Q1 2024 IBEX Ltd Earnings Call
[music].
Okay.
Welcome to the IDEXX first quarter 'twenty 'twenty four earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question at that time. Please press star one on your telephone.
There is an accompanying earnings deck presentation available on the investor.
The Investor Relations website at Investor Dot IBEX Darko I will now turn this conference over to Mr. Michael Dawah, Deputy CFO and Investor Relations of IDEXX. Please go ahead.
Good afternoon, and thank you for joining us today before we begin I want to remind you that matters discussed on today's call may include forward looking statements related to our operating performance financial goals and business outlook, which are based on management's current beliefs and assumptions.
Note that these forward looking statements reflect our opinion as of the date of this call and we undertake no obligation to revise this information as a result of new developments, which may occur.
Forward looking statements are subject to various risks uncertainties and other factors that could cause our actual results to differ materially from those expected and described today for a more detailed description of our risk factors. Please review our annual report on Form 10-K filed with the U S Securities and Exchange Commission on Sept.
Timber 13th 2023.
As a reminder, as of July one 2023, we became a domestic filer and are reporting on a U S GAAP basis, rather than from the previous ifr at standard with that I will now turn the call over to Bob Duggan CEO of buybacks.
Thank you Mike Good afternoon, everyone and thank you all for joining us today as we share our first quarter fiscal 2024 results.
I'm extremely proud of how well our business continues to perform.
In the quarter, we delivered on our key objectives, while achieving the high end of our revenue guidance and coming in line with our EBITDA margin guidance.
More importantly.
<unk> continues to consistently execute.
Capitalize on market opportunities and strengthen our position.
Q1, FY 'twenty four.
Seventh consecutive quarter of year.
Year over year adjusted EBITDA growth.
And our fifth straight quarter of year over year, adjusted EBITDA margin improvement.
Driven by continued growth of our high margin services.
And geographies.
Revenues for the quarter were $124 6 million.
As we continue to migrate portions of our onshore business to higher margin offshore and nearshore regions.
Adjusted EBITDA increased 6% year on year to $13 $7 million.
90 basis points to 11%.
While adjusted net income improved to seven 6 million from $6 8 million in the court.
And adjusted EPS increased to <unk> 40.
From 36 cents prior year.
We generated $6 6 million and free cash flow.
More than tripled from the prior year quarter.
Finishing the quarter with an outstanding balance sheet debt is debt free.
With a net cash position of $61 1 billion.
Our conversion rate of adjusted EBITDA to free cash flow was nearly 50%.
We believe that our consistent trajectory of margin improvement and maintaining an outstanding balance sheet.
And our ability to generate strong free cash flow puts us in an enviable.
<unk> position.
From an overall client and sales standpoint.
Our pipeline is resuming its pace of wins.
Deal flow.
Our growth has been fueled historically by our powerful new logo engine.
In fiscal 2024 is off to a fast start.
We began the first quarter with four impressive new client wins across key verticals, including healthcare and financial services.
And that carried into Q2.
I am excited to report that we have won two blue chip Fortune 100 brands.
One in the automotive transportation vertical.
One with a very large retail brands.
In highly competitive deals.
Both are launching in late Q2.
Our competitive advantage continues to be centered around our <unk> two point or capabilities.
And now more recently in our ability to bring advanced.
<unk> based technology to our solution.
Of these two wins.
One is in our near shore Jamaica region.
Other in our provincial Philippines, geography, demonstrating our ability to win all the diverse markets we serve.
We expect these two clients to scale in the second half of FY 'twenty four.
Additionally, <unk> continues to expand its higher margin integrated Omnichannel and digital first support which is now 77% of our overall business up from 71% a year ago.
With these new wins and our strong pipeline, we remain confident in our brand and our ability to win transformative new business throughout the fiscal year.
Operationally, we continued to execute well for our clients across all geographies and consistently outperform our competition.
Our ability to not only land new clients, but to expand with them as a strong proof point of our ability to operationally deliver.
As the data point today for our top 25 clients, we operate on average in nearly two and a half distinct geographies for them.
We typically start with a client in one geography.
And then we grow with them in new regions based on our strong performance.
We view this as a proxy for being a trusted partner to our clients.
And our ability to deliver exceptional customer experiences in all our operating regions.
Now last quarter I discussed our three axis strategy for deploying AI for our clients to improve performance and customer experience.
The first axis is focused on the frontline agent, where we have been deploying generative AI to make the agents more productive as part of our wave ex toolset.
Second is where we use AI in our deep analytics and business intelligence offering, enabling us to provide better more actionable insights into the customer.
And third is where we deploy generative AI to automate contacts with solutions, such as voice spots and chat box.
This third prong is the further evolution of our digital transformation, where we have been working with their clients moving from voice calls to digital contacts such as chat and SMS.
We are now building solutions, where the digital first experience can start with digital automation.
Which we see as an even higher margin service.
This is why we are bullish on generative AI.
And we see this as more opportunity than risk.
I want to highlight that we are using our speed and our tech strength to quickly move into these opportunities.
We now have over 15 opportunities in our pipeline with both existing and new clients.
And these solutions are helping us win new clients.
As an example.
One of the key Differentiators in our recent automotive transportation quiet when I referenced earlier was our unique ability to demonstrate and deliver an AI powered smart <unk> solution to digitally transform their customer experience.
We leveraged our new Genesis platform and.
And generative AI to build the solution that also includes conversational voice and chat box, creating a seamless CX solution from an AI agent to a live agent.
We see this as the next generation of integrated Omnichannel.
And the next wave of way backs.
We believe solutions like this will continue the growth of our higher margin digital first services.
From a capital allocation standpoint, we are successfully executing on our share buyback program given the current valuation and the confidence in the trajectory of buybacks.
Since we announced the program we have acquired more than 400000 shares back.
We see this as a very attractive use of our growing capital.
Additionally, we are actively exploring new markets for client expansion.
Our strong balance sheet puts us in a great position to expand our geographical footprint.
And analyze market by market.
They are to organically expand or to look for a small tuck in acquisition.
And finally, our debt free environment and our overall structure is enabling us to generate strong free cash flow, enabling us to put our capital to constructive views and to make targeted investments for growth.
In closing my.
My team and I are focused on continued strengthening of the business and driving value for our employees.
<unk> and our shareholders.
I will now turn the call over to Taylor to go through our financial results and guidance Taylor.
Thank you Bob and good afternoon, everyone. Thank you for joining the call today.
My discussion of our first quarter fiscal year 2024 financial result references to revenue net income and net cash generated from operations are on a U S GAAP basis adjusted.
Adjusted net income adjusted earnings per share adjusted EBITDA and free cash flow are on a non-GAAP basis.
Reconciliations of our U S. GAAP to non-GAAP measures are included in the tables attached to our earnings press release.
We had a strong quarter, representing a solid start to our fiscal year in terms of profitability and free cash flow as our clients continued migrating to lower cost offshore regions and we absorbed the impact of a changing business environment for several of our Fintech clients revenue declined two 5% to $124 6 million.
Compared to a $127 8 million in the prior year quarter.
Revenue mix continued to trend towards higher margin services and geographies digital and Omnichannel delivery now represents 77% of our total revenue versus 71% in the first quarter a year ago, while our offshore and nearshore revenues now comprise 75% of total revenue versus 70%.
In the prior year quarter.
Looking at revenue in total the shift in Geo mix and a decline in the Fintech vertical were largely offset by growth in our strategic health Tech and retail verticals.
Net income increased to $7 4 million versus $6 5 million in prior year quarter. The increase in net income was primarily driven by stronger operating results and higher interest income versus interest expense in the prior year quarter.
Partially offset by higher tax expense.
EPS increased to 39% compared to 35 cents in the prior year quarter.
We expect our annual effective tax rate to be approximately 20% for the year on a normalized basis.
On a non-GAAP basis, adjusted net income increased to $7 6 million compared to $6 8 million in the prior year quarter.
non-GAAP fully diluted adjusted earnings per share increased to 40% compared to 36 cents in the prior year quarter.
Adjusted EBITDA increased to $13 7 million or 11% of revenue compared to $12 9 million or 10, 1% of revenue for the same period last year.
The increase in adjusted EBITDA margin was primarily driven by stronger operating results from an increased mix of higher margin offshore nearshore delivery higher capacity utilization and an increased mix of digital and omnichannel delivery.
Partially offsetting these operational benefits were higher SG&A expenses for investments in sales marketing infrastructure and increased compliance expenses to support our growing business.
For the first quarter of fiscal year 2020 for our top five and top 10 client concentration has remained largely flat at 40, and 59% respectively of overall revenue our client base remains stable as just one new client entered our top 10 client list we.
Worked hard to diversify our client base over the last several years.
Proud of the progress we have made.
Switching to our verticals retail and e-commerce increased to 23, 4% of first quarter revenue versus 21, 3% in the prior year quarter.
<unk> increased to 11, 9% of first quarter revenue versus 10, 2% in the prior year quarter and travel transportation and logistics increased to 13, 5% of first quarter revenue versus 13% in the prior year quarter.
Conversely, our exposure to telecommunications vertical decreased to 16, 8% of quarterly revenue versus 17, 3% in the prior year quarter.
Additionally, fintech decreased to 14, 8% of revenue for the quarter versus 19, 9% in the prior year quarter impacted by the changing landscape for crypto and new economy investment platform clients.
Net cash generated from operations increased to $8 7 million for the quarter compared to $5 6 million in the prior year quarter, primarily due to stronger operating results.
Our Dsos were 67 days up four days sequentially. Several larger client payments were received shortly after the quarter ended and negatively impacted our dsos at the end of the first quarter. Despite this we continue to be below industry average.
Capital expenditures were $2 1 million or one 6% of revenue in the first quarter of fiscal year 2024 versus $3 6 million or two 8% of revenue in the prior year quarter, and we continued to utilize our available capacity following the completed during the pandemic.
We did make in Capex for the quarter was used predominantly for seat utilization of previously built out capacity.
Free cash flow increased to $6 6 million in the current quarter compared to $2 1 million in the prior year quarter as we converted nearly half of adjusted EBITDA to free cash flow. This is the highest level of free cash flow <unk> generated in the first quarter of fiscal year.
We ended the first quarter was $62 million in cash up from $57 4 million as of June 2023, mostly driven by strong cash conversion of operating profit during the quarter.
Net cash improved to $61 1 million from $56 4 million as of June 2023.
Borrowing availability under our revolving credit facilities increased to $72 6 million at September 2023, compared to $71 9 million as of June 2022.
During the quarter on September 18th we announced a share repurchase program authorizing us to repurchase up to $30 million worth of shares.
In the first quarter, we purchased we repurchased 134000 shares for $2 million for fiscal year to date through November eight we have repurchased over 400000 shares.
Looking forward to the remainder of 2024, we're confident in the resiliency of our business supported by the client diversification and strategic vertical expansions, we built over the preceding years as a result of our strong start to the year, we remain confident in our execution, which is reinforced by our reiteration of prior guidance and our share repurchase program we.
Our recent client wins and strength of our pipeline, we will return us to growth later in the year and position us well as we head into fiscal year 2025.
I joined <unk> as I was excited about the diversity of clients in vertical markets. We serve a strong balance sheet and positive cash flow strength of our management team and employees and our ability to win market share to grow our business.
As I have now been here for almost three months I can say that have not been disappointed in any of the assumptions I've made about IDEXX prior to joining the team.
Certainly excited about our future and where we're headed.
With that Bob and I will now take questions. Operator, please open the line.
Okay.
Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star one one.
One moment for your first question.
Our first question comes from the line of Tobey Sommer of choice. Your line is open.
Okay.
I was wondering if you could describe what you're hearing from customers in your conversations with them about.
<unk> <unk>.
Calendar 2020 for growth expectations in their businesses.
<unk>.
The implications for IBEX next year.
Yes, thanks for that question Tobey.
I appreciate you joining the call.
Our clients give us.
Good visibility to their business sooner forecasts six months out what kind of gear.
Directional.
Viewers past that.
If you look at.
The hull of them, they're still trying to figure that out and you'll have some that are winning and theyre pretty bullish on that and others that are.
Kind of.
Let's say a little bit more conservative you put it all together.
Together, it's kind of it looks like our top 25 clients that we've talked about to you were talked about earlier that.
Some up some down but for the most part they're holding in really strong and I think that's attributed to the very diversified business that we built not only from clients between the verticals and so somewhere some losers would you put it all together and I think we're holding pretty strong.
I appreciate that.
I was wondering maybe if you could describe the pace of deal flow, which in Europe.
First part of your prepared remarks, I think you described is improving.
And it may be.
Add to that a little bit of perspective on the contours of.
The pipeline of for new logos. Thanks, sure, Yes, and that's an important part as you know of our business.
And last quarter I kind of shared that the pace is picking up.
And we have some really large deals that are in play.
And.
Really delighted to announce that we were two for two on those very large deals and we won for other deals.
And Thats really the track record that my team and I have built over years.
The first two quarters of the calendar year.
Last two quarters of our fiscal year started slow and then they started getting delayed deals and I see that things are back to the pace that they work.
With very large blue chip deals and also what I think are some really new property kind of disruptor brands and so we're excited.
We're excited about where this business is picking up again and how that trajectory looks in the back not only in back half of the year.
But really into 'twenty five.
And then I just wanted to ask a question about capital deployment and I'll get back into queue.
Should we expect.
A similar pace of acquisitions or excuse me of share repurchase.
Given the announced value that you said you execute over six months.
And maybe if you could.
Give us the parameters and.
And thought process around how you are going to manage the balance sheet sort of over time once once that's.
Come and gone and been executed on.
How low would you let cash go you want do you want cash to remain relatively stable, even with the share repurchase. Thanks.
Tim why don't you.
Yeah, no absolutely so so.
We don't provide a forecast or guidance for our share repurchase, but what I can say is we certainly believe the valuations that our shares are trading right now.
Our compelling and as you saw.
Once we announced the share repurchase program, we purchased over 400000 shares for $6 $7 million and we have other.
Authorization up to $30 million that we have.
Over an additional $20 million.
Availability to continue to continue the repurchase program, but.
Fortunately if you look at our balance sheet as you indicated we have no debt we have a very nice cash balance we have positive cash flow and so we balance all our capital allocation strategy at this point, where we don't have any debt repay.
Considering a dividend so it's really our capital is going to be balanced between share repurchase.
Expanding capacity in targeted geographies and then we're also as Bob mentioned open too.
Targeted and opportunistic M&A opportunities if they come along so I would say that.
We are comfortable where at their balance sheet, obviously, where it is now but would also be comfortable deploying some of the capital on these items, assuming we get the proper returns. So were continue down that path, but feel we're in very good shape from a balance sheet perspective.
If I could sneak in a follow up there with respect to targeted acquisitions.
Could you describe in the broadest parameters.
Like what kind of thing would fit as it is it geographic is it an industry is at.
Customer relationships, what would you want to extract from an acquisition what exactly I think we'd be interested potentially in geographic expansion in geographies, where we arent currently located to get a beachhead and then we can grow organically from there I think also we have strategic verticals and.
If we saw an opportunity that was focused on one of our strategic verticals I think that would interest us as well.
Yes, Tobey thank you.
Yes, if I could just add.
<unk>.
For better part of my first.
78 years here, we were heads down operating this business.
And now that we've really transformed this business and we have this really.
Well structured balance sheet and business model. We've now really created a Corp. Dev Corp. Dev team that has a lot of pipeline.
We are evaluating that and so you know going back a year, we're kind of just starting that process now we have been careful about it but there's a lot of opportunities that we're having and the good news is I think we have a team that is pretty sharp and savvy and looking at the right things and then we will make.
If that comes across we'll make that decision.
I appreciate your responses. Thank you.
Operator are there any more questions.
Our next question comes from a lot of Dave Koning of Baird. Your line is open.
Yes, Hey, guys nice job and can you hear me.
Sure Ken Dave Yes.
Alright good.
Hum.
So I guess my first question.
Youre doing a nice job. This year is a little tougher growth wise, but would you be growing better maybe maybe how much headwind is the shift offshore.
And how much is it in a normal year like is this your 5%.
Headwind from the shift to offshore but in a normal year might only be a couple of percent like how much of the headwind to revenue is this I know that's good for margin, but just kind of talk to that.
Sure and I guess the way to.
To think about this Dave and I think we talked about.
In the numbers is the percentage of business that we now have in the near shore and offshore regions and that increase.
5% for our business and so.
And if you look at what's happened in the U S.
Where that is extensively coming from.
No.
Down downsize agree so.
You can you can see the correlation of the U S down to the.
Two the move into other regions and so.
I think thats the math that.
Thats there.
We are what one is I think we've gotten a lot of that trend.
Matt.
Transformation or the move you don't kind of behind us as we move.
Into the second half of this year and so.
Thank God.
The way I look at it is hopefully that will be key in us resuming.
Getting into resuming out what has been our.
Really strong growth track record of.
Better part of eight years, and so I think once those things kind of level.
Normalized.
That will be the driver for us and especially because that pipeline is picking up.
And Bob I'll, just add in terms of the migration. It certainly has contributed we've had very nice gross margin improvement.
Over the past year, it's gone from about 25% in the first quarter of 23% to 29% this quarter and the shift to offshore has certainly helped us improve that gross margin as well as operate improvements we've made in the U S.
Got it thanks for that and then maybe just as a follow up question.
<unk> had a lot of years, so you've grown very well right around 10% or so in a normal year like that how much of the growth is from existing and how much is from new and then in a year like this how does that change and then do you think youll get back to normal by by next year, maybe even late this year.
Yes, we're hoping that we can get the <unk>.
Mark it's a little bit tough right. So at all so.
Can we get to double digit in the back half of your Q4 into 25 I'm not quite sure. We're there yet but can we get into upper single digits.
<unk>.
That's what we're hopeful for.
Thanks, Keith progressing on the pipeline.
We feel we feel good about just how that trajectory adds up and if you look at.
Dave I kind of look and say and we've shared these numbers in past.
Our new logo revenue has ranged in the 30 to 50 million in your revenue over the last let's say.
Three or four years ish.
And so as we kind of move from a 400 million through a $500 million company.
And just kind of do that math $30 $40 $50 million off of $4 $500 million Youre also net ads in about 10%.
Growth.
But more importantly, as you know those clients do have historically done two five times a year or two so that usually you put those two things together and that.
It has given strong growth for us and we think we're in a good position to have our business structurally look like that down the road.
Got you that's helpful and great job on margins and cash flow too.
Yes, we're excited about what we've got here structurally as a company.
It's really we're proud of that.
Great to see thanks, guys.
Thank you. Thank you.
Thank you one moment please.
Again, ladies.
If you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star 111 moment for our next question.
Our next question comes from the line of Matthew Roswell RBC. Your line is open.
Congratulations on a nice quarter.
Three questions sorry about that all revolving around the large wins and I guess the three of them are first you mentioned that they were very very competitive. So can you talk about pricing and competition for those win for the large wins and then in general.
Second.
Second part of the question.
The analytics piece is that do you think that will become table stakes for winning new deals relatively soon and then the final question for Taylor.
You had mentioned the ramp towards the back half of the year, how should we think about sort of the seasonality of revenues are they large enough to kind of move the needle.
Great. So let me take that thank you and thanks for those questions and Jordan, Let me take your first two and then Taylor will bounce over to you if that makes sense, but.
So.
The deal set.
I talked about especially the large deals.
Very very competitive and again I would just sit and say think of them big multibillion dollar players the $10 billion multipliers toe to toe in.
Rose.
And so I like to call those on Broadway deals.
And.
What.
Both of them.
One common theme.
Proposal, one was the near shore deal with one of those.
In deal was.
The decision and your position around.
And your ability to deliver generative AI solutions.
In this one case as I highlighted a smart.
IPR that then has got box voice box.
And of the experience enabled.
Does.
That was key and it's <unk>.
Read it out right on that.
Versus the other folks there is no way, we would have won that and if I go back a year ago that we've never been in any bodies decision, making process. So it's front and center and the other deal.
<unk> that immediately the other deal was very similar but it's kind of like phase two for them and so what I love is in.
In that business.
Business, we're going to get some more price billion dollar players to more convenience and repeating them.
We have the <unk> two point or capabilities of the culture the analytics.
The branding all of that.
Thanks technologies, and now AI, and we're not taking a backseat and thats why well about what we've done some.
Therefore, the pricing.
As you know.
Front center, you have to be competitive.
We think that.
And again thank you.
It's experiences now.
<unk> Securities.
They are lower cost.
Human experiences, but it's.
Just an extension of the way I look at this it's just an extension of the transactions that we deal with human folks, but now we get paid and using technology to do that.
And you monetize them.
And we think that that is <unk>.
The visual I have is that is higher margin. So when you put all of that together.
That's why we are bullish on this and I know the market looks at AI.
AI is around <unk>.
As a risk.
That solution is clearly.
An.
Extension of what we do and that's why we're excited about that and Thats why pricing.
As competitive.
You are not winning on price.
We hold their own.
Your heart to.
Apologize for that long.
To answer that.
So we're excited about.
Analytics side, that's table Stakes.
Question is how good are.
Hello.
We are differentiating our surplus is.
Adi.
Analytics, where you can a knock you were still rely upon.
So you can stay with more cost effectively.
But it says surveying a low percent of defaults you can survey of 100% of the calls and then use those analytics those pay audio Neely.
<unk> never insights.
Rates and weakness.
The cable space.
Those efforts can build it as a strong competitive advantage and I think we're in a great position on that.
And favorable view on park.
Yes.
Part three related to the progression of the year in and how we see some of the new wins rolling out. So if we if we look at revenue from from Q1 to Q2, we are going to have a similar seasonal rentals. We did last year, maybe not quite as strong.
Thanks.
And she will be very similar to last year and so revenue from a Q2 perspective will be down slightly on a year over year basis.
With the win or wins that Bob mentioned.
Q1, and then we have to date so far in Q2, we're going to see.
Revenue ramping so thats Q.
Q3 will probably be an inflection point on a year over year basis in terms of revenue growth and then we see the.
Contributing nicely to Q4, and we will return to growth in Q4.
From a profitability standpoint profitability also.
Revenue so.
On a year over year basis, the profitability will be down slightly as revenue be down slightly in Q2, but yes.
In addition, with all these deals that we've won and the ramping.
We expense our training costs as they are incurred and we defer the trading revenue. So it has a negative drag on.
On margins initially so we will see some of that impact in Q2, but as these deals ramp and revenue grows and some of the training cost and behind us.
Nice progression in margins in Q3, and Q4 and.
We always see a nice trend between Q2 and Q3 anyway.
Just because of some of the seasonal.
The crawl walk between Q2, and Q3, and we're certainly going to see that again this year as well.
Okay. Thank you very much.
Thank you one moment please.
Our next question comes from the line of Ryan Potter of Citi. Your line is open.
Hey, Thanks for taking my question.
So I can see the two deals that you mentioned in <unk> and with some of it coming from your Gen AI capabilities, but could you give an update on where you stand with your planned investments in Rollouts.
And to jet AI in various capabilities around that.
What has.
On adoption been so far of generics are still in very early stages are most clients starting to ask for some <unk>.
<unk>.
Instead, our current services.
Taken on that.
Cadence question, how do you expect some kind of help you through the peak volume season into Q.
Sure.
Really good question.
Brian and I appreciate that so.
Jenny is it's early yet very very early.
So.
We have.
Pretty much over the last quarter and I believe I have this in my remarks that we had.
Now 15 opportunities sitting in that pipeline.
Some of those are embedded base clients others are covered like this new win that we had that.
They're asking us to deliver around that.
But theres not one.
Theres not one only solution Mike it's not like everything is voice sponsor everything's chat box as it relates to AI.
Our clients are looking at us.
Two.
Okay.
Sure.
Multiple facets around how to deploy AI to improve either take cost out or improve the experience and improve the number.
Interactions that you can do.
So.
We are early on those.
And there is different types and so as it relates to.
Canada.
The impact it's having here's what I do know Jenny has not really taken any volumes out of any of our clients.
Business.
But.
It has the potential to complement it has the potential to.
Boom.
The actual human interactions through very complex and take the lower cost of funds.
If we can do that and we can use technology.
And create a high margin business on that it creates I think a powerful business model for IDEXX.
So that's kind of how were.
We're thinking around this as it relates to <unk>.
Is any of this really <unk>.
<unk> and the ability to.
Two maybe not ramped so much during peak season.
My team and I have actually been out in front.
A few clients, where we have kind of building call deflection solutions for them.
Where they don't have too high.
Any folks and we do that now.
I think those will take hold probably for next year I think they've got a lot of interest on those for this this peak season.
And probably didn't have the time.
Get them in.
I believe because as we've turned the corner next year around youre going to see maybe some of those solutions being implemented and.
Some pretty good technology scale solutions that will be boardroom.
Got it that's helpful and I guess.
Ed.
Yes.
The capacity that you guys have kind of called out can you comment on how much of that.
Capacity is kind of left to sell into.
And are there certain geos, where you have more capacity than others.
And I guess in terms of Capex Capex has been relatively low as had been selling into seats already built but can you comment on.
Virtual additional build out you might need and how capex might trend going forward and then how you decide on.
Organic versus inorganic growth.
Let me take the first part and then maybe you can kind of.
Around the Capex, and we talk a little bit about the.
<unk> surround around the geographies and such.
And.
We and.
And I think you could see these in the growth rates of our regions that youll see but our offshore regions.
<unk>.
Been growing pretty aggressively so we've been putting a lot of capacity in those regions.
And then R.
Near shore regions have been growing not quite a SaaS paas.
So if I look at it right now.
We have plenty.
Capacity in the near shore.
That's why I'm excited about.
The one that we have large client in Jamaica, because that will take a big chunk out of that much.
Should have strong margin.
You have flow through to margins.
With the growth that we've been doing in the Philippines will probably continue to look at some new markets and new provincial place in a market like that.
And so.
I think we can do.
You get into some balanced capex going going forward I think we've been.
Very conservative Tamar Love your thoughts on you know on that.
I think youre spot on I think if theres, one geography that we're probably would lean into a little bit more than others, where utilization is right now it's probably the Philippines.
Look at our capital expenditures in the first quarter. They were just a little over $2 million, which is.
Around.
It's on the low side of our capital expenditures, we provide guidance of $15 million to $20 million for the year, which would imply that we would accelerate some of those capital expenditure investments in capacity expansion later in the year.
What I would expect that to happen.
Got it thanks again.
Yes.
Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star one.
Thank you.
I'm showing no questions at this time elektron the call back over to Bob <unk> CEO for any closing remarks, yes. Thanks.
Thanks, Rob. Thank you all for listening to our earnings call.
In closing I just have to say this we're really proud of what we've built here.
And I have full confidence in where this business is going and our ability to deliver in the future. So thank you all for listening and we will.
Look forward to next quarter.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.
Okay.
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