Q2 2023 Altus Group Limited Earnings Call
Good day, everyone and welcome to Altus group's second quarter 2023 results conference call and webcast today's call is being recorded and 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 on the phone lines you can press star one on your telephone keypad, if you would like to have.
Move yourself from the queue you can press star one again.
I will now turn the call over to Camilla. Please go ahead.
Thank you operator, good afternoon, everyone and welcome to Altus group's second quarter conference call and webcast for the period ended June 30th 2023.
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 interim financial statement.
A presentation to accompany our prepared remarks has also been posted to our website under the Investor Relations section.
Joining us today, our CEO , Jim Hainan, and our CFO Province.
We'll 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 on this call 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 those assumptions risks and uncertainties are detailed in our forward looking statements.
In today's materials.
Please be reminded that Altus group uses certain non-GAAP financial measures non-GAAP ratios total of segments measured capital management measures in supplementary 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 as they provide additional insight into our performance.
And listeners are cautioned that they are not defined performance measures and do not have any standardized meaning under eye of fraud and may differ from similar 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 substitutes for financial measures prepared in accordance with IRS.
An explanation of these measures as detailed in today's IR materials, including the news release presentation MD&A and in our other filings with the Canadian Securities regulators.
I would also like to point out that unless otherwise specified all the growth rates, we referred to on this call will be on a constant currency basis over the same period in 2022.
Over to you Kevin.
Thank you Camilla and good afternoon to everyone on the call.
I'm pleased with the steady progress, we're making in executing our strategy.
<unk> continues to deliver on our plans our results demonstrated solid sales execution and healthy demand for our offer.
<unk>.
Our intelligence offers help our clients manage performance and risk, which is especially relevant in today's dynamic CRE market.
From a year over year comparable bar was set high for us this quarter.
Q2, 2022 was our highest quarterly revenue and adjusted EBITDA performance in the company's history.
As you know Q2 2023 reflects the reset in the U K property tax annuity billing revenue stream.
At $33 2 million last year.
We are really pleased with the robust performance this quarter.
Property tax successfully managed through the UK annuity reset with a strong performance across our portfolio.
Analytics didn't skip a beat delivering consistently strong double digit revenue growth.
Yes, I get margin expansion.
Beginning with our consolidated second quarter results as can now appointed out unless specified the growth range I will be referencing are on a constant currency basis.
Our consolidated revenue came in just shy of a historic quarterly record revenue achieved last year.
Excluding the impact of the UK annuity reset topline growth was 14, 3%.
Adjusted EBITDA was down 15, 3% inclusive of the $33 2 million annuity reset most of which drops to the bottom line.
Profit was $11 9 million slightly down from the prior year.
This reflects the savings from the completion of the 2022 global restructuring program offset by the higher <unk>.
Tax expenses this quarter.
Adjusted EPS came in at 53 cents.
Free cash flow was $19 1 million a strong sequential improvement over Q1.
This metric continues to reflect temporarily higher working capital balances following our transition to our new ERP system at the beginning of the year.
Operationally, we're seeing improvements in both billing and collections, we remain on track to meet our original working capital targets by the end of the year.
Turning to our business segment performance starting with analytics.
Continue to consistently put up double digit top and bottom line growth with significant margin expansion.
But just on a nine consecutive quarters of double digit top line growth and five consecutive quarters of margin expansion.
Revenue was up 15, 5% and notably recurring revenue was up 19%, alright, and analytics revenue was organic.
We are benefiting from our ongoing transition to cloud subscriptions.
Sales valuation management solutions asset expansion supported by steady new customer additions.
Adjusted EBITDA continues to grow with the higher revenues and improved operating leverage.
Overall, we are really pleased with the sustained momentum in recurring revenue growth.
$89 million in the quarter pairing revenues were up 19% and represent 89% of total revenues.
We continue to focus on go to market efforts and investments to make consistent pairing revenue growth there.
This provides us with a resilient revenue base.
700 basis point margin expansion in the quarter captures improvements in sales productivity cross border salary leverage.
Our streamlined processes.
Better resource management, and overall prudent expense management.
Main confident in our plans to continue expanding margins in the second half of 2023.
Now turning to property tax.
As mentioned Theres, an annuity elements of the segment that is prevalent in the second quarter.
Last year, we benefited from the UK annuity revenue that dropped off this year with a jurisdiction are reset at the tax rate in west.
Revenue was down $18 4 million or 22, 4% net of the $33 2 million drop.
Backing out the impact of the UK annuity revenue growth would have been 24%.
Our Canadian and U S operations had a great quarter with double digit growth.
We also had strong performance in the U K against the New 2023 rating list as we begin to build our new annuity revenue stream.
The solid results achieved this quarter are a testament to the team's perseverance and managing effectively through the UK annuity reset.
And finally appraisals and development advisory revenue was steady in the quarter driven primarily by the development advisory team.
Development Advisory provides us with a predictable revenue stream associated with complex long term projects.
We have rebalanced some of the resources from our appraisals group to support our higher margin value management solutions engagement as we continue to pursue operating efficiencies.
Lastly, turning to our balance sheet we.
We finished the quarter with a cash position of $43 1 million and were $335 8 million in bank debt.
The funded debt to EBITDA leverage ratio as defined in our credit agreement was $2, one nine times well below our limit of four five times.
<unk> cash and a net debt to adjusted EBITDA leverage ratio was $2, one zero times, representing a very healthy balance sheet.
Regarding our capital allocation priorities, we continue to reinvest in the business to scale.
Opportunistically pay down debt and maintain financial flexibility for M&A and stock repurchases.
With that I'll turn it over to Jim.
Okay. Thanks, Kevin.
Let me start with young congratulations to my colleagues for delivering outstanding results in Q2, so like I said every quarter.
Hello, guys. Thank you for those listening the momentum across our business is strong and team is doing a fantastic job executing strategy and moving the business forward.
Our ongoing transition to Argus cloud is tracking to plan, we ended the quarter with 70% of Argus enterprise users contracted on the cloud steady improvement from 52% a year ago.
Turning to new bookings this metric captures incremental new business growth.
<unk>, new bookings at $18 4 million were up 35% sequentially and up three 4% year over year at constant currency.
Sequentially, our software bookings remained strong data bookings grew and we saw a nice increase in valuation management solutions.
We're seeing growth driven by both debt and equity funds in Q2, we signed our largest debt valuation engagements to date.
We're closely watching how the external environment will impact bookings in the second half of the year and we're cautiously optimistic about recent Q2 fundraising reports there is a few points to note.
Our pipeline continues to grow our largest clients are active in the market.
We are selectively layering in sales and service delivery capacity to ensure we remain well positioned to best serve our clients as our business and more importantly, as our claims businesses continue to grow.
To wrap up quarter after quarter, we've demonstrated the resiliency of our business model.
We continue to successfully navigate this dynamic business environment to strategically position ourselves for long term growth.
No that volatility in the market drives demand for our advanced analytics.
Our development group is continually adding to and improving the features and functionality of the altice performance platform.
Our altice labs team brings new insights to CRE data each day, leveraging the power of artificial intelligence technology, we acquired the strategy Embryotomy and applying those technologies against the significant amount of data available across our altice offers including Argus enterprise valuation management solutions and proper.
Tax.
Our sales and marketing teams are driving the business development process with new offers such as market insights premium which has added significantly to our pipeline.
We've expanded our services with our largest clients are new infrastructure is already paying dividends with significantly improved visibility into customer profitability.
Of course utilization and business unit metrics.
This visibility allows us to identify areas of continuing operating efficiencies.
We continue to invest in our global service Center resources.
Another source of operating leverage while acquiring fantastic talent.
We can see the progress in our working capital processes as measured in the increased throughput of billings and collections.
And with the UK reset behind US we look forward several years of rebuilding the annuity revenue with an even greater number of clients.
Combined these efforts will drive higher cash flow conversions to fuel, both organic and inorganic growth debt repayment and opportunistic share buybacks.
Said differently significant revenue and margin growth opportunities exist to continue driving success.
With that let's open up the line for questions.
Thank you if he would like to ask a question on the phone lines today that its star one on your telephone keypad.
Our first question from Yuri Lynk with Canaccord Genuity.
Hey, good evening, everyone and congrats on a nice quarter.
Thanks Sherry.
Yeah, I wanted to get more color on tax I mean surprising how strong it was and even in Q1 I think you could see it building.
So was the outperformance all in the U S and Canada or or was the U K able to it sounds like they were they were able to do better than we thought so.
Was that new lines of business or how are they able to kind of offset a lot of the annuity headwind.
Great question here so the.
U S and the Canadian peers have just been they've been crushing it they've been planning for the dynamics in the various jurisdictions, even within the U S and Canada and.
They kept their eye on the ball and they closed deals that needed to close in the U K. If you remember a couple of quarters ago. I guess Q4 of last year. We said, we continue to add resources selling in the U K, we continue to add significant amount of clients there.
It's a really well run sales machine in.
In the UK and our UK sales leader is repeating those processes across the U S. So it's just all about and really focused.
And the teams on what they need to do day in.
Layout.
Is there.
We had really good success after 2023 and less in the UK as well so it's a good backlog and we're making sure we're beginning a belt.
Okay.
Is there anything outside of annuity billings that that that would make Q2.
Still make it the biggest quarter of the year.
I'm just trying to.
Got it.
Quite a bit higher than.
What we were expecting.
<unk>.
Outside of what you just explained it was there anything onetime in nature that might have got pulled into the quarter.
Theres always large deals that will settle at various times in.
Different jurisdictions.
So we do expect Q2 will be a high point for the year, but we expect that really strong finish.
In Q3, and Q4, yes, and Youre familiar with there is a slight element of seasonality to the U S with Q2, and Q3 typically coming in stronger than Q4.
Okay.
That's it for me congrats again on the quarter I'll turn it over.
Alright, Thanks Gerry.
We'll take our next question from Daniel Chan with TD Cowen.
Hey, guys. Thanks for taking my questions and congrats on the strong quarter.
The new bookings performance in Q1 was a.
A point of concern for a lot of investors, but that seems to have completely reverted which is great to see can you just provide some colors.
What you saw what you've seen from this quarter versus Q1.
Yes.
I think you heard our comments to Q1.
We said keep an eye on the recurring revenue growth.
Our growth comes from more than just the bookings number so what let me just ground everyone again.
Any bookings number is incremental new growth for our business.
And our recurring bookings are strong and you can see that flowing through our recurring revenues and Thats. We just kept landing everyone last quarter. So we knew our revenue growth was going to be strong.
In addition to the bookings number as our clients.
Assets to our portfolio, we already serve that doesn't count into our bookings numbers.
Incremental.
Okay.
So there's multiple ways for us to grow outside of.
Just the just the bookings number that said we still see.
We see an increase in capital inflows CRE in Q2 versus Q1.
And.
We are seeing our clients commit they want they want to make sure that their reserving resources with us as they deploy those assets.
Yes, so we're seeing that we had amazingly strong bookings.
We saw it starting to build the second half of 'twenty one.
'twenty two is a massive increase over 'twenty one 'twenty three.
The massive increase over 'twenty, one as far as bookings and you're seeing that flow through the recurring revenue line.
Okay, that's great to hear is to add to that.
Just to add to that Danielle maybe.
There was a.
Harsh.
Reaction to the March headline news that hit Q1.
The precipitate in a lot of the.
The outcome for Q1.
Bookings that as Jim mentioned in the prepared remarks like fund raising is still up.
Versus Q1 at a lot of the activity is being led by larger companies and a lot of those larger companies are our clients and so we're benefiting from this trend.
Find raising activities and the deployment of capital from the larger companies.
Okay. So it's not just it's not just software bookings are strong, but dms as it sounds like is benefiting as well.
That's right.
Well, that's great to hear.
Okay.
Maybe along the same lines like your cloud migration is moving along 70% contracted as we look beyond the cloud migration voice and you guys were talking about.
The new analytics products a lot at your conference.
How does the sales pipeline developing for those new products and their appetite for these transformational projects products in this volatile environment.
Absolutely and my comments I mentioned that the ultra since this premium.
Offer which we still technically have not we soft launched it at the connector that we haven't done major launch of it yet but R. R.
Our pipeline.
Break our pipeline numbers down into the components, but our pipeline.
For next.
For the end of this year toward.
Really next year is.
Growing significantly because of the premium offer the market insights premium offer.
We've got several proof of concepts in place as this is kind of a new motion for a lot of our clients to one be adopting this much data science.
And adopting it from artists.
Sorry August but through the size of the Argus enterprise.
Users as well.
Great. Thanks, So first of all nice pipeline.
Thank you.
Yes.
We will take our next question from Stephen Macleod with BMO capital markets.
Great. Thank you good evening everyone.
Just wanted to follow up on a couple of things. The first one is just just coming back to the new bookings number.
If I think back to Q1 it was really.
Like customers sort of some of those always.
The year over year decline in Q1 was driven by customers sort of hitting the pause button around the March banking crisis, so even though CRE volumes continued to be weak on the transaction side in Q2.
Im just trying to understand how you were able to put up both year over year and sequential growth. So just wondering if you could just parse it out a little bit more for me.
Yes, Steve it's there are new funds spinning up.
In both debt and equity.
And those clients because we are the gold standard for this those clients are coming to us.
<unk>.
And they are raising these funds to deploy capital.
And.
We're at the point, where they are theyre looking at the market.
And we're getting closer to.
The regional bank.
Balance sheet.
Adjustments are starting to get priced into deals. So now it's.
Who gets in.
At the price point and there are several of our clients are already out with public statements, saying that.
Ed.
They are saying they are.
They are ready to deploy their capital quickly right now.
Yes, Steven.
Yes.
There's like almost $350 million of dry capital sitting on the sidelines and we're starting to see the larger companies and trying to deploy assets.
Again, I think as I mentioned in earlier March was just a knee jerk reaction.
Yes.
And then we're seeing.
Seeing the activity being led by the larger companies and Steve We just point you back again what.
What's the recurring revenue growth.
Yes.
Okay. No. That's helpful. That's great color. Thank you.
Good to see.
The sequential and year over year growth.
Just wanted to confirm I think I know the answer but in terms of the tax business you wouldn't expect to see anything in Q3 from this annuity reset is that right.
We're selling off the 23 lists.
And then the.
We'll see Q2 next year is where we will see the major step up off of the newest.
So all of that.
Against that.
Okay, Great and then revenue program, but the original list.
Yes.
Okay, Yeah, and I was going to ask about just do you have a great chart in your presentation you show the.
Annuity impact over the last couple of years.
Would you.
Do you expect it to sort of build in a similar way when we get into 2024 and then over the next few years.
We would.
Adjusted up for we have significantly more clients now than.
We did the last time, the India started to rebuild.
And also keep in mind as you think about it. This next annuity cycle is much shorter.
<unk> actually plays to our advantage in regards that keeping existing clients and growing new ones.
Okay, that's great.
That's helpful color.
Thanks, so much.
Thanks, so much alright, thanks, Steve.
We will take our next question from Christian <unk> with eight capital.
Hi, Thanks for taking my questions and congrats on the strong quarter.
First question I'll ask is on the analytics side of the business and just in the context of the macro.
Now things have changed since March what trends are you seeing across your high touch versus your scale clients, which are more engaged and more active.
Right now.
Your group and your products.
Our seeing more activity with the high touch which is Christian as you know that's where our focus is that's where we're doubling down our go to market efforts.
Extra support on.
Customer success, and it's what the premium offers data.
Data and analytics, that's where we expect them to land. So those are the clients who have the most.
Valuation management solution contracts with us.
We saw immediately in Q1, when the market is trying to figure out what's going on.
You know you're the trusted partner when you are the first call.
So we know we're in a great position with our largest clients.
We expect that to continue driving growth right now. They also have the most uninvested capital right now so their capital availability to them as.
Much greater than to the smaller players in the market.
Okay and could you confirm are you still seeing.
Assets increase across your largest customers and.
Well you know what the references to the dry powder on the sidelines. So do you think this is a trend you can expect to see through the year that business would be independent to the bookings youre bookings figures, but.
It sounded in almost in Q1, and even though it's surprising but do you see this asset base continuing to increase.
Yes.
Again, we have <unk>.
Strong bookings for the last couple of years, so the number of assets where serve we serviced.
In Q2 of this year is significantly larger than Q2 of last year.
And there is a seasonality to the number of assets that drive revenue in any given quarter. So if you recall in Q1, when we were looking at the recurring revenue you said you have to normalize for the spike in the number of Q4 valuations that drive revenue.
So.
The number of assets are increasing with van it's the largest clients that are driving it.
Okay. That's all helpful color, Chris Thank you for taking my questions.
Yes.
We will take our next question from Gavin.
Fairweather with core Mark.
Oh, Hey, good afternoon late.
Late last year early this year you added some sales resources for analytics can you just discuss how those resources are ramping in the current macro and it sounded like you're looking to layer in a few more resources. So maybe you can discuss.
You know where those resources will be pointed out is this north America high touch or are you starting to broaden out the focus there.
Good question Gavin we did add sales capacity and we will continue its sales and service capacity.
We know this capital will get deployed in these clients are committing to deploy it with us so we need to be prepared to service them.
And you can see we're doing that while still driving 700 bps margin expansion. So we're being very selective about how we do that and rebalancing across the P&L to make sure. We're most effectively deploying capital.
Okay.
Okay.
That's helpful maybe.
Maybe just on the market insights offering.
You've discussed in the past that as kind of a Trojan horse our way into some of the verticals, where you're less penetrated like rates. It sounds like the pipeline is building nicely. Maybe you can just kind of comment on whether that would include some of these verticals.
Verticals, where you're a little bit less penetrated.
Right sorry.
I grabbed a sip of water in that last answer so.
Those are those are two related questions. So the sales resources. We are we are.
Targeting our resources from.
Data companies.
<unk>.
That's where that's the type of resource, we're adding and they are targeting absolutely high touch and specifically around market insights premium.
<unk>.
Slightly different motion.
A lot of our existing legacy sales folks are doing awesome and getting there, but we're complementing them with folks from the data and analytics world and Theyre targeting high touch here.
The other area, where we are specifically targeting resources as you can see at debt funds, but then we also have.
Higher motion directed at.
Thanks.
That's helpful. And then just lastly on on the working capital should we expect roughly the 65 million kind of outflow in the first half to reverse in the back half is that kind of roughly the excess working capital that should flow Bakken.
Yes, that's right.
As we mentioned in the prepared remarks.
We did the big transition in Q1.
Operationally, we're already seeing the improvements in Q2, and we're fully expecting to be on track for the full year.
And if you look at our free cash flow conversion from EBITDA from last year.
As a percentage we will finish this year significantly better than that which will be reflected in.
Not only to catch up and an improvement in Q3 and Q4.
Adam.
We can see all the metrics in the throughput of the teams where they are operating at higher volumes.
They ever did last year with the new systems.
That's it for me thank you.
Thanks, Kevin.
We will take our next question from Scott <unk> with CIBC.
Okay.
Hi, I have a question on the on the property tax obviously strong quarter, there and outperformance on the revenue, but also on the cost side I think and I'm. Just curious could you give us some context on how the margins and the tax court this quarter compared to previous quarters that had been at the sort of a trough of the annuity.
Cycle.
Yeah.
Both mode.
Yes, Scott so most of the $33 million drops through to the bottom line.
Theres no way operationally youre going to offset that we did continue to add resources.
Especially in the U K at the end of the year, which gave us the first half.
Increase in expenses.
But.
If you remember we were specifically targeting.
The finished the 2016 list very strong.
So that because we could sell through that.
Through March 31, and.
And we did.
And then as.
As I said the UK is a.
Fantastic selling machine.
And.
We are going in we will be going into the new list. We're in the new list with a significantly larger number of clients than in prior years. So that's where the investment's going we also had significant investment going into.
Systems automation, and bringing if you'll bear with the word analytics into the tax business.
Yeah.
Okay. Thanks, and then we've covered a lot of good ground.
Curious just on the new bookings again.
Was there any was there any change in the cadence as the quarter went on did you sort of see sequential improvement through April may and June and then maybe even into Q3, if you have any color on that.
We saw we saw our normal.
Probably a little more skewed to the month three than usual, but thats.
While it's always heavily weighted to month three is.
What we saw in March.
So it was in month, three and we're watching our clients go through price discovery.
So it was are they going to close their funds.
As more capital going to flow into CRE, how many funds are going to close what type of funds and can we service those funds and those things lined up very nicely for us in the quarter Scott.
We started the quarter with a really good pipeline and we finished the quarter with that good conversion on that pipeline to at least.
It was anticipated throughout the quarter.
And it was really good to see it close appropriately.
Okay.
Okay. Thank you.
We'll take our next question from Paul <unk> with RBC capital markets.
Hello, Thanks, very much and good afternoon.
Really great to see the rebound in bookings just.
Good morning, and again on them.
The bookings that were delayed in Q1 can you give us a sense of what proportion closed in Q2, and if theres any sort of outstanding proportion that's remaining to close.
Good.
The best I can answer that for you Paul is that you.
You always have.
Bookings our bookings are lumpy by definition right. So it's why everyone looks at recurring revenue.
And we always have multiple paths to hit our number so which deal is going to close in quarter versus out of quarter. So we have large deals that.
We were targeting at the end of Q1 that actually closed end of Q2, and we had large deals in Q2 that are now the team's calling in Q3 so.
In any in any tech business as you know youre going to get those large deals.
Moving.
Across the quarter and line.
The pipeline looks good right now.
And it's really just add to that and we're trying to accelerate Q4 deals inked and into <unk>.
Q3, as well at these centers are always going to be.
A question to Paul we're just we're looking at pipeline pipeline coverage and conversion of that pipeline is kind of our leading metric.
Comfort for the quarter.
But thats been our life every quarter for 30 years, so nothing new.
And then.
How do we think about the seasonality of bookings I guess, it typically skewed to Q4 like.
Most software companies.
So you get into the legacy so even though we're into software as a service mode. Our Argus cloud.
A lot of those contracts were.
Clients, who were trained for 20 some years to use up their capital at the end of the year.
Even though the term license world is gone.
Look at clients will.
Renew their contract or move to cloud when they are old contracts expire. So there are still.
Significant in the in the on the application side of things significant amount of clients that will be at the end of Q4.
So yes it varies.
As we said bookings can be lumpy the real the true test here is the <unk>.
Maintaining the recurring revenue growth and just seeing that play through.
And then.
Keeping an eye on deferred revenue as well so.
<unk>.
We're replacing.
That backlog as we recognize the revenue onto the P&L.
Okay and then one last question just on the AE renewal rate or retention rate.
Dipped down Q2 versus Q1 in anything to call out there or is it just sort of the.
Quarterly.
Nor is there variability.
No. There is it's getting to be such a small number for us.
<unk>.
One client can move it is there is there is nothing there that is causing any alarm on our side here.
Alright, thanks for taking the questions.
Alright, Thanks, Paul.
We'll take our next question from Richard <unk> with National Bank financial.
Yes. Thank you.
So I don't know if this.
<unk> better to revenue or bookings, but if you look at the growth could you maybe give us a sense of how much is coming from new versus existing.
Customers and in the case of the existing customers can you also give us a sense of.
What they may be adding I appreciate when they serve you started another fund those or add more licenses, but I'm just really trying to understand.
The mix in terms of the contribution of growth.
When we get so we can break it down to AE and BMS. So the AE clients when they're new clients tend to be very small bookings.
On Vms.
Its new and existing.
When you break that down we've had new funds spin up that.
Syed that signed contracts with us.
In.
Q2.
But it's the largest clients again, who are bidding.
<unk> been the most successful in raising capital and who we expect to be most confident in deploying capital.
So as they add new portfolios that we treat as a new booking or you can think of that portfolio is new client, but it's largely our existing clients and expanding.
Okay.
And then on <unk>.
Slide 23 of your deck, you talk about digitizing property tax workflows it seems like.
I don't know how far it is but.
As an opportunity to potentially improve the efficiencies so sort of two part question number one what is the sort of the timeline for that and then number two what do you figure the potential margin lift would be from something like.
Like this to driving efficiencies.
Okay.
So there is a couple of things that we continue to leverage.
Our investment.
So when we bought rethink with the product I cant link.
And we continue investing in technology, particularly in the U K business.
Which.
It gives us more and more of a moat around that business. So in future years, the appeals time will actually shorten.
And.
Although we have a majority share of the business in the UK. There is still a massive growth opportunity there for us.
The smaller <unk>.
You'll firms and accounting fees that are doing tax appeals aren't going to be able to process all the information that they need.
As quickly as they will need to file the appeals so we're continuing to invest.
There the other piece of the business. So there is there is customer acquisition and workflow, which is what the UK investment is around there is leveraging the ICM linked workflow, particularly in the U S. And then there is the self serve market in tax which is.
A major driver of why we bought ITM League for the clients, who do not want to <unk>.
We engaged in a full white glove turnkey service they can self serve leveraging ICANN Lake.
Okay, and then just I guess the last question sort of related on those acquisitions.
Acquisitions, you referenced no doubt, it's sort of a given you.
It's pieces to serve buildup.
Sort of a more broad platform what do you think about acquisitions today are there any pieces.
You may be missing.
That you need to pursue but.
The valuations sort of in your sweet spot, maybe you can give us a bit of color on that.
We think the acquisition.
The opportunity for acquisitions is.
Is increasing right now.
You heard us say several times last year, we thought valuations were lofty and there was a lot of private money chasing transactions, even though they couldn't go in there strategically chasing trip.
Pricing.
To a point, where we didn't see it being accretive in a reasonable timeframe. So.
There was a ton of money that went into prop tech in the last few years and.
So there is M&A opportunity here as some of those those earlier stage companies.
Are getting cash crunched here, so we think.
Valuations are to come back down to a very attractive point for us.
We're keeping a close eye on the market.
Okay. Thank you.
As a reminder, everyone that is star one to ask a question.
Yes.
Alright, and there are no further questions at this time I would like to turn the call back over to Jim Hannon for any additional or closing remarks.
Great well.
As always thank you everybody. Thank you for the thoughtful questions and as always you can get in touch with us through our IR website or directly to Camilla Barton So have a great night. Thank you.
And that does conclude todays presentation. Thank you for your participation and you may now disconnect.
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Okay.
Yes.
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Okay.
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