Q3 2023 Enghouse Systems Limited Earnings Call
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Good morning, ladies and gentlemen, and welcome to inch House Q3, 2023 conference call note that at this time all lines are in a listen only mode, but following the presentation. We will conduct a question and answer session and if at any time during the call you require immediate assistance. Please press star zero for the operator.
Speaker 1: Good morning ladies and gentlemen and welcome to Inch House Q3 2023 conference call. Note that at this time all lines are in the listen only mode. Following the presentation we will conduct a question and answer session.
Also this call is being recorded on Friday September eight 2023, and I would like to turn the conference over to Mr. Stephen Sadler. Please go ahead Sir.
Speaker 1: This call is being recorded on Friday, September 8, 2023.
Good morning, everybody I'm here today with this Mr Global President, Rob <unk>, VP finance and Todd May VP legal counsel.
Speaker 2: Good morning, everybody. I'm here today with Vince Masood, Global President, Rob Medved, VP Finance and Todd May, VP Legal Counsel. Before we begin, I'll help Todd read our former, our forward...
Before we begin I'll have Todd read our former our forward disclaimer.
Speaker 3: Certain statements made may be forward-looking. By their nature, such forward statements are subject to various risks and uncertainties, including those in Ench House's continuous disclosure filing, such as its AIF, which could cause the company's actual results and experience to differ materially from anticipated results or other expectations. Undo reliance should not be placed on forward-looking information and the company has no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Certain statements made may be forward looking by their nature, such forward statements are subject to various risks and uncertainties, including <unk> continuous disclosure filings such as its Aif, which could cause the company's actual results and experience differ materially from anticipated results or other expectations undue reliance should not be placed on forward looking information and the company has no obligation.
To update or revise any forward looking information, whether as a result of new information future events or otherwise.
Speaker 2: Thanks, Todd. Rob will now give an overview of the financial results.
Thanks, Todd Rob will now give an overview of the financial results.
Speaker 4: Thank you, Steve. I'll go through the financial highlight for the three and nine months ended July 31st, 2023, compared to the three and nine months ended July 31st, 2022 as follows. Revenue increased to 111 and 330.9 million respectively, compared to revenue of 102.1 and 319.5 million.
Thank you Steve I'll go through the financial highlights for the three and nine months ended July 31, 2023 compared to the three and nine months ended July 31, 2022 as follows revenue increased to 111, and 339 million respectively compared to revenue of 102.
2.1, and $319 5 million results from operating activities were $30, nine and $86 4 million, respectively compared to $29 eight and $96 5 million.
Speaker 4: Results from operating activities were 30.9 and 86.4 million, respectively, compared to 29.8 and 96.5 million.
Speaker 4: Net income was 17.6 and 47.1 million, respectively, compared to 18.1 and 57.5 million.
Net income was $17, six and $47 1 million, respectively, compared to $18, one and $57 5 million.
Speaker 4: Adjusted EBITDA was 33.4 in 95.9 million respectively compared to 32.5 and 104.8 million.
Adjusted EBITDA was $33, four and $95 9 million, respectively, compared to $32, five and $104 8 million.
Speaker 4: Cash flow from operating activities, excluding changes in working capital, was 35.5 and 97 million respectively, compared to 34.1 and 107.3 million.
Cash flow from operating activities, excluding changes in working capital was 35, five and 97 million, respectively compared to $34, one and 107 3 million.
Speaker 4: These achievements are largely attributable to the strategic investments channeled into various facets of the business. These include acquisitions, investing in product enhancements, bolstering our SaaS offering, refining our go-to-market capabilities, optimizing internal systems and growing our acquisition team.
These achievements are largely attributable to the strategic investments channeled into various facets of the business.
These include acquisitions.
Investing in product enhancements bolstering, our SaaS offering refining our go to market capabilities, optimizing internal systems and growing our acquisition team.
Speaker 4: Increased revenue operating profits and cash flows ultimately culminated in our quarter end holdings of cash, cash equivalents and short term investments of $249.7 million, representing a near returns to the January 31st, 2023 cash balance of $250.7 million, even after dispersing $22.4 million in shareholder dividends and $29 million for acquisitions subsequent to January 31st.
Increased revenue operating profit and cash flows ultimately culminated in our quarter end holdings of cash cash equivalents and short term investments of $249 7 million, representing a near returns to the January 31, 2000, Twenty's free cash balance of $250 7 million even after disbursing.
$22 4 million in shareholder dividends and 29 million for acquisitions subsequent to January 31.
Speaker 4: Subsequent to quarter end on August 1st, 2023, and shows completed the acquisition of substantially all of the assets of life-side things.
Sequent to quarter end on August one 2023, and chose completed the acquisition of substantially all of the assets of Lifesize, Inc. Cloud Communications company. The acquisition was completed for a purchase price of approximately U S $20 7 million, bringing our total capital deployed on acquisitions in the year two.
Speaker 4: Cloud Communications Company. The acquisition was completed for a purchase price of approximately US 20.7 million, bringing our total capital deployed on acquisitions in the year to over 56 million as of August 1st, 2023. The macroeconomic environment of increasing interest rates and a more difficult funding environment for technology.
Over $56 million as of August one 2023, the macroeconomic environment of increasing interest rates and a more difficult funding environment for technology companies continues to generate more acquisition opportunities French house that meet our financial and operational criteria.
Speaker 4: Continue to generate more acquisition opportunities for Anchaus that meet our financial and operational criteria.
Speaker 4: Yesterday, the Board of Directors approved the company's eligible quarterly dividend of 22 cents per common share, payable on November 30, 2023 to shareholders of record at the close of business on November 16, 2023. I will now hand the call. We're Mr. Sadler.
Yesterday, the board of directors approved the company's eligible quarterly dividend of 22 cents per common share payable on November 32023 to shareholders of record at the close of business on November 16 2023.
I will now hand, the call over to Mr. Sadler.
Thanks, Rob This will now give some operational highlights of the quarter.
Speaker 2: Thanks Rob. This will now give some operational highlights of the quarter. Thank you Steve.
Steve.
Speaker 5: As outlined in our Q3 press release, we are pleased to report pre-financial achievements during the quarter. Revenue growth, improved operating income, and increased cash flow from operation.
As outlined in our Q3 press release, we are pleased to report three financial achievements during the quarter revenue growth improved operating income and increased cash flow from operations.
I'm going to delve into the key drivers behind how we achieved these positive financial results.
Speaker 5: I'm going to delve into the key drivers behind how we achieved these positive financial results.
Speaker 5: Regarding our revenue growth, several factors have contributed to the 8.7% quarter of growth to 111 million.
Regarding our revenue growth.
Real factors have contributed to the eight 7% quarter over quarter growth to $111 million.
Speaker 5: Approximately 24 months ago, we decided to amplify our distinct advantage over other technology providers in our markets. The Advantage centers around
Approximately 24 months ago, we decided to amplify our distinct advantage over other technology providers in our markets.
Advantage centers around a core principle offering our customers the power and flexibility of choice.
Speaker 5: offering our customers the power and flexibility of choice.
Speaker 5: While the concept of choice might appear straightforward, it requires significant investment and the ability to cope with operational complex.
While the concept of choice might appear straightforward it requires significant investment.
And the ability to cope with operational complexity.
Speaker 5: We have made substantial investments in various critical areas, including software engineering, operational capabilities, standing up our own software, the service platform, and significant efforts in our go-to-market strategy.
We have made substantial investments in various critical areas, including software engineering.
Operational capabilities.
Adding up our own software as a service platform and significant efforts in our go to market strategies.
Speaker 5: These invasives have been crucial in enabling us to fulfill our value proposition around providing choice to our customers.
These investments have been crucial and enabling us to fulfill our value proposition around prep, providing choice to our customers.
Speaker 5: We believe we are one of the only companies in the world that can provide customers our degree of choice.
We believe we are one of the only companies in the world that can provide customers our degree of choice.
Speaker 5: A unique proposition involves delivering multi-tenant cloud, private cloud and on-premise solutions across any cloud provider. This gives our customers the technology option that aligns with their preferences and requirements.
Our unique proposition involves delivering multi tenant cloud private cloud and on premise solutions across any cloud provider.
This gives our customers the technology option that aligns with their preferences and requirements.
Speaker 5: Another big advantage that choice offers to our customers revolves around preserving their technology and best.
Another big advantage that choice offers to our customers really revolves around preserving their technology investments.
Speaker 5: We can migrate our existing customers' text back from on-premise to the cloud.
We can migrate our existing customers tax back from on premise to the cloud.
Speaker 5: Eliminating the need for extensive retraining of their team.
Eliminating the need for extensive retraining of their teams.
Speaker 5: This is really important during times of inflation, where businesses are carefully reviewing costs and strive to minimize disruption.
This is really important during times of inflation, where businesses are carefully reviewing costs and strive to minimize disruption.
Speaker 5: choice isn't a buzz word for us. It's a real tangible advantage.
Joyce isn't a buzzword for us its a real tangible advantage, which is key to contributing to our success enhancing our revenue growth and positioning us uniquely in our market.
Speaker 5: to contributing to our success, enhancing our revenue growth and positioning us uniquely in our market.
Speaker 5: Another driver contributing to revenue growth relates to our demand generation and go to market teams.
Another driver contributing to revenue growth relates to our demand generation and go to market teams.
We have strategically invested in enhancing our digital demand generation capabilities.
Speaker 5: We have strategically invested in enhancing our digital demand generation capabilities.
Speaker 5: and improving the proficiency of our sales teams, especially around the ability of selling toys.
And improving the proficiency of our sales teams, especially around the ability of selling choice.
Speaker 5: Historically, we weren't widely recognized as a fast provider by the market, which required concerted effort to raise awareness, especially around our SaaS offering.
Historically, we werent widely recognized as a SaaS provider by the market, which required concerted effort to raise awareness, especially around our SaaS offerings.
Speaker 5: And these investments are now paying dividends, contributing to the 13.8% quarter-requiter increase in recurring revenue, which is mostly driven by SAS, total recurring revenue now increases to 72.3 million in Q3.
And these investments are now paying dividends contributing to the 13, 8% quarter over quarter increase in recurring revenue, which.
Which is mostly driven by SaaS total recurring revenue now increased to $72 3 million in Q3.
Speaker 5: The third catalyst behind Revenue Girl stems from acquisition.
The third catalyst behind revenue growth stems from acquisitions.
Speaker 5: The broader macro technology environment influenced by it, in rising interest rates.
Broader macro technology environment influenced by rising interest rates and decreased technology funding followed by us expanding our acquisition team is enhancing our capacity to complete acquisitions.
Speaker 5: and decrease technology funding, followed by us expanding our acquisition team, is enhancing our capacity to complete acquisition.
Speaker 5: Following the announcement of life size on August 1, we've now deployed $56 million in capital, as Rob mentioned, which is our highest level since fiscal 2020. And we have plenty of runway to do more acquisitions with $250 million of cash and a debt free balance.
Following the announcement of life Lifesize on August one we've now deployed $56 million in capital as Rob mentioned, which is our highest level since fiscal 2020, and we have plenty of runway to do more acquisitions with $250 million of cash and a debt free balance sheet.
I would like to highlight a few important contributors to how we improved operating income and.
Speaker 5: I would like to highlight a few important contributors to how we improved operating income and cash flows, which led to the expansion of EBITDA to 30.1% of sales, reaching 33.3 million in Q3, and both boosting operating cash flows to 39 million.
And cash flows, which led to the expansion of EBITDA to 31% of sales, reaching $33 3 million in Q3 in both boosting operating cash flows of $39 million.
Speaker 5: These results are especially positive when considering the inflationary environment in which we operate in. And the turn around we required to convert the historical operating losses of our Q2, QMU acquisition.
These results are especially positive when considering the inflationary environment in which we operate in and the turnover turnaround we are required to convert the historical operating losses of our Q2 Q acquisition.
Born out of the last several years of engineering, we developed a new important technology asset called the NGL source library.
Speaker 5: Born out of the last several years of engineering, we developed a new important technology asset called the Inchhouse Source Liber.
Speaker 5: The Intel Source Library is a collection of cloud technology components that were developed by Intel's engineers.
The NGL source library is a collection of cloud technology components that were developed by Ngl's engineers.
Speaker 5: and they are designed for sharing and deploying across multiple products, which allows us to drive innovation at an accelerated rate.
And they are designed for sharing and deploying across multiple products, which allows us to drive innovation at an accelerated rate.
Speaker 5: With this best-in-class library of components, our engineering teams can expedite product development while at the same time manage cost and profitability, delivering both product innovation and engineering efficient.
With this best in class Library of components, our engineering teams can expedite product development well.
While at the same time manage cost and profitability deliver.
Delivering both product innovation and engineering efficiency.
Speaker 5: Our commitment to operational profitability requires significant investments in internal systems.
Our commitment to operational profitability requires significant investments in our internal systems.
Speaker 5: a move we made that improved our operations and our ability to integrate acquisitions.
And move we made that improved our operations and our ability to integrate acquisitions.
Speaker 5: These internal system investments unified our operations across all of NCHELS divisions and departments, including customer experience, sales automation, marketing automation, human resource, and recently AI technology to improve demand gen.
These internal system investments unified our operations across all of <unk> divisions, and departments, including customer experience sales automation marketing automation human resource and recently AI technology to improve demand yet.
Speaker 5: These investments in internal systems have proven their value by facilitating the speed and success back position integration.
These investments in internal systems have proven their value by facilitating the speed and success of acquisition integrations.
Speaker 5: Both CUMU and Navita acquisitions, which we completed in Q2, were integrated quickly. And as a result, both businesses were profitable in Q3.
Both Cumulus Davita acquisitions, which we completed in Q2 were integrated quickly and a result as a result, both businesses were profitable in Q3.
Both the ancho source library, and our holistic investments in internal systems have enabled us to achieve profitability and improved cash flows even in times of high rates of inflation.
Speaker 5: Both the Ancho Source Library and our holistic investments in internal systems have enabled us to achieve profitability and improve cash flows even in times of high rates of inflation.
Just one final point I would like to make about artificial intelligence.
Speaker 5: Just one final point I would like to make about artificial intelligence.
Speaker 5: And Charles has been a provider of AI technologies for quite some time.
And Charles has been a provider of AI technologies for quite some time.
Speaker 5: We kick-started our AI journey back in 2019 with the acquisition of Eftica.
We kick started our AI journey back in 2019 with the acquisition of Africa.
Speaker 5: If this acquisition brought skilled engineering teams well versed in natural language processing and AI technology.
If this acquisition brought skilled engineering teams well versed in natural language processing and AI technologies.
Speaker 5: And let me highlight an example of one of our AI products with a relatable use case.
And let me highlight an example of one of our AI products with a related will use case.
Speaker 5: Most of us have experienced calling into a contact center and prior to the call you often hear a message, this call may be recorded for quality assurance purpose.
Most of us have experienced calling into a contact center and prior to the call you often hear message. This call may be recorded for quality assurance purposes.
Speaker 5: What happens then is context-centered supervisors need to spend hours listening into these recordings to assess agent performance.
What happens then is contact center supervisors needle been hours listening into these recordings to assessed agent performance.
Operator: Note that at this time, all lines are in the listen only mode, but following the presentation, we will conduct a question and answer session. And if at any time during the call you require immediate assistance, please press star zero for the operator. Also, this call is being recorded on Friday, September 8, 2023.
Speaker 5: What REI product does using our Intel's transcription engine is convert these voice recordings into written text.
What our AI product does using our Ngl's transcription engine is convert these voice recordings into written taxed.
Speaker 5: We then ingest the text into our AI engine, which automatically scores and evaluates the agent's performance.
We then ingest the tax into our AI engine, which automatically scores and evaluates the agent's performance.
Stephen Sadler: And I would like to turn the conference over to Mr. Stephen Sadler. Please go ahead, sir. Good morning, everybody.
Speaker 5: This eliminates the need for a supervisor to spend hours listening into these calls and results in huge cost savings and improvements in agent performance by providing an unbiased automated evaluation and recommendation.
This eliminates the need for a supervisor to spend hours listening in to these calls and results in the huge cost savings and improvements in agent performance by providing an unbiased automated evaluation and recommendations. This is just one example of our AI capabilities here at Ngls and we continue to.
Stephen Sadler: I'm here today with Vincent Mifsud, Global President, Rob Medved, VP Finance, and Todd May VP Legal Counsel.
Todd May: Before we begin, I'll Todd read our forward disclaimer. Certain statements made may be forward-looking. By their nature, such forward statements are subject to various risks and uncertainties, including those in Enghouse's continuous disclosure filing, such as its AIS, which could cause the company's actual results and experience different materially from anticipated results or other expectations. Under-reliance should not be placed on forward-looking information, and the company has no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Speaker 5: This is just one example of our AI capabilities here in Enchhouse, and we continue to invest in this area. Let me turn the call over to Mr. Steve Satt.
In this area.
Let me turn the call over to Mr. Steve Sadler.
Thanks Vince.
Speaker 2: With respect to acquisitions, the two acquisitions that we completed early in the second quarter are performing better than expected and getting close to our historic EBITDA march.
With respect to acquisitions, the two acquisitions that we completed early in the second quarter are performing better than expected and getting close to our historic EBITA margins further improvement is anticipated in our final Q4 of fiscal 2023.
Speaker 2: Further improvement is anticipated in our final Q4 of Fiscal 2023.
Subsequent to the end of our fiscal Q3 quarter. We successfully completed the acquisition of Lifesize for approximately 21 million U S. By the U S bankruptcy courts Lifesize is in on Prem and cloud company, which fits our current video and contact center.
Speaker 2: Subsequently to the end of our fiscal Q3 quarter, we've successfully completed the acquisition of lifestyles for approximately 21 million US.
Todd May: Thanks, Todd.
Robert Medved: Rob will now give an overview of the financial result. Thank you, Steve. I'll go through the financial highlight for the three and nine months ended July 31st, 2023, compared to the three and nine months ended July 31st, 2022 as follows.
Speaker 2: by the US Bankruptcy Court. Life size is an on-prem and cloud company which fits our current video and contact center operations as part of our interactive management group.
Robert Medved: Revenue increased to 111 and 330.9 million respectively, compared to revenue of 102.1 and 319.5 million, respectively, compared to 29.8 and 96.5 million. Net income was 17.6 and 47.1 million, respectively, compared to 18.1 and 57.5 million. Adjusted EBITDA was 33.4 and 95.9 million, respectively, compared to 32.5 and 104.8 million. Cash flow from operating activities, excluding changes in working capital was 35.5 and 97 million, respectively, compared to 34.1 and 107.3 million.
Operations as part of our interactive management group.
Speaker 2: LifeSize also provides workforce optimization and management as an addition to our contact center solution.
Lifesize also provides workforce optimization and management as an addition to our contact center solutions.
Speaker 2: The combination of lifestyles with our businesses anticipated to be mostly integrated with our operations by the end of our fiscal year. We expect at least a five year payback, almost starting almost immediately from this asset acquisition. No financial results of lifestyles were included in our Q3 results. I would now like to open the call for questions.
The combination of Lifesize, where their business is anticipated to be mostly integrated with our operations by the end of our fiscal year, we expect at least a five year payback almost starting almost immediately from this asset acquisition.
No financial result of Lifesize were included in our Q3 results I would now like to open the call for questions. Thank you Sir.
Speaker 1: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touch on phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, please press star followed by two. And if you're using a speaker.
Ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone you will then hear a three Tom prompt acknowledging your request and if you would like to withdraw from the question queue. Please press star followed by two and if you're using a speaker phone. We do ask that you. Please lift the handset before pressing entities. Please go ahead.
Robert Medved: These achievements are largely attributable to the strategic investments channeled into various facets of the business. These include acquisitions, investing in product enhancements, bolstering our SaaS offering, refining our go-to-market capabilities, optimizing internal systems and growing our acquisition team. Increased revenue, operating profits and cash flows ultimately culminated in our quarter end holdings of cash equivalents and short term investments of 249.7 million, representing a near returns to the January 31st, 2023, cash balance of 250.7 million, even after dispersing 22.4 million in shareholder dividends and 29 million for acquisitions subsequent to January 31st.
Press Star one now if you have any questions.
Speaker 1: for his question, we'll be Daniel Chan at TD Cowan. Please go.
And your first question will be from Daniel Chan at TD Cowen. Please go ahead.
Speaker 4: Hi, good morning guys. Vince, thanks for all the color on the SAS Progo. Sounds like your organic SAS efforts are starting to pay dividends.
Hey, good morning, guys Vince Thanks for all the color on the SaaS progress sounds like your organic sauce.
Efforts are starting to pay dividends.
Speaker 4: You also highlighted in the MBA that the SAS growth was largely during by a contact center solutions growth.
You also highlighted in the MD&A that the the SaaS growth was largely driven by a contact center solutions growth.
Color on how much of a SaaS growth. This quarter came from acquisitions, which is one of the factors you highlighted versus progress on that organic on your organic SaaS offerings.
Speaker 4: Color and how much of the sass growth this quarter came from Acquisitions, which is one of the factors you highlighted versus progress on that organic, on your organic sass off.
Yeah, we really don't break its hard to break out because we integrate things in so how do you do when you're you know you bring product set and then grow from there certainly some of our acquisitions were SaaS oriented because what we're finding is SaaS companies are having difficulty making money.
Speaker 2: Yeah, we really don't break, it's hard to break out because we integrate things in. So how do you do it when you're, you know, you bring products in and grow from there? Certainly some of our acquisitions were sass oriented because what we're finding is sass companies are having difficulty making money. We make money. They do not. So we buy them and have to fix them to make them work.
Robert Medved: Subsequent to quarter end on August 1st, 2023, and shows completed the acquisition of substantially all of the assets of life side bank, cloud communications company. The acquisition was completed for purchase price of approximately US 20.7 million, bringing our total capital deployed on acquisitions in the year to over 56 million as of August 1st, 2023. The macroeconomic environment of increasing interest rates and a more difficult funding environment for technology companies, continues to generate more acquisition opportunities for anchors that meet our financial and operational criteria.
We make money they do not so we buy them and have to fix them to make them work. So we are building a lot of our SaaS by acquisition cost is the most logical way.
Speaker 2: So we are building a lot of our fast bi-acquisition cut to the most logical way.
Speaker 2: People who try and do it internally, a lot in our markets, lose money to do it, and unless they get more money, they end up like life size, which is basically...
People, who try and do it internally a lot in our markets lose money to do it and unless they get more money. They end up like Lifesize, which is basically.
Speaker 2: in a troubled situation. So most of it does come from acquisitions, but yes, we're also building our own cloud SaaS model as well, but the majority's from the acquisition.
In a troubled situation. So most of it does come from acquisitions.
Robert Medved: Yesterday, the Board of Directors approved the company's eligible quarterly dividend of 22 cents per common share payable on November 30th, 2023, to shareholders of record at the close of business on November 16th, 2023.
But yes, we're also building our own.
Cloud SaaS model as well, but the majority is from the acquisitions.
Thanks for that Steve and then you brought up Lifesize and yes, it does seem to have.
Speaker 4: Thanks for that Steve. And then you brought up lifespies. And yes, it seems to have some challenges before being acquired by you. Can you provide some insight on what some of those challenges were and what your plans are for this asset? Thanks.
Stephen Sadler: I will now hand the call over to Mr. Sandler. Thanks Rob.
Some challenges before being acquired by you can you provide some insight on what some of those challenges were and what your plans are for this asset. Thank you.
Vincent Mifsud: This will now give some operational highlights of the quarter. Thank you, Steve. As outlined in our Q3 press release, we are pleased to report three financial achievements during the quarter. Revenue growth, improved operating income, and increased cash flow from operations. I'm going to delve into the key drivers behind how we achieved these positive financial results. Regarding our revenue growth, several factors have contributed to the 8.7% quarter over quarter growth to 111 million.
Speaker 2: You know, there's a lot of different things that go wrong.
You know, there's all there's a lot of different things that go wrong.
Speaker 2: But I would think from life-sized point of view, they did not spend enough time with their customers and listen to what they need.
But I would think from Lifesize point of view, they did not spend enough time with their customers and listen to what they need I believe they try to force them into the cloud SaaS model a lot of customers don't want SaaS. That's why as Vince said, we get we are flexible and give choice.
Speaker 2: I believe they tried to force them into the cloud SaaS model. A lot of customers don't want SaaS. That's why as Ben said, we are flexible and give choice.
Speaker 2: and spend a little more on R&D doing so, but we keep both going.
And spend a little more in R&D doing so, but we keep both going so I think those are probably the major items, we want to spend more time with the customers to see what they want.
Speaker 2: So I think those are probably the major items. We want to spend more time with the customers to see what they want.
Speaker 2: And we want to give them the choice. They don't have to be forced over to a staster cloud model if they Want to keep what they've got
Vincent Mifsud: Approximately 24 months ago, we decided to amplify our distinct advantage over other technology providers in our markets. The advantage centers around a core principle, offering our customers the power and flexibility of choice. While the concept of choice might appear straightforward, it requires significant investment and the ability to cope with operational complexity. We have made substantial investments in various critical areas, including software engineering, operational capabilities, standing up our own software at the service platform, and significant efforts in our go-to-market strategies.
And we wanted to give them the choice they don't have to be forced over to SaaS or cloud model, if they want to keep what they've got.
Thanks, Steve about Pennsylvania.
Thank you next question will be from Stephanie price at CIBC. Please go ahead.
Speaker 1: Next question will be from Stephanie Price at CI.
Hey, good morning, Steve I, just wanted to follow up on your last comment there around the concept of choice in the interactive Division.
Speaker 6: Hey, good morning. So you guys just wanted to follow up on your last comment there around the concept of choice in the Interactive Division. So are you seeing the conversion of existing customers into private cloud or public cloud-saf offerings? And are you seeing new customers that are looking at on-premise? Just trying to understand exactly what you're seeing there as you roll out the concept of choice.
So are you seeing the conversion of existing customers into a private cloud or public cloud SaaS offerings and are you seeing new customers that are looking at on premise just trying to understand exactly what youre seeing there as you rollout the concept of choice.
But you had such a complex question.
Speaker 2: You had such a complex question. I would probably just say yes. You know, you covered it. We have some customers who don't want to move. We have customers who want to move into the cloud for various reasons. And we have on-prem new customers as well as in the cloud customers. So.
Vincent Mifsud: These investments have been crucial in enabling us to fulfill our value proposition around providing choice to our customers. We believe we are one of the only companies in the world that can provide customers our degree of choice. Our unique proposition involves delivering multi-tenant cloud, private cloud, and on-premise solutions across any cloud provider. This gives our customers the technology option that aligns with their preferences and requirements. Another big advantage that choice offers to our customers revolves around preserving their technology investments.
I would just say yes.
You've covered it we had some customers who don't want to move we have some customers who want to move into the cloud for various reasons and we have on prem new customers as well as in the cloud customers. So yes.
Speaker 2: Yes, yes, sir. And when it comes to the cloud, Stephanie, we have.
Yes, Sir.
And when it comes to cloud Stephanie we have two flavors of that we have the private cloud. So a lot of the larger companies prefer private cloud and we have a multi tenant cloud offering as well.
Speaker 5: two two flavors of that we have the private cloud so a lot of the larger
Speaker 5: companies for private cloud, and we have a multi-tenant cloud offering as well.
Speaker 5: So again, that also varies in terms of cloud. And which cloud
So again that also varies in terms of cloud and which cloud.
Speaker 5: Cloud provider it sits on top of so the customers also want flexibility. Some have a preference of one cloud.
Vincent Mifsud: We can migrate our existing customers' techs back from on-premise to the cloud, eliminating the need for extensive retraining of their teams. This is really important during times of inflation, where businesses are carefully reviewing costs and strive to minimize disruption. Choice isn't a buzzword for us. It's a real tangible advantage, which is key to contributing to our success, enhancing our revenue growth, and positioning us uniquely in our markets. Another driver contributing to revenue growth relates to our demand generation and go-to-market teams.
Cloud provider it sits on top of so the customers also want flexibility some have a preference.
One cloud provider over another.
Okay.
Speaker 2: What what what vintage is detailing there is we try and set up so you can move from platform providers, you know who they are, there's Microsoft, there's Amazon and Google. We set up so if someone has a preference of one of those platforms, our software generally can run on any of them. And we spend extra time to make sure we can move and not get captured by any one platform.
As is detailed and errors, we try and set up so you can move from.
The platform providers, you know who they are there's Microsoft there's.
Amazon and Google we set up so if someone has a preference of one of those platforms are software generally can run on any of them and we spend extra time to make sure. We can move and not get let's say captured by any one platform.
Vincent Mifsud: We have strategically invested in enhancing our digital demand generation capabilities, and improving the proficiency of our sales teams, especially around the ability of selling choice. Historically, we weren't widely recognized as a fast provider by the market, which required concerted effort to raise awareness, especially around our SaaS offerings. And these investments are now paying dividends, contributing to the 13.8% quarter-record or increase in recurring revenue, which is mostly driven by SaaS, total recurring revenue now increased to 72.3 million in Q3.
Okay, Perfect and then just looking at the margins I know last quarter. Our professional services margins were impacted by a large public safety program that required. Some third party contractors is that third party work now complete how should we kind of think about those margins going forward.
Speaker 6: Okay, perfect. And then just to think of the margins, I know last quarter, professional services margins were impacted by a large public safety program that records and third party contractors. Is that third party work now complete? How should we kind of think about those PS margins going forward?
Yeah, it's not complete same this quarter as last quarter, we're hoping to complete it in a few quarters, but theres been no change to that that's still a little bit of a drag on our results.
Speaker 2: It's not complete. Same misquarters last quarter. We're hoping to complete it in a few quarters, but there's been no change to that. That's still a little bit of a drag on our results.
Okay. Thank you I'll pass the line.
Thank you as a reminder, ladies and gentlemen, please press star one if you have any questions.
Vincent Mifsud: The third catalyst behind revenue growth stems from acquisitions. The broader macro-technology environment influenced by rising interest rates and decreased technology funding, followed by us expanding our acquisition team, is enhancing our capacity to complete acquisitions. Following the announcement of life size on August 1, we've now deployed 56 million dollars in capital, as Rob mentioned, which is our highest level since fiscal 2020. And we have plenty of runway to do more acquisitions with $250 million of cash and a debt free balance.
And your next question will be from Paul Treiber RBC capital markets. Please go ahead.
Speaker 7: Oh, thanks so much for being here. Just in regards to life size, this has set expectations, because there's a court documents out there that give details on the revenue run rate. Now, how should we think about the amount of revenue that you expect to retain from that acquisition going forward? Like how much is that sort of, do you see a sustainable revenue to get into your five year payback?
Oh, thanks, so much and good morning, just in regards to Lifesize just to set expectations.
No because there's court documents out there that that you know give give details on their revenue run rate.
Should we think about the amount of revenue that you expect to retain from that acquisition going forward like how much is that sort of do you see as sustainable revenue to get into your five year payback period.
Speaker 2: So in the bankruptcy type situation.
So in.
Vincent Mifsud: I would like to highlight a few important contributors to how we improved operating income and cash flows which led to the expansion of EBITDA to 30.1% of sales reaching 33.3 million and Q3 and boosting operating cash flows to 39 million. These results are especially positive when considering the inflationary environment in which we operate in and the turnaround we required to convert the historical operating losses of our Q2-QMEW acquisition. Born out of the last several years of engineering, we developed a new important technology asset called the Enchhouse Source Library.
In the bankruptcy type situation.
Speaker 2: That's difficult to say, so that's why we did the now Seney revenue. We want to get back to the customers and show them it's different now that we're going to give them more service, more contact and give them choice where they don't have to move into a SaaS model they don't want to.
Difficult to say so that's why we didn't announce any revenue we wanted to get back to the customers and show them. It's different now that we're going to give a lot more service more contact and give them choice, where they don't have to move into a SaaS model. If they don't want to so we don't have a good number on that yet so that's why we.
Speaker 2: So we don't have a good number on that yet.
Speaker 2: So that's why we haven't provided anything and we need probably this last quarter to see where we're at all fair, it's out. Are the customers gonna trust us to do what we say? We've done it a lot. It's not our first rodeo as they say, but some customers may have started looking before the bankruptcy and enduring it unsure of what's gonna happen. So we don't have a firm number on that. We could guess it, but we don't guess it. So we're not gonna do it.
We haven't provided anything and we probably this last quarter to see where that all ferrets out of that are the customers going to trust us to do what we say we've done it a lot it's not our first rodeo as they say, but you know some customers may have started looking before the bankruptcy and enduring it unsure of what's going to happen. So.
Vincent Mifsud: The Enchhouse Source Library is a collection of cloud technology components that were developed by Enchhouse Engineers and they are designed for sharing and deploying across multiple products which allows us to drive innovation at an accelerated rate. With this best-in-class library of components, our engineering teams can expedite product development while at the same time manage cost and profitability delivering both product innovation and engineering efficiency. Our commitment to operational profitability requires significant investments in internal systems and move we made that improved our operations and our ability to integrate acquisitions.
We don't have a firm number on that we could guess at it but we don't get sick. So we're not going to do it.
Speaker 7: That's fair. I mean, maybe looking back at past acquisition.
That's fair I mean, maybe looking back at past acquisitions is there like a rule of thumb that you'd typically see like if a business is doing you know whenever a certain amount of revenue to drop by 20%, 30% in order to get to a sustainable.
Speaker 7: Is there like a rule of thumb that you typically see like if a business is doing you know whatever a certain amount of revenue to the drop by 20% 30% in order to get to a sustainable level of profitability.
Level of profitability.
Speaker 2: It depends how they were running and what they were doing, but you do bring up a good point. To give profitable, sometimes we have to eliminate unprofitable revenue. A lot of times,
It depends how they were running on what they were doing but you do bring up a good point to get profitable, sometimes we have to eliminate unprofitable revenue a lot of companies to a piece of their shareholders take on unprofitable revenue, believing that revenue growth is the key factor is.
Speaker 2: to appease their shareholders, take on unprofitable revenue.
Speaker 2: believing that revenue growth is the key factor. It's certainly an important factor, but we want profitable revenue growth.
Certainly an important factor, but we want profitable revenue growth.
Vincent Mifsud: These internal system investments unified our operations across all of Enchhouse divisions and departments including customer experience, sales automation, marketing automation, human resource and recently AI technology to improve demand gen. These investments in internal systems have proven their value by facilitating the speed and success back position integrations. Both QMEW and Navita acquisitions which we completed in Q2 were integrated quickly and as a result both businesses were profitable in Q3. Both the Enchhouse Source Library and our holistic investments in internal systems have enabled us to achieve profitability and improve cash flows even in times of high rates of inflation.
Speaker 2: So certainly in many cases it does decline, but it depends on the particular situation. This is a little unusual because it came to a bankruptcy, which is different than most all of the-
So certainly in many cases, it does decline, but it depends on the particular situation. This is a little unusual because it came to a bankruptcy which is different.
Then most all of our other acquisitions.
Speaker 7: And just lastly, just on that, the business and the comments are on choice.
And just lastly, just on the business and it.
The comments around choice.
Speaker 7: Can you provide a color on renewal rates and upgrade rates to the cloud and how you've seen that track over the last several, and on quarters or years?
Can you provide it.
Any color on renewal rates and upgrade rates to the cloud and how you've seen that track over last several quarters or years.
It's a good question, but a tough one to answer because sometimes the renewal rate is moving to the cloud and so maintenance has not reduced but it goes to the cloud.
Speaker 2: It's a good question, but a tough one to answer. Because sometimes the renewal rate is moving to the cloud and so maintenance is not reduced, but it goes to the cloud. And we have a variety of countries doing it differently. So that's a hard one.
And we have a variety of countries doing it differently.
Vincent Mifsud: Just one final point I would like to make about artificial intelligence. Enchhouse has been a provider of AI technologies for quite some time. We kick-started our AI journey back in 2019 with the acquisition of Etica. This acquisition brought skilled engineering teams well versed in natural language processing and AI technologies. And let me highlight an example of one of our AI products with a relatable use case. Most of us have experienced calling into a contact center and prior to the call you often hear a message this call may be recorded for quality assurance purposes.
That's a hard one to really project any numbers on what I would say, especially like we used to have a bolt maintenance renewable both 90% to 92%. It is drop but some of that goes into the cloud now which is a different product. So I really can't answer that very well.
Speaker 2: to really, you know, project any numbers on. But I would say, and especially, we used to have about maintenance, renewable, about 90 to 92%. It has dropped, but some of that goes into the cloud now, which is a different product.
Speaker 2: So I really can't answer that very well right now.
Right now.
Speaker 7: Or maybe another way of asking some question is this, what's the feedback from your customers on starting this new strategy of offering choice? Have you had...
Well, maybe another way of asking the same question is this what's the feedback from your customers.
And you know starting this.
New strategy of offering choice.
Have you had customers that are E. R. R.
Speaker 7: Or you group customers and characterize them as being uniformly positive or there's still some that for whatever reason just want to switch to other vendors.
Our group customers and characterize them as being permanently positive or are there still some that for whatever reason just wanted to switch to other vendors.
Vincent Mifsud: What happens then is contact center supervisors need to spend hours listening into these recordings to assess agent performance. What our AI product does using our Enchhouse transcription engine is convert these voice recordings into written text. Next, we then ingest the text into our AI engine, which automatically scores and evaluates the agent's performance. This eliminates the need for a supervisor to spend hours listening into these calls and results in huge cost savings and improvements in agent performance by providing an unbiased automated evaluation and recommendations. This is just one example of our AI capabilities here at Enghouse and we continue to invest in this area.
Well the answer comes down to I think everyone likes choice in their life I think our customers like choice. It really started with video initially because they were we've had several acquisitions, we've done where the companies were trying to force their customers to SaaS model probably.
Speaker 2: So the answer comes down to, I think everyone likes choice in their life. I think our customers like...
Speaker 2: It really started with video initially, because we've had several acquisitions we've done where the companies were trying to force their customers to a SaaS model, probably because analysts like it better and they'll say good things because it's recurring even though it doesn't make as much money as on-prem.
Cause analysts like it better and you know, we'll say good things because it's recurring even though it doesn't make as much money as odd prep.
Speaker 2: We give the choice. Some of them don't want to do that. So again, I think they appreciate the choice. I don't see how they can.
We give the choice some of them don't want to do that so again I think they appreciate the choice I don't see how they can.
Speaker 2: be bad about which spend a little bit more on R&D to do that, but so it'll be a maybe bench you can add a book. I can just elaborate. I think it's in every customer call that I have, it's a positive thing offering choice.
B bad about we spend a little bit more in R&D to do that but so be it maybe Vince you can add back and just elaborate I think it's in every customer call that I have it as a positive thing offering choice. There is no customer that sees that and negative in any way shape or form.
Stephen Sadler: Let me turn the call over to Mr. Steve Sadler. Thanks Vince. With respect to acquisitions, the two acquisitions that we completed early in the second quarter are performing better than expected and getting close to our historic EBITDA margins.
Speaker 5: There's no customer that sees that in negative in any way, shape or form. Everybody has preferences, especially around.
Everybody has preferences, especially around <unk>.
Stephen Sadler: Further improvement is anticipated in our final Q4 of Fiscal 2023.
Speaker 5: Cloud providers, and we have that choice as well. It adds operational complexity. It adds engineering complexity for sure for us to do it, but it's very well received by customers.
Cloud providers, and we have that choice as well.
It adds operational complexity it adds engineering complexity for sure for us to do it but.
Stephen Sadler: Subsequently, to the end of our Fiscal Q3 quarter, we've successfully completed the acquisition of life size for approximately 21 million US by the US Bankruptcy Court. Life size is an on-prem and cloud company which fits our current video and contact center operations as part of our interactive management group. Life size also provides workforce optimization and management as an addition to our contact center solutions. The combination of life size with our businesses anticipated to be mostly integrated with our operations by the end of our fiscal year. We expect at least a five-year payback almost starting almost immediately from this asset acquisition. No financial results of life size were included in our Q3 results.
Very well received by customers.
You know the one thing that you know.
That is probably obvious, but we should mention having choice of platforms does improve our cost of revenue. It helps the customer because they maybe want one platform or another but also we can get better rates from the platform providers by saying you know what just booth, if you can't move and get on a platform using all there.
Speaker 2: that is probably obvious, but we should mention, having choice of platforms does improve our cost of revenue. It helps the customer because they maybe want one platform or another, but also we can get better rates from the platform providers by saying, you know, we'll just boot.
Speaker 2: If you can't move and get on a platform using all their facilities, they know you can't move to your cost go up every year. With us, we're a little tighter than that, and that's why we think choice also benefits us as well as the customer. So there's derived your policy to run your own?? viendo l bartender carbone? your volunteers bleed.
Our facilities. They know you can't move so your costs go up every year with US we are a little tighter than that and that's why we think choice also benefits us as well as the customer.
Yeah.
Okay. Thanks for taking the questions.
Thank you and at this time Mr. Sadler, we have no further questions registered please proceed.
Speaker 1: And at this time, Mr. Sadler, we have no further questions registered.
Operator: I would now like to open the call for questions. Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touch on phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, please press star followed by two. And if you're using a speaker phone, we do ask that you please list the hands up before pressing any keys. Please go ahead and press star one now if you have any questions.
Speaker 2: Okay, thank you everyone for attending the call and your continued support. Our objective remains to have profitable growth and make sure we service our customers with the highest regard for them and their quality of our solutions. We are looking forward to talking to you again upon completion of our 2023 fiscal year.
Okay. Thank you everyone for attending the call and your continued support.
Our objective remains to have profitable growth and make sure we service our customers with the highest regard for them and their quality of our of our solutions. We are looking forward to talking to you again upon completion of our 2023 fiscal year.
Thank you Sir.
Speaker 1: Ladies and gentlemen, this is indeed concludes your conference call for today. Once again, thank you for attending. And at this time, we ask that you please, this can...
Ladies and gentlemen, this does indeed conclude your conference call for today 11 again, thank you for attending and at this time, we ask that you. Please disconnect your lines have a good weekend.
Daniel Chan: And your first question will be if I'm Daniel Chan at TD Cowan. Please go ahead. Yeah, good morning, guys. Thanks for all the color on the SaaS progress. Sounds like your organic efforts are starting to pay dividends. You also highlighted in the MVNA that the SaaS growth was largely joined by a contact center solutions growth. Color on how much of the SaaS growth was quarter came from acquisitions, which is one of the factors you highlighted versus progress on that organic on your organic fast offerings.
[music].
Daniel Chan: Yeah, we really don't, it's hard to break out because we integrate things in. So how do you do it when you're, you know, you bring products in and grow from there? Certainly some of our acquisitions were SaaS oriented because what we're finding is SaaS companies are having difficulty making money. We make money. They do not. So we buy them and have to fix them to make them work. So we are building a lot of our SaaS buy acquisition because it's the most logical way. People who try and do it internally a lot in our markets lose money to do it. And unless they get more money, they end up like life size, which is basically in a troubled situation.
Stephen Sadler: So most of it does come from acquisitions, but yes, we're also building our own cloud SaaS model as well, but the majority is from the acquisition. Questions. Thanks for that, Steve. And then you've brought up lifestyles, and yes, it seems to have some challenges before being acquired by you. Can you provide some insight on what some of those challenges were and what your plans are for this asset? Thank you. You know, there's a lot of different things that go wrong, but I would think from lifestyles point of view, they did not spend enough time with their customers and listen to what they need.
Stephen Sadler: I believe they tried to force them into the cloud SaaS model. A lot of customers don't want SaaS. That's why as been said, we are flexible and give choice and spend a little more on R&D doing so, but we keep both going. So I think those are probably the major items. We want to spend more time with the customers to see what they want. And we want to give them the choice. They don't have to be forced over to a SaaS or cloud model if they want to keep what they've got. Thanks, Steve.
Unknown Executive: I'll pass the line.
Unknown Executive: Thank you.
Stephanie Price: Next question will be from Stephanie Price at CIBC. Please go ahead.
Stephanie Price: Hey, good morning. Steve, I just want to follow up on your last comment there around the concept of choice in the Interactive Division. So are you seeing the conversion of existing customers into private cloud or public cloud SaaS offerings? Are you seeing new customers that are looking at on-premise? Just trying to understand exactly what you're seeing there as you roll out the concept of choice. You had such a complex question. I would probably just say yes.
Stephanie Price: You covered it. We have some customers who don't want to move. We have some customers who want to move into the cloud for various reasons. And we have on-prem new customers as well as in the cloud customers. So yes, it is the answer. And when it comes to the cloud, Stephanie, we have two flavors of that. We have the private cloud. So a lot of the larger companies for private cloud. And we have a multi-tenant cloud offering as well. So again, that also varies in terms of cloud. And which cloud provider it sits on top of. So the customers also want flexibility, some have a preference of one cloud provider over another.
Stephen Sadler: Okay. What vintage is detailing there is we try and set up so you can move from the platform providers, you know, who they are. There's Microsoft, there's Amazon and Google. We set up, Phil, if someone has a preference of one of those platforms, our software generally can run on any of them. And we spend extra time to make sure we can move and not get, let's say, captured by any one platform.
Unknown Executive: Okay, perfect. And then just looking at emergence, I know last quarter professional services margins were impacted by a large public safety program that records and third-party contractors. Is that third-party work now complete? How should we kind of think about those P.S, margins going forward? It's not complete. Same, this quarter is last quarter. We're hoping to complete it in a few quarters. But there's been no change to that. That's still a little bit of a drag on our results.
Unknown Executive: Thank you.
Unknown Executive: I'll pass the line. Thank you.
Operator: As a reminder, ladies and gentlemen, please press star one if you have any questions.
Paul Treiber: And your next question will be from Paul Treiber at RBC Capital Markets. Please go ahead. Oh, thanks so much.
Stephen Sadler: Good morning. Just in regards to life size, this is set expectations, you know, because there's a court documents out there that, you know, give details on the revenue run rate. Now, how should we think about the amount of revenue that you expect to retain from that acquisition going forward? Like how much is that sort of, do you see a sustainable revenue to get into your, you know, five year payback period? So in the bankruptcy type situation, that's difficult to say.
Stephen Sadler: So that's why we didn't announce any revenue. We want to get back to the customers and show them it's different now that we're going to give them more service, more contact and give them choice where they don't have to move into a SaaS model if they don't want to. So we don't have a good number on that yet. So that's why we, we haven't provided anything. And we probably this last quarter to see we're a lot off there.
Stephen Sadler: It's out of the, are the customers going to trust us to do what we say? We've done it a lot. It's not our first rodeo as they say. But, you know, some customers may have started looking before the bankruptcy and enduring it unsure of what's going to happen. So we don't have a firm number on that. We could guess it, but we don't guess things. So we're not going to do it.
Stephen Sadler: That's fair. I mean, maybe looking back at past acquisitions, is there like a rule of thumb that you typically see? Like if a business is doing, you know, whatever a certain amount of revenue to the drop by 20%, 30% in order to get to a sustainable level of profitability? It depends how they were running and what they were doing, but you do bring up a good point to give profitable. Sometimes we have to eliminate unprofitable revenue.
Stephen Sadler: A lot of companies to appease their shareholders take on unprofitable revenue, believing that revenue growth is the key factor. It's certainly an important factor, but we want profitable revenue growth. So certainly, in many cases, it does decline, but it depends on the particular situation.
Stephen Sadler: This is a little unusual because it came through a bankruptcy, which is different than most all over other acquisitions.
Stephen Sadler: And just lastly, just on the business and the comments are on choice. Can you provide a color on renewal rates and upgrade rates to the cloud and how you've seen that track over the last several of the quarters or years? It's a good question, but a tough one to answer because sometimes the renewal rate is moving to the cloud and so maintenance is not reduced, but it goes to the cloud. And we have a variety of countries doing it differently.
Stephen Sadler: So that's a hard one to really, you know, project any numbers on. But I would say, and especially, we used to have about maintenance, renewable, about 90 to 92%. It has dropped, but some of that goes into the cloud now, which is a different product.
Vincent Mifsud: So I really can't answer that very well right now, or maybe another way of asking this in question is this, what's the feedback from your customers on starting this new strategy of offering choice? Have you had customers that are, you group customers and characterize them as being permanently positive, or are there still some that for whatever reason just want to switch to other vendors? So the answer comes down to, I think everyone likes choice in their life.
Vincent Mifsud: I think our customers like choice. It really started with video initially because we've had several acquisitions we've done where the companies were trying to force their customers to assess model, probably because analysts like it better and they'll say good things because it's recurring even though it make as much money as on prem. We give the choice. Some of them don't want to do that. So again, I think they appreciate the choice.
Vincent Mifsud: I don't see how they can be bad about. We spend a little bit more and R&D to do that, but it may be Vince, you can add a bit. I can just elaborate. I think it's in every customer call that I have, it's a positive thing offering choice. There's no customer that sees that in negative in any way, shape or form. Everybody has preferences, especially around cloud providers, and we have that choice as well.
Vincent Mifsud: It adds operational complexity. It adds engineering complexity for sure for us to do it, but it's very well received by customers. You know, the one thing that is probably obvious, but we should mention, having choice of platforms does improve our cost of revenue. It helps the customer because they maybe want one platform for another, but also we can get better rates from the platform providers by saying, you know, we'll just move.
Vincent Mifsud: If you can't move and get on a platform using all their facilities, they know you can't move to your cost go up every year. With us, we're a little tighter than that, and that's why we think choice also benefits us as well as the customer.
Unknown Executive: Okay, thanks for taking the questions. Thank you, and at this time, Mr. Sadler, we have no further questions.
Stephen Sadler: Reversed third, please proceed. Okay, thank you, everyone, for attending the call, and your continued support. Our objective remains to have profitable growth and make sure we service our customers with the highest regard for them and their quality of our solutions. We're looking forward to talking to you again upon completion of our 2023 fiscal year. Thank you, sir.
Operator: Ladies and gentlemen, this is indeed concludes your conference call for today. Once again, thank you for attending. Then at this time, we have to please disconnect your lines.
Operator: Have a good weekend.