Q1 2023 AgileThought Inc. Earnings Call
Ladies and gentlemen, thank you for standing by good morning, and welcome to agile thoughts first quarter 2023 financial results Conference call.
At this time all participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
You withdraw your question again press Star one.
It depends on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.
A webcast replay of the call will be available approximately one hour. After the end of the call through August three 2023, I would now like to turn the call over to Maryann Franco the company's head of Investor Relations.
Good day, and thank you for joining idle thoughts first quarter 'twenty earnings conference call.
Our speakers today are my new ones and that of her mother and keep the ticket at both Easter egg or then chief revenue Officer, and I became Chief Financial Officer.
Before we begin allow me to remind you that some of them to comments on our call today, including our people.
And the answers to some of your questions maybe considered forward looking statements.
The statements are subject to the recently announced they're going to be discussing the company's earnings release, another filings with the SEC.
The gun sympathies go contain time sensitive information that is accurate only as of today may.
12 plenty plenty.
Except as required by law I have thought disclaims any obligation to publicly update or revise any information to reflect events or circumstances. After the school.
Well these remarks, we'll open the line.
And for instance to non-GAAP financial measures.
Adjusted operating income, which is how we tried before making currently.
This is the way to compare I guess thoughts or fears in the AG.
Additional information, including reconciliations between non-GAAP financial information to GAAP financial information is provided in the acetate at early stages.
This conference call will be available for replay via webcast.
You'll start your Investor relations website at IR, but I just thought that film.
Where you can also find a copy of our earnings release.
I'd now like to turn the call over to Mike.
Oh I see.
Thanks good.
Good morning, and thanks to everyone for joining us it is a pleasure to be here with you today to talk about the work and results from our first quarter of 2023.
We finished the first quarter with revenues of $41 8 million.
Presenting a year over year decline of five 4% and that's.
The sequential decline of two 8%.
Growth in this quarter was partially impacted by the market uncertainty beginning in the second half of March which delayed some projects by a couple of months.
This market uncertainty, it's also slightly delayed the ramp up of our newly hired sales team members.
As you might remember at the beginning of the year, we increased our sales team by almost 50%.
In addition, under the new leadership of our new P. R O and record them. We have also acted and he started exiting several small accounts that did not have the potential to grow materially but are a huge brought into our SG&A and gross margin.
During first quarter, our gross margin was 34, 2%.
Increase of 290 basis points year over year.
Gross margins have been performing better than expected due to our accelerated exit from noncore businesses and Thats small accounts discussed before.
And also because of the quality of the work we are delivering to our clients.
As we mentioned on the previous earnings calls focus on digital work that clients that have the potential to become 10 million plus of annual revenue client is a priority and very important part of our strategy to take ideal thought.
<unk> industry, leading top line growth levels.
Because of our strong efforts towards gross margin improvement our gross profit increased three 4% year over year and five 2% sequentially.
Okay.
On the demand environment as I mentioned in the second half of March following the volatility in the banking sector. We did witness an impact in our financial services vertical.
Which continues in the second quarter.
We witness volatility across other industry verticals as well due.
Due to the slightly challenging broader macro environment.
That said, we are now witnessing deal activity starting to pick back up again, and we expect a much stronger second half of the year.
Digital transformation that helps companies drive revenue growth make them more competitive and also helps them save cost is still a priority for businesses across the industries.
During our last earnings call I talked about how we have been investing to strengthen our sales structure.
First by hiring new sales team members and finally by appointing Eric burden as our new Chief revenue Officer.
Eric is now reporting directly to me.
Leading our sales and demand generation efforts.
I'm sure Eric leadership, and customer centric vision will bring our innovative approach to digital transformation to each customer experience.
Ensuring we make the most out of the huge market opportunity in front of us and deliver the market leading top line growth we have planned.
Okay.
Now that we have a strong sales foundation and have all the pieces in place and the delivery structure and depot structure.
We are ready to focus on agile thoughts growth.
Eric's disciplined approach will continue to guide our team to carefully peak are new customers and focus on those accounts that can become large accounts with industry leading margins.
Okay.
During the first quarter of 2023, we added four new logos and opened several new opportunities in some of our more established clients.
We will continue to add logos the right logos, but it is also exciting to see how much space for growth, we're still kind of in most of our clients.
We have a good record on client trajectory, starting with small projects in a specific area or technology and growing into other businesses and geographies.
A good example is one of our clients in the financial services vertical which is one of the top 10 wealth management companies in the U S. It has been a client for over eight years.
We are helping them with a multiyear modernization program of high priority that is essential to the different departments in a highly regulated market.
This is a complex initiative that will integrate numerous internal and third party systems to enable faster decision making processes.
Operating more data points among all other strategic initiatives.
We are helping to drive cultural changes by embracing agile methodologies.
Which creates operational efficiencies.
This long lasting partnership represents the kind of business, we want to continue creating where we contribute to strategic multiyear initiatives, helping the client to be more efficient and provide better experiences for their employees and customers, while we create more and more stable jobs it adds value.
To both companies.
The digital world is because of the changing which makes it vital to continuously we imagine every.
Including yourself.
This bank. Many other companies are working to keep up with the changing environment trying to invest in the latest technologies to always stay ahead.
A good example is this AI revolution ideal thought we have been investing in for.
For several years now, but the time has come where everyone from science to business and education are.
Turning to AI and want to make it a part of their business.
We have seen an increasing demand from clients and potential clients to understand how AI can help them.
And we have decided to launch or applied AI guilt.
Up to now applied AI was part of the data and AI guilt.
With this guild, we will be able to better focus on helping our clients digitally re imagine and imagine intelligent businesses using an AI first human centric and platform driven approach.
Our applied AI Guild will have three main practices.
Generative AI.
<unk>, the AI and the spoke machine learning.
Generally if AI is nascent but there are already 250 companies in this space and so far it has team takes companies reached Unicorn status.
This wave in the space is rapidly expanding the use cases for January .
Tackling everything from search engines to motion capture animation.
It will allow companies in every space to leverage on it.
We are currently working with a company in the health care sector, a group of analytical laboratories.
We are using large language models like chat EBITDA for two out of Nike generates relevant content that relates their offering with trend in conversation and use.
We trained it to know and understand our client offering and it is classically screening didn't use and posed to produce real time blog posts for its website.
This results in a significant increase in the website traffic and engagement, which will ultimately translate in additional revenue for our clients.
In today's world customer experience and customer engagement, there are probably some of the most valuable capabilities for businesses.
And the gaming industry is a leader in that matters, we believe that the principle of gaming the sign and gave mitigation can be applied to a variety of industries. So.
So medication in healthcare to finance and retail.
And we decided to launch a gaming guilt.
I just thought has been working in the gaming industry for seven years now.
Classically growing the practice in size and complexity and gathering enough expertise to apply it to the rest of the verticals we work on.
Our gaming Guild will provide tailored solutions from gay development to player support and matters.
With our deep understanding of the gaming industry and commitment to excellence will guide our clients gaming or non gaming to succeed and thrive in this exciting and rapidly evolving field.
As always we look forward to enhancing our relationships with our clients by bringing the latest technologies into their businesses.
With that I'll turn it over to Eric <unk> our CFO .
Thanks, Manuel and Hello to everyone I'm happy to be here today.
I'd like to start by telling you a little bit about myself I've been in the industry for over 25 years and worked in multiple global businesses and built and ran digital transformation practices.
During this time I have led business unit centered around IP management custom engineering application managed services product management and many others.
Prior to joining agile thought I was the global head of banking solutions at DXP luck soft where I helped to transform the global team consisting of sales offerings.
Management marketing engineering and delivery into a unified team delivering digital transformation programs at scale.
Let's now focus on our clients and their industries.
Would you all thought operates in five key market units and they are all going through a transition aerie period, starting March we saw some softness in our clients' investments in both growth initiatives and roadmap items. Some of the rationale for this was due to their own miss targets and EBITDA losses also due to economic pressures some of our clients pause.
To take a deeper look into how they were spending their investment dollars to maximize return on investment.
This pullback was felt across all industries and across the competitive landscape.
Now that the second half is approaching we are already seeing the industry's shift again towards commencing a strategic and digital initiatives, especially those that have TCR savings ROI around digital transformation and further adoption of new technologies with one significant example, being AI as Manuel mentioned earlier.
And as agile THAAD has existing and mature client relationships in each of our market units, we're seeing our clients depend on these relationships is key to solving their business challenges in the second half.
We have worked with many of these clients to help them understand the importance of those investments you solve real business problems and how agile thought is the continued choice for their initiatives through our exceptional delivery abilities and deep understanding of their industry.
Just solidify the growth in the second half we are focused on three key areas first we are continuing to drive the culture of sales far internal workforce in most cases to deliver top industry growth companies need to go through a transformation stage, where the culture interaction among the different structures unify become clients.
Centric and growth focused.
This is what we've been doing at agile thought but it is a process. We've worked to encourage everyone in the company to become an ambassador for our brand and our values.
Our customers do you have a great experience with us from the moment they hear about us to the moment, we deliver the service. This is not just the responsibility of our sales team but of the entire organization simply put every agile Tinker is accountable for every interaction with our clients every time.
Second we have carefully selected existing and new clients with the potential to become $10 million plus revenue for us and committed to growing them exponentially through 2023 and into 2024.
This directly relates to our proven ability to create deep relationships with our clients understand the industry as to which they operate in and hyper focus on their business problems and all Igl thoughts technology prowess can solve these problems.
Conjunction to that as Manuel spoke before we will also continue to make key exits on accounts that we do not see a strategic or growth accounts and are expensive to deliver these accounts detract from our focus on industry, leading delivery and profitability.
Third and finally, we have continued to attract and retain some of the best talent in the industry from bringing in top industry sales talent to recruiting the foremost technical and delivery personnel. We truly believe that this investment in our people is what continues to drive exceptional service for our clients. This is why agile so I continue.
To have over 22 accounts that have been with us for five or more years and seven accounts that have been with us for over 10.
Let me walk through some additional key facts about our business and then a mitt will walk through the numbers number one agile thought his focus on around half of our current accounts across the five market units that make 99% of our revenue with good profitability. These numbers show good diversification of accounts and markets number two.
Agile thought has nine accounts all generating over 5 million in revenue over the last 12 months that continue to strengthen our portfolio and show good organic growth towards becoming 10 plus million accounts.
We also have identified an additional 11 accounts that focus on that also have the potential to become 10 plus million dollar accounts.
<unk> III the remaining of our accounts are being restructured to maximize profitability.
And number four and finally the pipeline that is driving the second half growth is seven times larger than where the company was last fiscal year at this time.
Based on these key facts the agile <unk> business is in a prime position to grow in the second half and continue that growth into fiscal year 'twenty four.
Now I will turn the call over to a mid sing our CFO , who will provide additional insights into our financial results.
Thank you Eric and good morning, everyone. Let me start by summarizing the results of our first quarter 2023, I will then discuss our guidance for the year.
Revenues for the first quarter of 2023 were $41 $8 million, representing five 4% year over year decline and two 8% sequential decline.
As discussed before by Manuel generic revenues in this quarter were impacted by the market volatility that started around mid March resulting in some of our projects being postponed.
In addition, this market volatility leading to a delayed ramp up of our newly hired sales team members.
Our decision to focus on long term growth and profitability also impacted our revenue this quarter as we continued to exit noncore work as.
As Manuel and Erik mentioned during this quarter. We also decided to start exiting other small nonstrategic accounts. They do not have the potential to become large clients, but our very extensive on SG&A to manage.
On gross margins during the first quarter of 2020, we delivered gross margins of 34, 2%, representing a 290 basis point improvement year over year, and 260 basis points sequential improvement.
This improvement is the result of our focus on profitability I, just talked about and to the robust deal governance processes, we have in place.
The average gross margin on the projects we closed during this quarter is already above 35% and we expect this improvement to continue until our gross margin gets to industry leading levels.
The strong improvement in gross margin led to gross profit up three 4% year over year and five 2% sequentially.
Yeah.
In the first three months of 2023, we had a material increase in our SG&A, both sequentially and year over year. This increase was mainly due to the strong investments in our sales delivery and people function that began in late 2022 to early 2023.
Adjusted operating income for the first quarter of 2023 was negative $1 2 million down from $1 1 million in the same period of 2022.
Adjusted net income for the quarter totaled negative $4 2 million down from negative <unk> 4 million in the same quarter of the previous year.
Adjusted diluted EPS for the first quarter of 2020 was negative nine based on $47 3 million average diluted shares for the quarter compared to negative <unk> for the same quarter of the previous year based on 46 million average diluted shares for the quarter.
We have been focusing on profitability and strategic accounts and it will continue to be our top priority for the year.
In addition to our efforts on topline and gross margins. We also recently launched our SG&A optimization plan.
This initiative has been a collaboration among all the teams across the company to analyze and identify efficiencies and has allowed us to significantly reduce our full year G&A forecast by more than 15% and is helping us along with our gross margin improvement to target a higher adjusted operating income for the full year then we.
As we expected.
Yes.
Moving on to the balance sheet.
Cash and cash equivalents as of March 31, 2023 added up to $3 2 million during the first quarter, we repaid debt of $2 1 million. Additionally, paid $2 1 million interest expense and approximately <unk> 9 million of debt related cash expenses.
Total debt net of unamortized debt issuance costs as of March 31, 2020 was $84 5 million.
Now I would like to give you an update on our financing activities.
As you previously disclosed on April 18, we entered into a forbearance agreement regarding Ah 64 million financing agreement in our 21 million credit agreement as to the HR in both payment and covenant compliance default.
The forbearance agreement terminated by its terms on May 10th we are.
In active discussions with our lenders regarding extending touch forbearance.
We also continue to work with our legal and financial advisers in evaluating all strategic alternatives.
Although we remain confident there can be no assurances that we can reach such an extension agreement our recapitalization plan unacceptable terms if at all.
As I Trust you can appreciate we are unable to comment on any of these discussions at this time.
Now, let's talk about our outlook for the full year 2020, we remain focused on executing revenue growth acceleration and we will continue working towards improving our profitability year over year.
We will also continue to focus on strategically selecting the right customers and projects, while exiting non core and small non strategic accounts that together will help us deliver industry, leading growth and margin.
Our successful efforts to exit the noncore business as they announced a couple of quarters ago should be completed during the second quarter of the current year.
Which along with the ramp up of all the new sales team members should lead to strong revenue growth towards the second half of the year.
We now expect full year 2023 revenues of $185 million.
Our four 6% organic year over year growth.
Now expect gross margins for the full year in the range of 34, 5% to 35, 5%.
Additionally, as a result of our strong focus on profitability. We expect the full year 2023, adjusted operating income to be at least $13 7 million, implying at least 22% year over year growth.
Thanks, everyone for participating in the call I'd like to turn the call back to Manuel for any closing remarks.
Thank you Amit in conclusion, we believe we are very well positioned to make the most out of the digital transformation demand across the world and bring strong sustainable growth for the long term.
And with that I'd like to turn the call over to the operator, so that we can begin the question and answer session.
We note in the Q&A session, we will not discuss anything related to our refinancing forbearance and liquidity.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. Your first question comes from the line of Maggie Nolan from William Blair. Your line is open.
Hello, Good morning, with respect to new client addition, I have the financing activity.
Impacted your ability to add new logos and how do you feel about your prospects for adding new logos over the course of the rest of the year.
Yeah.
So good morning. This is Eric I'll take that question. So we actually have done very good so far with adding new logos I think Manuel already spoke to our additions. We did in Q1, we are looking at a possibility of up to 20, new logos in Q2 of this year. So we actually have not seen a degradation in our ability to add new logos.
So far this year based on any of the news on the refinancing.
Thank you.
And in terms of.
The margin on that.
Perhaps you could comment on the cadence of the margins over the course of the year that you expect given that the back half is expected to be stronger than the first half, but you also have the dynamic of that noncore revenue roll off annualizing.
Yeah, Yeah. Thanks, Maggie how are you.
So you should expect.
Our margin growth to trend up as you go towards the end of the year so quarter over quarter, you should you should witness.
Margin improvement Q2 will be a little.
Q2 could see a little flattish a decline in gross margins. We are still looking into all the numbers, but from there on you should see the margins increasing as I said in the prepared remarks, the new deals that we're signing.
They are already much above the current margin level that we have reported so as those deals as those deals get converted into revenue you should start seeing gross margin improvement and the same thing should happen on the SG&A side too.
As I discussed in the prepared remarks, the SG&A optimization plans that are being put into place. They should start delivering results as you move through the year. So the overall adjusted operating margin should trend upwards.
Move forward from second quarter towards the end of the year.
Okay. Thank you for the update.
And your next your.
Our next question comes from the line of Brian Kingston <unk> from Alliance Global Partners. Your line is open.
Great. Thanks, so much for taking my questions I think you had 98%.
The last quarter, and clearly identified the adjustments to guidance.
Obviously with one quarter behind you visibility better so in regards to your $185 million revenue guidance what percentage of this is in the form of signing contracts or commitments or does it assume about revenue from new business wins and how does it contemplate if at all additional delays or cancellations.
So good morning I'll take this question. This is Eric again, so we're about 80% confident in our ability to to solution. The 185 million that we talked about earlier, which I think is an excellent position to be in only five months into the year. So we're very confident of that number are very confident will solution the remainder 'twenty.
Percent of that number throughout the year.
Great.
<unk> is our delays or cancellations at all contemplated or is that are you feeling that is behind you from especially from the banking sector.
So we are starting to see the uptick as we talked about early on the prepared remarks, we do not we did see at the beginning of year, some softness and some push out of projects from some of our key clientele, but those projects are now coming back into scope and were able to drive that to fruition now as we go forward into the second half. So we did see some softness in beginning in Q1, but again.
Starting to see those projects come back online and staff accordingly to make sure. We can we can hit those targets.
Thank you and then in regards to the delays.
Would you generally existing customers that in the last two weeks Scott projects or was it new logos that we're expecting to ramp that maybe did not.
So I think it's a combination of both but I would say that because of our good relationships with our clients. We knew ahead of time as they started to delay some of these initiatives from a new logo perspective, we obviously you only sell for in the Q1, but we see an uptick of new logos in Q2, so it's hard to determine if the market initiatives slowed us down at all new logos.
But what I would tell you is that the uptick in Q2 is very promising for the rest of the year.
Great One last question for a minute.
Looking at the first quarter SG&A.
It was a bit higher than I would've thought is there any one time items in there or nonrecurring.
Hiring costs for example.
Trying to understand how low you think SG&A you can get in.
In the second half of the year after some of this falls off.
Yeah definitely thank you.
So.
As you know most of the hires that we did in our sales team happened at.
At the beginning of the year and then a lot of related hires in delivery people function all came in around that time so.
Most of that expense is very much related to related to first quarter. So as you move from here.
<unk> call it expense.
They are not going to have incremental expenses related to that going forward and then on top of that and then for each cost center. We went through a very diligent exercise of driving SG&A efficiencies. So as we move through the year.
As you'll see SG&A as a percent of revenue keep coming down to around that and you can get that number from the adjusted operating income guidance that we provided but that around.
Mid 20 ish percent I think as a company.
And I'm not just talking about this year as a company as we move forward is that as a very strong path in front of us in the in the in the very near future to get to that low 20 ish percent SG&A as a percent of revenue and then as we as you build out some scale to hopefully even bring below 20%.
SG&A as a percent of revenue.
Sorry, just to be clear you are talking about when you just do the back of the envelope math.
Run rate next year of at least $2 million lower than the first quarter is that right.
Yes, So you would put SG&A as a percent of revenue. So I remember like second quarter revenue is going to be.
We're still there's a lot of moving parts in there, but as Youre looking at SG&A overall first of all U S revenue youre going to see revenue pick up a lot in third quarter and fourth quarter and to your point SG&A you will see SG&A.
Significantly declining in third quarter and fourth quarter.
Okay. Thank you.
And your next question comes from the line of Josh Siegel from Cantor Fitzgerald. Your line is open.
Yeah, Hi, guys. Thanks for taking my question I guess first of all when do you expect to see an increase in productivity from your sales personnel is that really going to kick off in the back half of this year.
This is Eric Brian So I'll take that question, yes. So we normally see a three to six month ramp when we hire a new sales personnel to start contributing to that top line revenue number and so we naturally youre starting to see our uptick in the second half that investment we made in Q1 and back in 2022 is starting to pay off now.
As we increase our pipeline as well like we mentioned earlier in the call you know our pipeline of $7 seven times, where it was last year. So that is why we are really looking to the second half is to bring in those numbers higher and also keep in mind too like we mentioned earlier, we did delayed a few months based on the ramp rate based on what we're seeing in the market.
Dishes, so theres a few things to keep in mind, there, but absolutely. Yes, we are starting to see that pay off now in the second half.
Got it and then on the market conditions front I'm curious of this increased demand and interest in AI generative AI is helping to offset some of the more cautious spending that youre seeing generally throughout your verticals. If you could comment on that that'd be helpful.
Sure.
Absolutely and I think all of US read the news and we see all the excitement and activity going on around AI right now our customer base and client base is no different right. There is a lot of discussion about how AI can help facilitate a more efficient business a better look at your data a better look at decisioning across the board in those.
Conversations are very active right now within our client base and some of our new logos as well. So I think youll see us continue to increase our AI presence as we go into the second half and certainly into fiscal year 'twenty four.
Understood. Thank you.
Youre welcome.
And your next question comes from the line of Man Tandon from Needham <unk> Company. Your line is open.
Thank you good morning, I, just wanted to ask about through <unk>.
Employee morale and what have you seen in terms of the attrition in your business.
Business, given the liquidity issue and also related to that would be your ability to hire keep people for key products.
Projects just given.
The situation currently.
Yeah. Thanks. Thanks for the question this is Manuel.
So we think that the morale is actually good our attrition levels came down significantly from last year.
Most 70% from the beginning of last year to first quarter and we continue to see the same levels.
You've been trending lower so low teens.
On attrition CFO Q1, and Q2, so we think that.
The morale is holding up even as we go through this.
Difficult times on refinancing and all that but people are generally excited about the type of work that we're doing the clients that we're capturing and the opportunities that we're working on so.
I think we're good on that front.
Okay and then just another question I had was on the sort of wind down of certain revenue.
If I recall you also had some sort of maintenance revenue, which I don't know if thats already run off completely if not I would assume that's higher margin revenue more of a cash cow traditionally in the it services business.
Still something you have.
Your bag that you could maybe slow down which helps profitability at least gives you more time to sort of steady the ship and resolve the liquidity situation just curious on that.
So I'll take this this is Eric so again like we mentioned before Q2 really where it runs off completely and I get your point, but I think we have to look at it from all sides. We also will have to look at how much it cost us to support that revenue as well. So what I would tell you is the team has done an excellent job of looking across the board.
Only at our topline revenue, but the profitability of each account and the expense cost us to support that account and we're making those decisions very strategically so where you may see us exit some revenue, but we're doing it on a very controlled and decisive fashion to make sure. We do the right revenue with the right profitability.
Got it thank you for taking my questions.
Just to add on that but I think for me. The highlight is that the gross profit actually is improving quarter over quarter. So you'll see even sequentially from Q4 to Q1 gross profit grew about 5%.
So that's a key indicator for us even US you know obviously market wants to look at top line, but for for US internally gross profit is super important at this time.
And also if you look at the guidance for the full year, yes. The revenue growth is mid single digit we are guiding to adjusted operating profit above 20% year over year.
Sometimes that's the decision we are making right and I mean do we want to just focus on revenue or do you want to focus on highly profitable revenue because in the end what matters is the operating.
<unk> that we are generating as a as a company.
Sure understood. Thank you so much.
And again, if you would like to ask a question at Star one on your telephone Keypad. Your next question comes from Joseph <unk> from Canaccord Genuity. Your line is open.
Hey, everyone. Good morning, and welcome on Board Eric.
Could you just remind us if you look at the second half ramp in visibility there or what.
Where are you.
Break if you can breakdown, where you think that ramp is coming from between existing and new logos and a quick follow up.
Yes, so so I would say that.
Quoting exact numbers because I think it will fundamentally change as we roll into second half, but I would think the majority of our growth. This year is around organic customer base and again it goes back to the fact that some of these projects were delayed there was some softness in the decision making in Q1 and so we're starting to see that really ramp up and again, we have very mature client.
Relationships at agile done that go back multiple years, so for us that is where that's driving too but that doesn't mean, we're not focused on the new logo because that will implement or supplement some of that additional revenue top line that will get in Q2. So majority of it is organic at this point, but again, we will still continue to grow the new logos and I think that really impact.
Our fiscal year 'twenty four as well.
Okay.
Helpful and then.
No I think Eric you mentioned in your your largest cohort.
Clients like the $5 million level.
That's not necessarily really large given probably the size of their it budgets.
Do you think that those largest customers at this point are gonna grow it or do they contribute to growth or do you think that the.
Could grow slower than overall growth.
No I actually.
Oh, sorry go ahead.
No I actually think they'll contribute quite a bit. So if you think about the customer base that we have and the large customers that are in that base rate. We do facilitate a lot of it services to them today, but there's a lot of untapped opportunity with each of those clients and enables us to go in there talk about the great work that.
We've done already to facilitate net new business with new buyers at those accounts. So what I would tell you is we're hyper focused certainly on that organic growth because I do think that theres a lot of opportunity within our existing client base to grow I would add one more thing is if you're a company that delivers well like us.
Go into a new buyer at a company and to really talk about the work we've already done there. It goes a long way in generating net new opportunities. So so.
The reality is as you know organic growth will be on.
On tap this year to help us really grow with those new logos, bringing us into the fiscal year 'twenty four.
Okay, maybe and then I'll just ask one more quick one I'm kind of given the balance sheet constraints are there any leavers to pull on.
Utilization or are there things.
Relative to <unk>.
I guess.
I think I can.
I can take the exploration.
I think as we have been.
Call it improving our overall business by exiting non core doing more and more high end digital work you are seeing metrics like revenue per billable employee materially improving over the last.
Call. It one year, where we have gone from just a year ago revenue per billable employee being 70 72000 to now above $82000. So.
So it was a VR and utilization remains in that low to mid <unk> level, which is I think the ideal level for our company, but I think as a company now we are the type of work that we're doing driving one of the highest revenue per billable employee. So it is making us deliver.
Revenues without having to necessarily.
Higher at that level, obviously, our head count has been a little impacted recently because of the exit of noncore.
But overall the steps that the company is taking us in the direction of.
More quality more more higher revenue per billable employee moving.
Moving forward.
Got it thanks, and good luck with the financing.
Thank you very much.
And there are no further questions at this time I will now turn it back over to management for some final closing comments.
Okay.
This is Matt and I will just really appreciate everybody coming on tour to our callers.
You answered most of your questions and give more clarity to where we're going.
Thanks very much.
This concludes today's conference call. Thank you for your participation you may now disconnect.
[music].
Yeah.
[music].
Yeah.
Yeah.