delayed a bit.
In addition to those drivers were also saying.
In the health care industry public sector is also struggling with staffing.
And staffing shortages and increased awareness on aging infrastructure and security.
So given that we are seeing activity as a result.
All that is positive across the board with RFID Rfps product upgrades and Greg's point.
Bottom line module expansions.
Got it thank you for the color I appreciate it.
As a reminder, if you have a question. Please press star then one can be joined into the queue.
Our next question comes from Matt <unk> with BP.
Go ahead.
Okay.
Matt is your line on mute.
Matt.
Reminder, is your line on mute, we're not able to hear you.
Can I move on to the next question I can't hear him.
Yes.
Alright.
Our next question comes from.
Peter Heckmann with D. A Davidson. Please go ahead.
Hey, good morning, everybody.
Good morning, good morning in terms of revenue cycle management can you talk a little bit about that niche.
Yes.
It appears that it's a fairly fragmented industry.
What type of companies you are competing with there.
<unk>.
In terms of winning.
Consulting and software deal with that with the top five health care payer.
That has to have a significant amount of.
You have your diligence on the part of the other on the part of the customer how do you go about winning something like that and are there other of those type of relationships is that fair.
Periodically you win one of those and it cycles through or does this represent maybe a move up in terms of.
Capabilities inside the contract.
Well.
I don't know if you want to sure I got you okay.
We are seeing increased demand on RCM.
And it's.
It's the primary points of monetization for our clients and the more we can do to augment that better now we are finding that in our software companies that are in the health care space, who had RCM operations.
<unk>.
Its outpacing all the trends of adoption by our client base and given that we have exceptional team on our Louisiana facility with Acs, who as fabulous expertise.
Medicare and Medicaid and the ability to process those on scale.
Allows us to focus our activities invest in technology and invest in the team there due to do that and bring that.
And that brings additional acceptance in the market. So we see that.
As a bright spot for us going forward on the diligence you had part of your question was diligence I do think it helps to be to.
They have a bigger balance sheet to be a public company. They can readily look up on the internet.
And I think Thats, one reason they were amenable in selling to us.
Was to have a bigger balance sheet going into rfps that we're gradually going away from sub company names and forming.
Formal names in healthcare for example is our three health care solutions. So, we're looking and feeling enacting like a bigger organization that we are based on our parts.
Okay.
Answer what you were looking for on healthcare, yes. Thanks, Alright that is helpful. I'll look I'll look at the website I wanted to dig in a little bit more there and look at some of the capabilities, but I would also add one little housekeeping question for you clay and just with regards to that.
I don't see that you mentioned, it but pro forma tax rate seemed like it was a little higher the last few quarters.
<unk>.
Maybe talk a little bit about that and maybe your expectations for the full year.
Well in our pro forma diluted EPS calculation.
Have always used a 25% tax rate.
And that since the IPO and we continue to use that.
If youre talking about taxes paid.
We paid very little taxes, since going public and I don't believe anything is different this quarter, Jeff do you have a comment.
So we would expect we're still going to have a very efficient low cash tax situation for the next couple of years.
The company moves to more pretax income that will change slightly overtime.
We haven't really efficient tax structure, we have a lot of deferred tax assets.
FC structure.
Over the coming five years will become more and more maybe a talking point.
Al.
Okay I'll have to refresh that and look at look at how I'm modeling it but then with the change in the non-GAAP EPS guidance would have been almost entirely be attributable to.
The higher level of interest expense due to the little bit higher cost on the unused facility and other fees.
That's right that's about $2 million at the midpoint.
Okay. That's helpful. Thanks.
Okay.
The next question comes from Matt <unk> with <unk>. Please go ahead.
Alright, hopefully I figured out the technical issues can you hear me alright.
Yes, we again, alright, sorry about that sorry about that.
Thanks for taking the question wanted to follow up on the answer.
Around stronger public sector budgets, obviously, a few factors there but.
One I guess first part is how sustainable do you feel like that is going forward and maybe more importantly, too.
How important is the integrated software and payment solutions that you've now put together in a number of sub vertical there, helping wind deals over competitors that maybe only offer one or the other.
So I'll take the first part and then I'll, let Paul chime in on the.
The second part.
We're continuing to see local governments strive for more monetization for modernization and digital digitization of products.
<unk> is an issue so they're looking for better technology ways to serve their constituents.
<unk>.
The American rescue plan dollars I think they run out the end of 2024 or they have to be used by then so it's kind of a false positive we may see an influx because of those resources within after that.
He knows.
But we're definitely seeing an upbeat and local governments driving for more technology to get the jobs done versus arms and legs.
Yes, I think that I agree with all of that and the other thing, which I see on a regular basis as the demand component.
Universally across all departments.
So there is a need with all of the government to upgrade and expand and in certain sectors like transportation in the court systems. There is more of a movement to move.
Matt that with state statewide activities, which were qualified to do and do today and it is accurately part of our business.
And finally as always becomes a component there that we speak to but there are elements of that with remote access for permitting and licensing and GSA for customer stand remote workers that are augmenting the demand component of what we do.
We did the <unk> acquisition that was a good deal for us the contact that they have at the state level is the same contact.
Celtic has so having those two companies under one umbrella is has allowed us to offer a more complete solution at the state level. So as we combine these products were pluck them out of the individual subs were always coming up with a more full suite of solutions for Rfps and can respond better.
There is there is a distinct depreciation for seamless payment interface.
So that's working.
That is embedded into the software systems and that deliberate seamless facilitate their efforts to recognize revenue and reconcile Matt. This vertical is so far behind the times.
As our original story and we wanted to get into verticals that were underpenetrated behind.
As everyone on the call knows dealing with your local government you see it every day.
Yes.
I feel like we're maybe in the bottom of the second inning is just how much more.
There has to be done.
It's.
To me it gets bigger.
Hi.
Every day.
Very helpful. There and then just to follow up on the new unified RFP team that youre putting in there.
And bring you more structural maybe workflow inside the company how quickly do you expect that maybe translate into new bookings wins or even into revenue.
And then maybe secondarily, how often are you kind of finding out about an RFP after the fact.
That may be your team kind of missed.
You feel like Youre very easily could have one given your product set or maybe overlap in a local jurisdiction. So.
I guess not only what how soon can the opportunity to come but maybe how big is the opportunity sort of immediately.
Hi.
We have had occasions in the past the RFP has surprised us and Thats always a disappointing day.
Do use sources to surface Rfps and we also use our sources to facilitate.
But just being approved and the potential of an RFP coming with that to get ahead of those curves.
I would like to be ahead of him as much as possible to craft what software solutions.
Hence for that in terms of the timing related to that.
That's a much tougher question because of the time and the nature of the RFP is so divergent.
Statewide motor carrier program could be.
And eight to 12 month process and then in longer delivery time.
And then the ERP program could be three to six month process.
So I think it's one of the most powerful decisions we've made great.
And it's got the most.
It's going to create the most value.
I think is very powerful.
There is work to be done.
Everybody has their own template for responding to an RFP and we're taking that and let's just say the about US section. It will now represent three at the enterprise level. So there is work to be done we had technical writers in some of our sub companies and not in others. So the CEO was responding to Rfps, we won't technical.
Writers to do that work going forward. So we think our response time.
The way, we respond will be appreciated.
And these are resources that we can use across many verticals not just one BARDA.
The demand from that.
The demand from the company since we started this has been high.
Hi.
So everybody is trying to understand it and we've been able to respond and it will take a little bit.
A little more time to build out, but it's having impact already.
Alright, it sounds like a good development. Thanks for taking my question.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Greg Daily for any closing remarks.
Thanks.
Let's nice to have another quarter behind us were excited about the second half of 'twenty three and into 24. So I appreciate everybody being on the call. This morning. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may all now disconnect.