Q1 2024 Alithya Group Inc Earnings Call
Good morning, ladies and gentlemen, welcome to <unk> first quarter and fiscal 2024 results conference call I would now like to turn the meeting over to management. Please go ahead.
Good morning, and thank you once again for joining us for <unk> first quarter fiscal 2024 results conference call. The press release and MD&A with accompanying financial statements and related note where should this morning and are now posted on our website.
Webcast presentation can be found on our website in the investors section.
Please be advised that this call will contain statements that are forward looking and which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.
These statements these statements, including without limitation, our estimate flat expectation and other statements regarding the future growth results of operation performance and business prospects.
Do not exclusively related to the history of all of that.
Which refer to future events.
Any statements regarding our expectations of our clients demand for our services.
And our ability to take advantage of business opportunities and meet our goals and our three year strategic plan for.
For more information please refer to the cautionary note in our presentation and the forward looking statements and the risks and uncertainties section of our MD&A available on our website.
All figures discussed on today's call are in Canadian dollars.
Otherwise data and we may refer to certain indicators and non <unk> measures.
Please refer to the cautionary note in our presentation and to the non ISR and other financial measures section of our MD&A for more detail.
Presenting this morning are call it Brandon.
President and Chief Executive Officer, and closing people Chief Financial Officer.
I will now turn the call over to Panama.
Thank you mentioned may and good morning, everyone. Thank.
Thank you all for joining us to discuss <unk> first quarter 2024 financial results.
On the wings of a robust close to our 2023 fiscal year, we began fiscal 'twenty for automakers.
Despite headwinds in certain sectors that have slowed our overall revenue growth rate in Q1, we continue to improve our business in most areas.
I would like to begin by sharing some highlights with you from our first quarter of fiscal 2024, which ended on June 32023.
First off despite headwinds in the global economic environment, particularly affecting our banking sector in Canada, and our learning business in the U S.
Our bookings remained strong in the first quarter with record bookings in our U S operations.
We also added 32, new clients across our global operations and we have a healthy number of new project starts from existing clients seeking to generate greater efficiencies.
Secondly, we continue to improve our gross margins as a percentage of revenue year over year, Despite companywide salary increases in Q3.
Third we have continued our momentum in generating healthy cash flows as we continue reducing our debt.
The quality of our global services backed by the collective intelligence and skill sets of our people continues to be recognized over the past few months with numerous nomination and prestigious award is bestowed upon our lithia.
And last but certainly not least we continue to leverage new and emerging technologies, including generative artificial intelligence to enhance our products and services and maintain our position on the crest of the digital way.
Now, let's dig deeper into some of those highlights.
As mentioned, we experienced a record quarter for bookings in our Oracle and Microsoft Enterprise cloud business practices.
Global <unk> bookings reached $111 million, which translated into a book to bill ratio of <unk> 85 that step if revenues from the two long term contracts were excluded our lithia is book to bill ratio would be around one.
On a trailing 12 month basis bookings were $491 million, which translate in book to Bill of <unk>.
93, and one when excluding the two aforementioned long term contracts.
Bookings were also particularly strong in respect to the healthcare sector, where there is a very strong demand for our services, which experienced both quarter over quarter and year over year growth.
That is a notable achievement in the context of the current economic climate and we will continue to pursue deeper market penetration in that area moving forward.
Now in terms of gross margin, we continue to hover around our minimum threshold of 30% in Q1 gross margin as a percentage of revenue reached 28, 9% compared to 26, 9% in Q1 of last year.
Improving our gross margins had been a focus of our current strategic plan and we've implemented multiple measures to continue that trend.
As we pursue greater profitability, we know that the road to achieving that goal.
Largely runs through the optimal utilization of our people and our focus on higher value services.
Process includes ongoing reductions of some contractors as well as continuing efforts to grow our smart shoring operations.
As we look at our regional performance.
I would first like to point out that salary increases for all of our employees across our global operations kicked in on the first day of our first quarter and this happens every year, which is important to consider in our result demonstrates our capacity to increase pricing.
Of higher value services.
Accordingly, our improved performance in Q1 fiscal 2024 was largely driven by our global enterprise solutions business.
The manufacturing sector is another important industry for ALLETE, yet efficiency and productivity of remain top priorities for manufacturers and their investments in new technology are driven by the promise of improved profit margins.
That trend in the manufacturing sector supported by Gartner research that fueled bookings and new projects, where our Microsoft practice.
Particularly in a nine minute with Microsoft's advancement of technology solutions and have used specifically towards the manufacturing sector.
Combined our Oracle and Microsoft Enterprise practices contributed <unk> <unk> to positive EBITDA in the first quarter of 2024.
And while we are also experiencing headwinds in our learning services business. We are confident that this resilient markets inevitably rebound.
In the meantime, we are enhancing our offerings in that space as our teams integrate the latest generative AI tools into solutions that we will soon bring to market.
In respect of our own internal training and development programs and May alleviate received a prestigious Juliet award and the training and workforce development category for our media leadership Academy and.
An initiative in partnership with Mcgill University faculty of management to ensure continuity of leadership and a robust succession plan.
People are our most valuable asset and they are also the experts most coveted by our clients. The immediate leadership Academy is a source of pride and we're pleased that has been recognized by our peers.
I would also like to take this moment.
<unk> Bank members of our teams was where it was recognized in eight categories of the combined 2023, Microsoft partner of the year and impact Awards.
Now for our revenues.
The year over year, our Q1 revenues increased three 8% to $131 6 million.
With 82% generated by existing clients that we had in Q1 of last year.
However, while our enterprise services revenue increased in the U S. A decrease in our learning services and the banking sector in Canada as a result of our Canadian revenues are slightly down year over year.
On a positive note we use this situation significantly reduced subcontractor usage. This can be seen in our continued gross margin progression.
We also experienced growth in Europe , this past quarter, while continuing to invest in our Morocco in eastern Europe operations to expand our near shore delivery capabilities in Europe .
These results and our healthy balance sheet allow us to remain focused on delivering the key components of our strategic plan, which ends on March 31, 2024 and positions us well to move on potential accretive acquisitions.
As expected by our clients, we diligently keep our finger on the pulse of emerging technologies, including exploring possibilities for leveraging the power of artificial intelligence.
As we enter those conversations decline who are looking to streamline their processes.
Rapid suite software is already being deployed in our health care and insurance sectors.
Our rapid suite solutions scan extract transform unstructured data obtained from the multiple.
A multitude of sources from handwritten notes to digital files, and then uses traditional AI to automatically normalized data for many disparate locations and systems.
With the help of GPT for rapid speed can now capture content that is not fully based on preexisting keywords and rules created by a human expert.
Rapid suite now has the capability to learn by itself and to adapt in real time.
<unk> acts as a sort of subject matter expert and accompanying rapid suite as it adjusts.
<unk> of documents in medical terminology to make educated decisions.
Rapid suite is a powerful tool for clients will turn to a DCF for solutions offering cost savings competitive advantages minimal errors increase agility and better decision making.
And that is just one example of our innovation at work.
I would now like to turn the meeting over to coach Hugo <unk>, Chief Financial Officer, who will expand on the financial highlights of the quarter close.
Good morning.
As Paul mentioned revenues for the first quarter increased three 8%.
Compared to the first quarter of last year.
Our data acquisition now referred to as data solutions completed on July one 2022 contributed revenues of $5 $9 million during the first quarter.
In Canada revenues decreased organically by 2% to $77 million.
Mainly to temporary reductions of business activity in the banking sector.
In the U S revenues increased 11, 2% to $49 $2 million.
Given by increased revenues from data solutions, and a favorable U S dollar exchange rate variations.
As for our international operations, they reported a strong quarter in terms of organic growth increasing 36, 1%.
Also driven by international revenues from data solutions and favorable exchange rate impact.
Now, let's look at our Q1 gross margin, which overall increased by 11, 8% or by $4 million to $38 $1 million up from $34 1 million last year.
Again as a percentage of revenues our first quarter consolidated gross margin increased to 28, 9% from 26, 9% for the same period last year.
The increase in gross margin percentage in Canada is derived from higher average revenue per employee increased.
Increased revenues from higher margin offerings inherently fewer sub contractors.
In the U S gross margin as a percentage of revenues increased as a result of a positive margin impact from our data solutions U S business.
Your average revenue per employee.
And improved project performance in other areas of the business.
On a sequential basis gross margin as a percentage of it.
Percentage of revenues, sorry decreased only moderately.
Compared to the 29, 9% posted for the fourth quarter.
Despite the companywide salary increases that came into effect at the beginning of this fiscal year on April one 2012.
Therefore.
This would suggest notable improvements at various other levels.
Including segment, NGL geography mix labor mix and project performance.
Despite the small apparent sequential decrease points to ongoing and continued progression towards higher gross margins.
Now looking at SG&A, which represent one of our first quarter significant improvements.
Total gross SG&A expenses in the first quarter totaled $32 5 million.
An increase of $3 6 million or 12, 3%.
Compared to $28 9 million in the same quarter last year.
However, it must be noted that this increase is due to four elements first.
One 4 million.
Permanent of property and equipment and right of use assets pursuant to vacate and real estate.
Second a $1 million increase in noncash share based compensation, mainly related to the data acquisition.
Third approximately $800000 of expenses.
From data solutions, which we did not own in Q1 of last year.
Lee and unfavorable U S dollar impact of $700000.
The above four elements totaling approximately $4 million indicate that on a comparable basis total SG&A has actually decreased year over year in absolute dollars.
This despite the same overall salary increases that occurred on April the first which equally impacted our SG&A.
Coincidentally on a sequential basis.
<unk> expenses decreased by $3 $5 million.
Also on the net comparable basis.
After adjusting for the same elements of the bone.
We see a similar sequential SG&A decrease.
And that again, despite the annual April one salary increases.
We are pleased to see our efforts on that front starting to show and we are looking to maintain the same continued discipline on SG&A spend going forward.
Yes.
Overall as a result of increased revenues and gross margin dollars, partially offset by increased SG&A expenses on a gross basis, our first quarter adjusted EBITDA amounted to $9 1 million and.
An increase of 46, 1% or $2 9 million compared to an adjusted EBITDA of $6 $2 million during the same quarter last year.
As the previous quarter.
We introduced a new financial metric to our reporting, namely adjusted net earnings.
Recent years, mainly due to our strategy of growth through acquisitions.
And despite the fact that the lithia is generating positive cash flows from operations.
We have been reporting losses on an accounting basis.
These accounting net losses have been mainly created by amortization of intangibles by acquisition and integration costs.
And by share based compensation, most of which are noncash and nonrecurring expenses directly attributable to past individual acquisitions.
Adjusting our accounting net loss, we are reporting in Q1 of fiscal 2024, adjusted net earnings and positive $1 $7 million.
Compared to adjusted net earnings of $2 7 million for Q1 of last year.
However, I would like to take a moment to provide some additional insight on this measure.
If we look at the Subtotal line on page eight we can see that before taking into consideration a notional tax effect on adjustments.
We would instead be looking at an increase of adjusted net earnings of close to 20%.
Indeed.
Entering the different tax rules, which Alicia currently has.
The company will not be significantly taxable for a few years to come.
Therefore, this alternative calculation is also relevant to point out.
Also as in previous quarters, our accounting net loss of $7 $2 million.
Steve viewed in relation to our $8 5 million of noncash depreciation and amortization.
Which is on top of our Q1 nonrecurring and noncash impairment charge for leases of $1 $4 million mentioned before.
Together. This explains why we generated strong cash flow from operations. Despite this accounting method.
We are also reporting $1 $1 million of nonrecurring business acquisitions integration and reorganization costs in Q1.
Which will keep decreasing sequentially until we acquire new businesses.
Despite our year over year progression in revenues and gross margin dollars, we see on page nine that after many quarters of continued growth on both fronts.
Our Q1 is facing similar challenges as many of our competitors, having recently reported.
Our long term adjusted EBITDA trends.
Despite a strong year over year growth also reflects a sequential reduction in Q1.
However, because of our good SG&A performance.
And the scale, which we have now reached the decrease in adjusted EBITDA is relatively smaller.
Of note this points to enhance EBITDA performance going forward just as soon as revenues returned to sequential growth pattern.
Now turning to liquidity and financial position on page 11.
Net cash generated from operating activities was seven $6 million a significant improvement from negative $9 $8 million used during the same period last year.
After working capital variations.
Also cash flow from operations before working capital variations amount.
Amounted to $6 8 million in Q1.
Out of $9 1 million of adjusted EBITDA.
Which represents a notable cash flow conversion percentage as I mentioned before.
The corresponding overall debt reduction.
<unk> are improved trailing 12 month EBITDA performance Q1 marks another quarter with declining leverage ratios.
Back to you Paul.
Thank you Claude and so.
So as we move into our second quarter of fiscal 2024, and we will continue to drive gross margin improvement SG&A reductions and cash generation as we focus on greater profitability in the face of the current headwinds in the banking sector and our learning Division.
On September 13, Alethia, we'll publish our second ESG report on the same day as our virtual annual shareholder meeting and we look forward to discussing <unk> progress in pursuit of its commitments.
Our second ESG reportable Nicolas disclose our greenhouse gas emissions for the first time, and we will discuss how our ESG initiatives.
Benchmarked against the metrics identified by the sustainability accounting standards board or FASB and organization working to bridge the gap between companies and investors through the disclosure of relevant sustainability information.
To access the annual shareholder meeting circular please visit the investors section on <unk> website.
We will now take questions Isabella.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on you touched on phone you'll hear three told prompt acknowledging your request and your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press.
Star followed by the Q. If you are using a speaker phone. Please lift the handset before pressing any one.
One moment. Please for your first question.
Your first question comes from Joe <unk> with Deutsche Bank. Please go ahead.
Hey, Brian I think the demand thanks for taking my questions first one is on the margin targets.
Thanks for the color in terms of the <unk>.
Nonrecurring items. However, it seems that these items will not either not affect EBITDA.
Adjusted EBITDA in coming quarters or will all will remain so are you still committed to the 9% to 13% margin range.
At the end of the year.
Hey, good morning, Jerome yet that's still our target.
Okay great.
Another question on margins I think it's fair to say during the uncertainty of Covid.
<unk> to keep basically everyone expecting an acceleration in the future.
If we're seeing a slowdown in terms of financial services do you expect that will be the strategy as well.
Yes, Thanks, Great question, Jeremy So we've actually already reduced our head count significantly as we adjust for these slowdowns as I was saying earlier.
If you look at where things are being cut in banking, it's non strategic projects.
A lot of those of those projects are staffed by some contractors. So it's very simple to to adjust for that.
You can see that in our gross margins going up in the revenue per employee going up. So so yes, we have the flexibility now because of that to adjust pretty rapidly when those types of things happen.
That's good to hear and last question last question is have you started doing work on the freedom mobile integration for <unk>.
Yes, it started.
Great. Thank you.
Thank you.
Your next question comes from <unk> <unk> with Scotiabank. Please go ahead.
Good morning, gentlemen.
I just wanted to get some color on.
The business got impacted because of the financial Canadian financial institutions and the.
Ed Tech sector.
U S.
Level of diversification.
Plan to bring in.
Are beginning a new bookings to reduce this kind of an impact on a go forward basis.
Yes, good morning, <unk>. Thanks for the question. So so actually when we see financial services in Canada is very specific to banking.
In Canada, and we don't have a lot of banking clients in the U S. We're very present in financial services, but not a lot of banking so.
The in Canada at the end of the impact almost all of it comes from banking as you know.
Banks are kind of upside down on the interest rates right now.
We've met with all of these these clients and they all they're all telling us its a temporary situation.
As as the banks adjust and renew them.
<unk> portfolio and so on and so forth so.
We're seeing it really across banking in Canada, we know it's temporary it will probably be back in a couple of quarters based on the meetings, we've had with the banks.
At best.
Yes.
One portion of our business in Canada. The other portions that are going strong.
Government healthcare and <unk>.
<unk> as the previous question was just saying, we're starting the integration for <unk> and freedom mobile so we expect that to grow.
So there are many other areas, but it's just that.
The slowdown in banking was significant.
But again, we believe it's temporary in the U S.
We have four four large business sectors.
The ERP business, that's divided between Microsoft and Oracle, that's doing extremely well had a record quarter of bookings in our revenue as well in year over year in both quarter over quarter and year over year.
And we have the data solutions business that <unk> was talking about.
That is growing.
And not just in the U S. But it has a positive impact internationally on our business.
And the training or the learning solutions in the learning solutions.
As the business Thats being slowed down because when you get close to a recession fears are out there and one of the first places where clients.
Slow down their spending is on training.
We know it's temporary.
And we're actually we're actually not only reducing head count in those areas, but we're investing so for example in our learning business <unk>.
One of the things that we will have a significant impact.
And in fact, we believe on what we do is the new Microsoft cloud.
So we have a solution.
That are going to include the chat.
<unk> technology in them, which shouldnt be released in the next few months, we have had beta beta tests with the solution and we think it's going to be yet.
A big driver of efficiencies and upside for us in that business. So.
But the rest of the and all the rest is doing well.
That's helpful. Just one question another one on this.
The expansion of the offshore operations.
So.
We expect to see.
Additional capex coming in the next few quarters as you add that operation and what kind of margin benefit do you expect to come out.
As you expand the operation given you already have been pulling the subcontractor reduction leavers.
Yes.
Thanks, So on the Capex, it's very minimal if you look at what we spend on Capex in any given year, it's mostly laptops smart people.
As we expand so for example, we we.
Lease larger spaces in India for our people as we expand there but again there.
Based on the current real estate market, we signed very short term leases as Claude was saying, we're actually getting rid of real estate.
We've taken some some some write downs in the quarter, just because we're ending leases early because our big financial advantage in doing it and we have to pay a termination penalty. So we've done that but we're going to be saving millions of dollars over the course of the year.
Of the process. So it very minimal in terms of Capex expenses.
Just on the margin benefit since when do we expect material.
Yes.
So a quick quick.
Point of reference in quota is using us in the past.
Whenever we increase.
Our offshore head count as a percentage of total head count by 5% in.
It improves the overall gross margin of the company by 2%.
So we are driving our target was to get to 10% by the end of this fiscal year.
We started the year at 5%. So we're pushing very hard on that we think at full scale, we could easily get to the 40% 50% range as most of our large competitors are doing today.
We think thats.
Feasible long term goal and we're pushing very hard in that direction.
It also it's also impacting R.
Our acquisition strategy.
Data solutions acquisition, we did the last one.
Most of their delivery.
Came from their offshore and near shore operation. So as we look at targets going forward, we do look for some that have that.
Smart shoring capability, because it's an accelerator for us as well.
That's very helpful.
Your next question comes from Gavin Fairweather with.
Please go ahead.
Oh, Hey, good morning, I wanted to start out on the bookings maybe you can just discuss kind of how your win rates are tracking how many opportunities you are seeing hitting the market and how kind of competitors are acting on these competitive.
Opportunities.
Thanks, Kevin.
Overall.
We're very happy with what our booking like so like I said in the U S. We've had a record booking especially in our.
Enterprise solution, which as you know in some of our higher margin business. So it is very very positive.
Our funnel of our sales funnel is also at a record high so from that growth and opportunities that are out there.
Some are a little bit slower in closing, but the opportunities are there, which is which is very encouraging.
Seeing some significant opportunity in government and healthcare and manufacturing so that's not slowing down if anything with all of the <unk> like the inflation reduction to <unk> in the U S is a big push to bring back manufacturing to North America. So that's a big driver on the manufacturing side healthcare.
<unk>.
A shortage of qualified people in the healthcare industry is not just the Canadian issue is.
Global issue. So again most of the healthcare institutions hospitals are looking to automate and get greater efficiencies to make up for the lack of.
The shortage of qualified people, so again thats, a big driver in that industry and again, we're very well positioned there. So there's a lot of a lot of good stuff happening in like I was saying earlier the only the only blemish that we're seeing right now and we think it's temporary is in the banking side in Canada, and then trading in the U S. So we're kind of double.
Going down on everything else right now.
And what projects. They are in the backlog are they tend to kind of kick off as expected or are they tending to push a little bit.
Most of them are we have a few.
Anecdotal we have a few clients, where we've actually signed the project and they want to start a bit later.
It's anecdotal for now.
Got it and then just next can you discuss the interplay between kind of employee raises and list prices.
Yes.
Raises kind of kicked in early in the quarter or maybe just talk about your ability to kind of pass throughs.
And the timing yes.
Yes.
Claude raise it and I think thats a very important.
Number for people to realize so when you think about it. So April one every year, we do a global salary increase based on the geographical.
Parameters. So we do a raise in the U S and Canada, and Europe everywhere and as you can imagine in our industry with the shortage of qualified people those raises are.
I mean.
Theres significantly every year April one so when we look at gross margins in Q1, and if we can grow our margins in Q1 year over year. It means that we're pricing power enables us to go to work in those those increases into our offerings.
But when it's growing is because we more than offset those salary increases which is very positive for us.
Good science.
And maybe I would add there is a silver lining to the current market conditions is that those increases will likely be.
Lower in the coming years.
This year 2023 was kind of out of the ordinary and so was 2022, but we are seeing probably some.
So more reasonable expectations there going forward.
Got it. Thanks, so much and then just lastly for me can you touch on the M&A environment and valuations we are seeing the leverage falling here progressively each quarter, maybe just discuss what you are seeing in the market.
Yes.
Great question again, and so we were very active in the.
And looking and talking and.
Evaluating targets.
The multiples arent coming down that much we were expecting them to come down, but they are coming down that much and if I look at where we're trading at right now we're probably the best deal on the market. So.
We keep that into consideration in the meantime, we're just like Colin said, we are paying down debt. So that we have the flexibility to pull the trigger.
There's a lot of interesting stuff out there. So we'll see we'll see but yes, we're still we're still looking.
We just want to make sure that Neil we dragged the three things that we look for the right acquisition at the right price.
And people want to stick around.
All three have to work for us to pull the trigger.
Great. Thanks, so much the pipeline.
Thank you.
Your next question comes from Vincent Colon.
<unk> with Barrington Research. Please go ahead.
Yes, good morning, Paul.
Good morning.
I'm curious.
Does your revenue goal for the year remain in place and how much should involve acquisitions.
So when we do our three year plan.
We try to look for a 50 50 in terms of M&A versus organic growth.
It's very I mean last year, we did three acquisitions in the last 12 months, we've done zero. So it would have to be a larger one to make up the difference.
Fiscal year, but again, we're not going to do an acquisition just for the sake of doing an acquisition, we want to make sure. It's the right one.
But.
At the beginning of the year and test whether the 50 50.
Are you seeing an acceleration in demand for offshore, giving given the economic pressures.
And if so.
Also curious if youre accelerating your offshore.
Both this year versus what you were thinking last quarter.
Okay.
Yes.
I don't know if it is much as accelerating Vince has renewed interest I think it's always been there.
I think since the pandemic people are more open to us.
And the current pressures or recessionary fears or making it that people are much more open to that discussion.
We see that as a positive.
And for shareholders with a scale issue before but we're there now.
It's definitely something that we're trying to accelerate.
And last one for me could you give us some more color on.
The higher margin offerings that are seeing the most traction in Canada.
The largest traction that we have right now are in the enterprise solutions. So the ERP in the cloud ERP and our data solutions those are the big drivers right now.
And both in the private sector and the public sector. So we're actually seeing demand on the government side as well for those solutions.
Thank you Paul.
Okay. Thanks.
Our next question comes from John Show with National Bank Financial. Please go ahead.
Hey, good morning, guys. Thanks for taking my question.
You mentioned some of the AI offering including co pilot I know, it's still early from that regards but how should we think about the revenue opportunities are they kind of like incremental opportunities or they're just going to be included in your.
Existing contracts.
Yeah. Thanks, Thanks, John for the question.
It's.
There's a lot of stuff that's still up in the year with profiler.
Sure.
The promises are are very interesting that date is still up in the air.
From what we've seen so far we think is something that Scott.
Help us accelerate the sale.
Some of our solutions. So I'll give you an example.
One of the things that we have with which you actually want to we wanted to Microsoft.
Award for US is what we do on the learning side.
With learning, but it's also assisting assisting clients in better using Microsoft solutions right. So when you implement Microsoft.
Business et cetera at a client in our team actually provides ongoing support the change management adoption adoption assistance.
An example of how copilot integrates into that is that today. When there is a problem somebody will click on the screen for help with.
With copilot and integrated into our solution. If somebody is using the App and has an issue with it they don't have to click on anything the app actually see is that the person is having a challenges says it looks like you're having a problem with X Y Z would you like some historical audits would you like some of the some island, if you'd like to talk to <unk>.
<unk> would you like to see a video so it reduces the reducer.
The cost of using that service it automates a large portion of that service. So it makes it available to more people and makes it a lot more efficient.
So we're looking we're in the process right now and trying to integrate those things into our solutions like.
Like learning in the assisted support for the rollout.
The tools.
So that's going to see that as a baby.
It should drive additional revenue for us by the same time and it's going to drive efficiencies as we are going to need less people to provide the same service the more people right.
So thats a positive and a good example, where even on that we have.
Already started integrating I was talking earlier about rapid suite so rather.
We came from our data solutions business.
And actually we.
It can go into a large.
Anybody who produces documentation and theres still a lot of documentation being produced today by large insurers banks utilities governments, both outbound and inbound.
With the solutions that we had we could automate that process, but we needed somebody the program rules look at exceptions.
Manage the process, which was driven by AI or machine learning now with chat GBC, you're eliminating that portion of it. So again same solution more efficient we can get to roll that out to a larger number of people with less with less people.
And drive more efficiencies for our clients as well so we see those as very positive as being things that we can include into our solutions across the board to make them more efficient higher margin at <unk>.
Larger market penetration and so on so that's how we see it coming into our business.
Okay, that's great to know.
32, new clients New client you signed this quarter could you give us some colors regarding your size.
The sectors and geography breakdown.
Yes.
They are pretty much everywhere globally I would say.
More a significant number in the U S and again it turns around our enterprise solution. So these are typically multimillion dollar multiyear projects.
Implemented.
ERP solutions suite or another large project, where we're modernizing our legacy platform moving into the cloud and so on and so forth. So it's more on the larger side in terms of new projects.
Okay and lastly, if I look at if you look if you look at if you.
Sorry, if you look historically, we've kind of been in that range every quarter in the high 20 percents low thirty's further past the past two years, so we're adding new clients new large clients at a really good clip.
Okay. Thank you. Thanks for the color I just have a last question regarding the model and maybe help us understand your working capital changes next quarter and how it could impact at operating cash flow in Q2.
Okay.
It's always a little tricky to forecast.
Typically it goes up and down certain quarters are going up certain quarters are going down.
We are we're on a streak here the past few quarters have been positive.
It really depends on the timing of the end of the quarter.
Our billing cycle on the receivable side and the salary accruals on the payables and accruals side, So one way to answer.
I'm not going to give you a number.
<unk> I would probably say that sooner or later.
We are bound to have a quarter where.
The net.
Variation will be negative, but im not expecting anything significant one.
One way or another.
We reach a certain stability last year, we had acquisitions brought into the mix.
If you remember if you look at last year's numbers, we had quarter, whereas with significant decreases and then we had a quarter with significant increases.
I'm not really expecting that going forward. So it's a bit of a crapshoot, whether it's a couple million in one direction or another.
Okay. Thank you.
Okay.
And also driven I forgot the third factor is obviously revenue variation so.
The.
When growth is important that typically has the ways on working capital variations and vice versa.
Okay. Thank you.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one line.
There are no further questions at this time I will now turn the call over to Paul.
Thank you Isabella.
Thank you everyone for joining us today.
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