Q3 2024 Dye & Durham Ltd Earnings Call
Ina: Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dye & Durham 3rd Quarter Fiscal 2024 Earnings Call. I would now like to turn the call over to Mr. Hass Hirschi, VP Investor Relations of Dye & Durham. Mr. Hirschi, you may begin your presentation.
Good morning, My name is Gina and I will be a conference operator today at this time I would like to welcome everyone to the Italian Durham third quarter fiscal 2024 earnings call.
Speaker Change: I'd now like to turn the call over to Mr has Turkey.
Mr. <unk>: The Investor Relations. Mr. <unk>, you may begin your conference.
Speaker Change: Thank you operator, and good morning, welcome to the Gyn Derm conference call before we start we'd like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated.
Huss Hirji: Thank you, operator, and good morning. Welcome to the Dye & Durham conference call. Before we start, we'd like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated. Please note that the statements made during this call may include forward-looking statements and information and future-oriented financial information regarding Dye & Durham and its business, as well as disclosure regarding possible events, conditions, or results that are based on information currently available to management, which include management's expectation of future growth, results of operations, business performance, business prospects, and opportunities.
Speaker Change: Please note that the statements made during this call may include forward looking statements and information and future oriented financial information regarding dot in Durham, and its business and disclosure regarding possible events conditions or results that are based on information currently available to management, which include managements expectation of future growth.
Speaker Change: Results of operations business performance business prospects and opportunities.
Huss Hirji: Such statements are made as of this date hereof, and Dye & Durham is under no obligation to update or revise them to reflect events, disclosures, or circumstances, except as required by applicable securities law. Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks or uncertainties could cause results to differ materially from those discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements and information.
Speaker Change: Such statements are made as of this date hereof and dine dermis. He was no obligation.
Speaker Change: To update or revise them to reflect events disclosures circumstances, except as required by applicable securities laws.
Speaker Change: Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks or uncertainties could cause results to differ materially from the results discussed today given.
Speaker Change: Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward looking statements and information and future oriented financial information section of our public filings without limitation, our MD&A and our earnings press release issued today for additional information.
Speaker Change: Joining us on the call today are Matt proud and Stein Durham, Chief Executive Officer, and frankly, Lisa <unk> Chief Financial Officer.
Speaker Change: A question answer session will follow the formal remarks for our research analysts.
Huss Hirji: Please refer to the forward-looking statements and information and future-oriented financial information section of our public violence without limitation or MD&A and our earnings press release issued today for additional information. Joining us on the call today are Matt Proud, Dye & Durham Chief Executive Officer, and Frank DeLiso, Dye & Durham Chief Financial Officer. A question and answer session will follow the formal remarks for research analysts. I'll now turn over the call to Matt for his opening remarks. Thanks.
Speaker Change: Now turn over the call to not for opening remarks.
Matthew Proud: Thanks, Hans, and I appreciate the introduction. Over the last couple of years, Dye & Durham has transformed into one of the largest legal technology software companies in the world. As we continue to build a business scale, our customers remain at the core of every decision we make as a company. And this is evident given the stickiness of our customer base, who truly depend on our products daily. Our software is primarily targeted at solving the problems faced by small and medium-sized law firms.
Speaker Change: Thanks, Scott I appreciate the introduction.
Stein Durham: The last couple of years <unk> transformed into one of the largest legal technology software companies in the world.
Stein Durham: As we continue to build a business of scale our customers remain at the core of every decision we make as a company.
Stein Durham: And this is evident given the stickiness of our customer base, who truly depend on our products daily.
Speaker Change: Our software is primarily targeted at solving the problems faced by small and medium sized law firms.
Matthew Proud: In particular, our practice-managed applications act as a central operating system for law firms, providing them with everything they need to run their practice, from intake to invoice, and truly everything in between. Our data insight software seamlessly enables law firms to help their clients assess risk and make informed decisions on any given transaction that a law firm would likely be involved in. The legal services market is an extremely attractive market in which Dye & Durham is well positioned to capture global market share in this fast-growing and highly fragmented market.
Lawford: In particular, our practice, we entered applications act as a central operating system for lawford, providing them everything they need to run their practice for me to take the invoice and truly everything in between.
Lawford: Our data and insights software seamlessly enables law firms to help their clients assess risk and make informed decisions on any given transaction that a law firm, we'd like to be involved in.
Lawford: The legal services market is an extremely attractive market in which <unk> is well positioned to capture global market share in this fast growing and highly fragmented market.
Matthew Proud: This is a market that's forecasted to almost double in the next six years. This afternoon, we reported our third quarter Fiscal 24 results. The results continue to demonstrate the strength of our business and the attractiveness of the legal technology market that I've just mentioned. Our revenue for the three months ending March 31, 2024 was $107 million, representing a 16% increase in revenue versus the same period last year when factoring in last summer's divestiture of the TM Group business.
Lawford: The market is forecasted to almost double the next six years.
Lawford: This afternoon, we reported our third quarter quarter fiscal 'twenty four results.
Lawford: The results continue to demonstrate the strength of our of our business and attract additional legal technology market that I've just mentioned.
Lawford: Our revenue for the three months ending March 31, 2024 was $107 million, representing a 16% increase in revenue versus the same period last year when factoring in last summer's divestiture, the TM group business.
Lawford: Recently, we've made significant investments into our product offering and go to market strategy.
Matthew Proud: Recently, we've made significant investments in our product offering and go-to-market strategy. This has been targeted at transitioning the business model away from our legacy single point solution product based relationship to a holistic modern SaaS based product based relationship involving bundling products from different platforms together under a single technology platform. At the core of this is the Unity Global Platform. The Uniglo platform brings together all the tools a small or medium-sized business law firm requires to run their practice, saving our customers time and money and providing real operational cost efficiencies, as well as access to the latest technologies in the market, including generative AI.
Lawford: This isn't a targeted at transitioning the business model away from our legacy single point solution product based relationship to a holistic modern SaaS based product based relationship involving bundling products from different platforms together under a single technology platform.
Lawford: At the core of this is the unique global platform.
Lawford: Our unique global platform brings together all the tools of small or medium sized business law firm requires to run their practice saving our customers time and money and providing real operational cost efficiencies as well as access to the latest technologies in the market, including generator of AI.
Speaker Change: The results of our investments speak for themselves for the three months ending March 31 2024.
Matthew Proud: The results of our investments speak for themselves. For the three months ending March 31st, 2024, ARR was $126 million, which represents an 85% year-over-year growth. Additionally, compared to the previous three months ended December 31, 2023, i.e. Last quarter, ARR grew by 12% in one quarter alone. We target to have ARR make up 30% of our revenue by June 30, 2024. That means as of March 31st, we've achieved that target ahead of plan, and we're still hurrying to achieve 50% of our revenue being attributed to AR in just over 24 months. As many of you know, the current quarter we are in is traditionally the strongest quarter for our business. That's Q4, and we have a June 30th year end.
Speaker Change: <unk> was 126 billion, which represents an 85% year over year growth.
Speaker Change: Additionally.
Speaker Change: Compared to the previous three months ended December 31, 2023 last quarter AOR grew by 12% in one quarter alone.
Speaker Change: <unk> targeted to have a makeup 30% of our revenue by June 30 of 2024.
Speaker Change: That means as of March 31, we would achieve that target ahead of plan.
Speaker Change: And we're still targeting to achieve 50% of our revenue.
Speaker Change: Just over just over 24 months.
Speaker Change: As many of you know the current quarter. We are in is traditionally the strongest quarter for our business Q4, and we have a June 30th yearend. However, we're excited more than usual by the very strong momentum we're seeing in the current quarter. As a result, we believe we're setting up to one of the best quarters on record the key drivers behind this performance.
Matthew Proud: However, we're excited more than usual by the very strong momentum we're seeing in the current quarters. As a result, we believe we're setting up for one of the best quarters on record. The key drivers behind this performance include, first, the large updraft in AR that we're driving. I just mentioned the trajectory.
Speaker Change: First the large updraft in AUR that we're driving I just mentioned the trajectory.
Matthew Proud: Second, really strong transactional revenue, primarily coming from property conveyancing and related due diligence being carried out in our application. This is, of course, due to the recovery in domestic and global real estate. We continue to make investments and drive strong revenue performance, while at the same time remaining disciplined around cost. Rather than embarking on large-scale cost-cutting campaigns, as you would have seen other technology companies undertake in recent days, we believe that consistent attention when it comes to managing costs is a much more healthy and effective way of managing our business.
Speaker Change: Second really strong transactional revenue, primarily coming from property conveyancing and related to diligence being carried out in our applications.
Speaker Change: This is of course due to recovery in domestic and global real estate markets.
Speaker Change: We continue to make investments.
Speaker Change: We continue to make investments and drive strong revenue performance, while at the same time remaining disciplined around cost.
Speaker Change: Rather than embarking on large scale cost cutting campaigns as you would've seen other technology companies undertaken recent days, we believe the consistent attention when it comes to managing cost is a much more healthy and effective way of managing our business.
Matthew Proud: This minute of velocity is reflected in our adjusted EBITDA performance. We generated just a wee bit of 60 million in the third quarter of fiscal 2024, an increase of 11% compared to the same period last year, taking into consideration the sale of TMG.
Speaker Change: This minimum philosophy.
Speaker Change: As reflected in our adjusted EBITDA performance, we generated adjusted EBITDA of $60 million in the third quarter of fiscal 2024, an increase of 11% compared to the same period last year, taking into consideration the selling of TMT.
Frank Di Liso: Financial flexibility and a strengthened balance sheet remain a key priority for us at Dye & Durham. In this regard, in April, we completed a series of refinancing transactions with $1.2 billion, which strengthened our balance sheet and improved our capital stack while lowering our expected cash interest payments by approximately $20 million a year next fiscal year on a like-for-like basis. Prior to the positive impact of refinancing, cash flow operations in the quarter were up 26% versus fiscal 23, and adjusted EPS was up 36%.
Speaker Change: Financial flexibility and a strengthened balance sheet remains a key priority for us at <unk> and.
Speaker Change: In this regard.
Speaker Change: In April we completed a series of refinancing transactions with $1 2 billion.
Speaker Change: <unk> strengthened our balance sheet and improved our capital stock, while lowering our expected cash interest payments by approximately $20 million a year next fiscal year on a like for like basis.
Speaker Change: Prior to the positive impact of the refinancing cash operations in the quarter was up 26% versus fiscal 'twenty, three and adjusted EPS was up 36%.
Frank Di Liso: Additionally, this afternoon, we also announced a $185 million substantial issuer bid to retire remaining 2026 convertible ventures. As we scale our business, it is important for us to continue to work on deleveraging the business and bring our net debt to approximately four times adjusted EBITDA or less. What truly excites me is how we're thinking about the business going forward, positioning the company to outperform based on a superior product. Additionally, we're committed to acting in the best interests of all the company's stakeholders, and we'll continue to welcome the opportunity to engage in good faith with all stakeholders going forward.
Speaker Change: Additionally, this afternoon, we also announced a $185 million substantial issuer bid to retire our remaining 2026 convertible debentures.
Speaker Change: As we scale our business. It is important to us to continue to work on deleveraging the business and bigger net debt to approximately four times.
Speaker Change: Adjusted EBITDA or less.
Speaker Change: We're truly excites me is how we're thinking about the business going forward positioning the company to outperform based on our superior product offering. Additionally.
Speaker Change: Additionally.
Speaker Change: We're committed to acting in the best interests of all the company's stakeholders and we'll continue to welcome the opportunity to engage in good faith with all stakeholders going forward.
Speaker Change: Before I pass it over to Frank I, just want to reiterate how pleased we are with the business performance in Q3 and the results of our current strategy as well as the current trajectory we're seeing in the business in the current quarter and moving forward.
Frank Di Liso: Before I pass it over to Frank, I just want to reiterate how pleased we are with the business performance in Q3 and the results of our current strategy, as well as the current trajectory we're seeing in the business in the current quarter and moving forward. I'll now turn it over to Frank to discuss the financials.
Speaker Change: I'll now turn it over to Frank to discuss the financials.
Frank Di Liso: Thank you, Matt, and good evening, everyone. This evening, we reported our third quarter fiscal 2024 results. Our results continue to demonstrate the resiliency and diversification of the business. As Matt mentioned, we continue to diversify our revenue base and enhance our practice management offering. We have reduced our reliance on real estate transactions and increased our annual recurring revenue, which has already achieved our full fiscal year target in Q3 earlier than expected, primarily through growing our proxy managed solutions.
Frank: Thank you, Matt and good evening everyone.
Frank: This evening, we reported our third quarter fiscal 2024 results.
Frank: Our results continue to demonstrate the resiliency and diversification of the business as.
Frank: As Matt mentioned, we continue to diversify our revenue base and enhance our practice management offering we.
Frank: We have reduced our reliance on real estate transactions and increased our annual recurring revenue, which has already achieved our full fiscal year target in Q3 earlier than expected primarily through growing their practice managed solutions.
Frank Di Liso: Our annual contracted revenue remains robust, driven by both our practice management and our payments infrastructure service line. Revenue exposed to real estate transactions globally in Q3 was 43% compared to 50% in the same period of fiscal 23. While revenue exposed to real estate transactions in Canada was only 20% compared to 26% in the same period of last year, keep in mind that a portion of our real estate exposure in Canada includes refinancing transactions. As a result, our actual exposure to these transactions is even lower than 20%.
Frank: Our annual contracted revenue remains robust driven by both our practice management and our payments infrastructure service lines.
Frank: Revenue exposed to real estate transaction globally in Q3 was 43% compared to 50% in the same period of fiscal 'twenty three while.
Frank: While revenue exposed to real estate transactions in Canada was only 20% compared to 26% in the same period of last year.
Frank: Keep in mind that a portion of our real estate exposure in Canada includes refinancing transactions as a result, our actual exposure to these transactions is even lower than 20%.
Frank: Annual recurring revenue contracted it was 3% as of March 31, 2024, compared to 19% in the same point of last year.
Frank Di Liso: Annual recurring revenue contracted was 30% as of March 31st, 2024, compared to 19% at the same point last year. There are components of our revenue which we do not include in the ARR, such as revenue from contracted overages and other revenues under contract with service agreements. These are included in annual contracted revenue, and for the third quarter, this was 53% inclusive of ARR compared to 37% in the prior year. We reported revenues of $107.3 million during the third quarter, an increase of 16% compared to the same period last year. Taking into consideration the sales TM on August 3, 2023, revenue grew 3% year over year, including the impact of TM in the prior period, mainly as a result of organic Keep in mind that the Q2 and Q3 periods of our fiscal year are typically the weakest from a seasonality perspective, while Q4 and Q1, in that order, are typically our strongest periods.
Frank: There are components of our revenue, which we do not include an IRR such as revenue from contracted Overages and other revenues under contract with service agreements.
Frank: These are included in annual contracted revenue in the third quarter. This was 53% inclusive of <unk> compared to 37% in the prior year.
Speaker Change: We reported revenues of $107 $3 million during the third quarter, an increase of 16% compared to the same period last year, taking into consideration the sales team on August three 2023.
Frank: Revenue grew 3% year over year, including the impact of <unk> in the prior year period, mainly as a result of organic initiatives.
Frank: Keep in mind that the Q2 and Q3 periods of our fiscal year are typically the weakest from a seasonality perspective.
Frank: Whereas Q4 and Q1 in that order are typically our strongest periods.
Frank Di Liso: As we reach the midpoint of our fourth quarter, we are seeing positive signals based on current market activity, which provides a tailwind for us to finish the year with positive momentum. We generated adjusted EBITDA of $59.8 million in the third quarter of fiscal 24, an increase of 11% compared to the same period last year, taking into consideration the sale of TM Group and growing 7% or $3.7 million, including the contribution of TM Group versus the prior year.
Speaker Change: As we reach the midpoint of our fourth quarter, we are seeing positive signals based on current market activity, which provide a tailwind for us to finish the year with positive momentum.
Speaker Change: We generated adjusted EBITDA of $59 8 million in the third quarter of fiscal 'twenty four an increase of 11% compared to the same period last year, taking into consideration the sale of PM group and grew 7% or $3 7 million, including the contribution of Tim group versus the prior year.
Frank Di Liso: This improvement is primarily a result of the growth in organic revenues, as well as the impact of our business improvement plan and lower direct costs. We continue to maintain our strong EBITDA margins, coming in at 56% this quarter, which is in line with our target range between 50 and 60%. Total adjusted operating expenses, which include direct costs, technology costs, G&A, and sales and marketing, were $47.6 million for the quarter, or 44% of revenue.
Speaker Change: The improvement is primarily a result of the growth in organic revenues as well as the impact of our business improvement plan and lower direct costs.
Frank: We continue to maintain a strong EBITDA margins coming in at 56% this quarter, which is in line with our target range between 50 and 60%.
Frank: Total adjusted operating expenses, which include direct costs technology costs, G&A and sales and marketing were $47 6 million for the quarter or 44% of revenue adjusted operating.
Frank Di Liso: Adjusted operating expenses for the quarter were lowered by approximately 1% from the prior year, including the impact of acquisition operating costs acquired over the last 12 months, which demonstrates improvements in our business improvement plan. Net finance costs for the quarter were $30.1 million compared to $40.3 million in the same period of fiscal 23. The improvement was primarily due to the revaluation of the convertible debentures, offset partially by the higher interest expense and loss on this discontinuation of hedge accounting on our interest rate swap. Acquisition, construction, and other costs for the quarter were $7.1 million.
Frank: Operating expenses for the quarter were lower by approximately 1% from the prior year, including the impact of acquisition operating costs acquired our last 12 months, which demonstrates the improvements of our business improvement plan.
Frank: Net finance costs for the quarter were $30 1 million compared to $40 3 million in the same period of fiscal 'twenty three.
Frank: Improvement was primarily due to the revaluation of the convertible debentures offset partially by the higher interest expense and loss on this discontinuation of hedge accounting on our interest rate swap.
Frank: Acquisition restructuring and other costs for the quarter were $7 1 million.
Frank Di Liso: This was a decrease from $15.8 million in the third quarter of fiscal 23, or 55%, and we believe we could deliver additional improvements in this cost item over time. As Matt mentioned earlier, we have taken actions to increase our cash flow performance with a greater emphasis on this measure. Our business improvement plan generated more than $70 million in annualized free cash flow improvements on a run rate basis as we exited the third quarter, which includes the impact of the recent refinancing transaction.
Frank: This was a decrease from $15 8 million in the third quarter of fiscal 'twenty, three or 55% and we believe we can deliver additional improvements in this cost item over time.
Speaker Change: As Matt mentioned.
Matthew Proud: And earlier, we have taken actions to increase our cash flow performance with a greater emphasis on this measure.
Matthew Proud: Our business improvement plan generated more than the targeted $70 million in annualized free cash flow improvements on a run rate basis as we exited the third quarter, which includes the impact of the recent refinancing transaction.
Frank Di Liso: Our Q3 cash flow operations was $35 million a quarter, up 24% compared to the same period last year, mainly as a result of lower acquisition costs and a lower amount of taxes paid. On a yearly basis, taxes paid were reduced by 63% or $15.7 million, largely as a result of legal entity consolidations and other tax planning measures. Basic adjusted net income per share was up 36% to $0.19 in Q3, compared to $0.14 in the same period of last year. As a reminder, basic adjusted net income per share merely adjusts for non-cash items such as amortization, stock-based compensation, and financing gains and losses, which is the closest measure to cash flow per share that we report.
Matthew Proud: Our Q3 cash from operations was $35 million a quarter up 24% compared to the same period last year, mainly as a result of lower acquisition costs and lower amount of taxes paid.
Frank: On a yearly basis taxes paid reduced by 63% or $15 7 million largely as a result of legal entity consolidations and other tax planning measures.
Frank: Basic adjusted net income per share was up 36% to 19 in Q3 compared to <unk> 14 in the same period of last year.
Speaker Change: As a reminder, basic adjusted net income per share.
Speaker Change: We adjust for noncash items, such as amortization stock based compensation and financing gains and losses, which is the closest measure to cash flow per share that we report.
Speaker Change: Turning to our balance sheet, our net debt excluding the convertible debentures stood at approximately $948 million as of March 31 2024.
Frank Di Liso: Turning to our balance sheet, our net debt, excluding the convertible debentures, stood at approximately $948 million as of March 31, 2024, which has been reduced by approximately $102 million since June 30, 2023. Subsequent to the end of the period, we repaid all of our amounts standing under the ARIES credit facility with the proceeds from the refinancing transaction. The refinancing transaction in Canadian dollars consisted of approximately $760 million of Senior Secured Notes due 2029, approximately $479 million in a Senior Secured Terminal B facility due 2031, and $105 million in revolving credit facilities.
Speaker Change: Which has been reduced by approximately $102 million since June 32023.
Speaker Change: Subsequent to the end of the period, we repaid all of our amounts outstanding under the <unk> credit facility with the proceeds from the refinancing transaction.
Speaker Change: The refinancing transaction to Canadian dollars consisted of approximately $760 million of senior secured notes due 2029.
Speaker Change: <unk> $479 million in a senior secured term loan b facility, due 2031 and $105 million revolving credit facility.
Frank Di Liso: These refinancing transactions significantly improve our capital structure, eliminate the springing maturity provisions of the ARIES facility, and result in an estimated $20 million of net interest savings on an annualized basis. We understand the importance of reducing our leverage, and we have set a clear target to reduce it below four times total net debt to adjust EBITDA. That said, we have sufficient resources to manage our debt level. The Business Generates Strong Sustainable Cash. We built a business of scale that's mission critical to small and medium-sized law firms and financial institutions all over the world.
Speaker Change: These refinancing transactions significantly improve our capital structure eliminated a springing maturity provisions of the Ares facility and results in an estimated $20 million of net interest savings on an annualized basis.
Speaker Change: We understand the importance of reducing our leverage and we have set a clear target to reduce it before.
Speaker Change: To reduce it below four times total net debt to adjusted EBITDA.
Speaker Change: That said, we have sufficient resources to manage our debt levels.
Speaker Change: The business generates strong sustainable cash flows.
Speaker Change: We built a business of scale is mission critical to small and medium sized law firms and financial institutions all over the world.
Frank Di Liso: Our financial results and the recent actions we've taken demonstrate the consistency of the business and the opportunity that is in front of us. With that, I'd like to turn it over back to the operator for Q&A.
Speaker Change: Our financial results and the recent actions we've taken demonstrates the consistency of the business and the opportunity that is in front of us.
Speaker Change: With that I'd like to turn it over back to the operator for Q&A.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your telephone keypad.
Ina: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys.
Speaker Change: Don from acknowledging your request questions will be taken in the order received should you wish to cancel your request. Please press star followed visitors.
Speaker Change: Using a speaker phone please lift the handset before pressing any Keith one moment. Please for your first question.
unknown: One moment, please, for your first question. Your first question comes from the line of Robert Young from Canecoyo. Please go ahead.
Speaker Change: Your first question comes from the line of Robert Young from Canaccord. Please go ahead.
Robert Young: Hi, good evening. A couple questions. First one: you said you were setting up for one of the best quarters on record. But you didn't give any guidance.
Robert Young: Hi, Good evening, a couple of questions first one.
Don: You said youre setting up for <unk>.
Speaker Change: One of the best quarters on record.
Speaker Change: You didn't give any guidance for the quarter, but I think you said that it's a large updraft in <unk> in the quarter and then strong transactional revenue from <unk> seen in due diligence and so I'm curious if you could.
Matthew Proud: For the quarter, but I think you said that there was a large updraft and error rate in the quarter and then strong transactional revenue from conveyance scene and due diligence. And so I'm curious if you could provide a little bit of additional detail around those components. Should we be expecting fiscal Q4 to be up quarter over quarter? Seems likely. Any other context there would be very helpful.
Speaker Change: Provide a little bit of additional detail around those components should we be expecting.
Speaker Change: Fiscal Q4 to be up quarter over quarter.
Speaker Change: Seems likely.
Speaker Change: Any other context, there would be very helpful.
Speaker Change: Sure.
Matthew Proud: So yeah, yeah, I think you've correctly categorized the drivers we reflected. So yeah, so yeah, as you know, Q4 is traditionally our strongest quarter. We still have, you know, approximately half our business, which is transactional today, and with overages even beyond that. So yeah, we're expecting a very strong quarter that will be up, which is the current quarter we just released.
Speaker Change: So yes, yes.
Speaker Change: I think you've correctly categorize the driver as we we reflected so yes. So yes, we I mean as you know Q4 is traditionally our strongest quarter.
Matthew Proud: Okay, and then the difference between those two figures, ARR at 30% and contracted revenue over 50%, is the bulk of that overages? If you could talk about the difference between those two figures, is that where this confidence is coming from? Is it overages on contracted minimums?
Speaker Change: We'll have roughly half of our business, which is transactional.
Speaker Change: Today with over to us even beyond that so yes, we are expecting a very strong quarter that will be up because of the current quarter. As a result, we just released.
Speaker Change: Okay, and then the difference between those two figures <unk> at 30% and contracted revenue or 50% is the bulk of that overages.
Speaker Change: Talk about the difference between those two figures is that wood.
Speaker Change: This confidence is coming from is it overages on contracted minimums.
Matthew Proud: Yes, we have really three buckets of revenue. I'll call one the traditional traditional kind of more legacy per transaction revenue. And that's really generally open, but by law firms purchasing products per matter or per transaction on our software.
Speaker Change: Yes, so we have really three buckets of revenue I'll call. It one is traditional traditional kind of more legacy per transaction revenue and that's really generally opened by law firms purchasing per matter of per transaction.
Speaker Change: <unk> products are on our software.
Matthew Proud: The other bucket is a kind of ARR, and that consists of minimum spend contracts, as well as traditional subscription licenses. And then the third is overages. And that really makes up two things. It's the overages on the minimum spend contracts that you referenced, but it's also that we have a lot of contracts, or all our banking business has contracts with very large financial institutions. And a lot of that, while very stable, predictable revenue, it is still revenue under contract with the bank. So those are the three buckets that make it up to answer your question. Okay.
Speaker Change: The other the other bucket is kind of IRR and that consists of minimum minimum spend contracts as well as traditional subscription licenses.
Speaker Change: And then the third is overdue and that really makes up two things. It's the overages on the minimum span contracts that you referenced but it's also we have a lot of contracts or all our banking business has contracts with very large financial institutions.
Speaker Change: A lot of that as well as very stable.
Speaker Change: Predictable revenue is still revenue under contract with the banks those are the three buckets that make it up to answer your question.
unknown: Okay, and then I know it's in the prepared remarks in the release that there wasn't any update on that strategic review of non-core assets. Is there any updated status you can provide on that? None of this time. And last question for me, the substantial issuer bid. Give us any context around the math or the thought process behind the $900 bid there, and then I'll pass the line.
Okay and then.
Speaker Change: And that.
Speaker Change: In the prepared remarks in the release there wasn't any update on that strategic review of noncore assets is there any updated status you can provide on that.
Speaker Change: Not at this time.
Speaker Change: Okay and last question for me.
Speaker Change: The.
Speaker Change: Substantial issuer bid.
Speaker Change: Give us any context around the math or the thought process behind the 900 dollar bid there.
Speaker Change: And then I'll pass the line.
Frank Di Liso: Yes, Rob this is Frank that are higher dollars.
Frank Di Liso: Yeah, Rob, this is Frank. The $900 is our best offer that we've made throughout the SIPP process. It reflects what we believe is the underlying premium to the underlying value. More details will follow with our SIPP offering that will come out later this week.
Speaker Change: <unk> is our best offer that we have made throughout the year that's the process.
Frank Di Liso: It reflects what we believe is the underlying actually a premium to the underlying value more.
Speaker Change: More details will follow with our SIB offering that will come out later this week.
Unknown Executive: Okay, that's fine thanks.
Robert Young: Okay, I'll pass that on. Thanks.
Speaker Change: Thank you and our next question comes from the line of Stan as Michelle Lewis from BMO. Please go ahead.
Ina: Thank you. And your next question comes from the line of Thanos Moschopoulos from BMO. Please go ahead.
Thanos Moschopoulos: Hi, good afternoon. You specified your objective of working down your leverage. But just for context, how should we think about how you're going to prioritize that relative to perhaps additional M&A over the next while? I think this is the first quarter in some time that you didn't execute an M&A, but just as we think about the near term, what are your thoughts on M&A versus collaborative?
Speaker Change: Hi, good afternoon.
Speaker Change: You specified to your objective.
Michelle Lewis: Working down your leverage.
Speaker Change: But just for context.
Speaker Change: How should we think about.
Speaker Change: How are you going to prioritize that relative to perhaps additional M&A over the next while.
Speaker Change: I think this is the first quarter in some time that you didn't execute on M&A, but just as we think about.
Speaker Change: The near term what are your thoughts on M&A versus celebrity.
Speaker Change: Okay, I think we've always said, it's a balance.
Matthew Proud: Okay, I think we've always said Thanos, it's a balance. You know, we've purposely been focused over the last 12-24 months on integrating the business, making substantial investments in the things I talked about, and really also driving ARR. We believe in the long run having, I said 50, but in the long run, I always want a much higher amount of kind of very predictable ARR revenue. That said, we'll still need to tuck in some time to time where it makes sense, as we often have the ability to augment our product stack or acquire market share, you know, via acquisition where it makes sense. So, again, highly focused and really want to get that leverage down. But if there's a creative acquisition that makes sense, we have to balance that, too.
Speaker Change: We purposely focus over the last 12 to 24 months on integrating the business, making substantial investments in the things I talked about and really also driving <unk> we.
Speaker Change: We believe in the long run having so I said 50, but the long run I was taught a lot higher amount of kind of very predictable under contract revenue.
Speaker Change: So can you just tuck ins from time to time, where it makes sense.
Speaker Change: As we often have the ability to augment our product stack or or acquire market share.
Speaker Change: Yeah, Bob via an acquisition, where it makes sense. So again highly focused and really wont get that leverage down, but if theres a an accretive acquisition makes sense with.
Speaker Change: With the balance that too.
Matthew Proud: Okay, um, as far as the improved transaction volumes and momentum you're seeing, is that across all your three key geographies, or is it more weighted to one versus the other?
Speaker Change: Okay.
Speaker Change: As far as the improved.
Speaker Change: Transaction volumes and momentum Youre seeing is that across all your three key geographies or is it more weighted to one versus the others.
Matthew Proud: It's primarily across Canada and Australia we're seeing it most. The UK market still seems to lagger a bit, but yeah.
Unknown Executive: It's primarily across Canada, and Australia, we're seeing we're seeing it the most.
Unknown Executive: The UK market still seems a leg or a bit.
Unknown Executive: Above that.
Unknown Executive: Yes.
Unknown Executive: Okay.
Thanos Moschopoulos: Okay, um, working capital was a significant use of cash during the quarter. Can you just expand on that?
Speaker Change: Working capital was a significant use of cash during the quarter can you just.
Frank Di Liso: I mean, is some of that related to restructuring-related payments? Or what's the dynamic, and what should we expect? Perhaps in the upcoming capital perspective?
Speaker Change: Expand on that and there's some of that related to restructuring related payments or what's the dynamic.
Speaker Change: Should we expect.
Speaker Change: Perhaps me I can get.
Speaker Change: Rebecca.
Thanos Moschopoulos: Hey Thanos, it's Frank here. What you would have seen in working capital this quarter would have been a use of prepays of about $5 million that was related to our refinancing transaction as we essentially incurred some of those charges in late March, and then on the AR side, there would have been a use of about $9 million. That reflects a few buildings that came in late in the quarter that we've since recovered, so we do expect some reversal of that into Q4.
Frank Di Liso: Yeah, Hey, Santos, it's Frank here.
Speaker Change: What you would have seen in working capital this quarter would have been of use from a.
Speaker Change: Prepays of about $5 million that was related to our refinancing transaction as we.
Speaker Change: Essentially.
Speaker Change: <unk> incurred some of those charges in late March.
Speaker Change: And then on the.
Speaker Change: Our side are there would've been a use of about $9 million.
Speaker Change: That reflects.
Speaker Change: A few a few buildings that accumulate in the quarter that we since recovered.
Speaker Change: So we do expect some some some.
Speaker Change: A reversal of that into Q4.
Speaker Change: Okay.
Ina: Hurry up, pass the line. Thanks.
Speaker Change: Alright, I'll pass the line thanks.
Speaker Change: Thank you and your next question comes from the line of Kevin Smith from.
Kevin Krishnaratne: Thank you. And your next question comes from the line of Kevin Krishnaratne from Scotiabank. Please go ahead.
Kevin Smith: Scotiabank. Please go ahead.
Kevin Krishnaratne: Hey there, good evening. Just on the organic growth 4%, wondering if you could dig in there a bit more, maybe by geography. I'm just looking at your financials. Canada, on a reported basis, is up 10%. Australia was down a little bit. I'm just wondering if you can give a bit more color on, you know, sort of what you're seeing in terms of organic growth across the different geographies and what are the drivers there?
Kevin Smith: Hey, there good evening, just on the organic growth, 4% I'm wondering if you could dig in there a bit more maybe by geography I'm just looking at your financials, Canada on a reported basis was up 10%, Australia was down a little bit I'm. Just wondering if you can give it but more color on sort of what youre seeing organic growth wise across the different geographies and what are the drivers there.
Speaker Change: Look I mean, I think we talked with a lot of the drivers there.
Matthew Proud: Look, I mean, I think we talked with a lot of the drivers there. You know, Kevin earlier said that a lot of the drivers are coming from, you know, on the legal side of the business, we don't disclose it by geography, but I think we kind of covered that off in our remarks earlier.
Speaker Change: Yeah.
Kevin Smith: Kevin earlier.
Kevin Smith: No.
Speaker Change: But a lot of the drivers are coming from.
Speaker Change: On the legal side of the business, we don't disclose it by geography.
Speaker Change: Bob.
Speaker Change: So I think we kind of cover that often remark earlier.
Speaker Change: Okay Fair enough, maybe just a bigger picture question then.
Kevin Krishnaratne: Okay, fair enough. Maybe just a bigger picture question, then, you know, with Unity, if you take, you know, you take a typical small law firm in Canada, you're serving here, say, look at their revenue per year, how does that compare to a law firm in the UK or Australia? And just how do you think about the opportunity for cross-selling with Unity to close that gap?
Speaker Change: With unity.
Speaker Change: You take a typical small law firm in Canada, serving here say look at their revenue per year, how does that compare to a law firm in the UK, Australia and just how do you think about the opportunity for.
Speaker Change: Cross selling with unity to close that gap.
Matthew Proud: It's really the same thing, right? Like, we, you know, if you look at the kind of the two key things we do globally, we do have auxiliary products, but but, it really is the selling of practice management systems, which really is the, you know, the central operating system for a law firm, as well as their data insight applications to provide legal due diligence. You know, the intersection of those two products in all markets is really key to our ability to A, drive extreme stickiness with our clients but also drive that cross-sell.
Speaker Change: It's really the same thing right.
Speaker Change: Look at the kind of the two key things we do.
Speaker Change: Globally, we do have a jewelry products, but it really is the selling.
Speaker Change: <unk> legal practice vein systems, which which really is the.
Speaker Change: The central operating.
Speaker Change: System for a law firm as well as the other.
Speaker Change: Their data insight applications provide legal due diligence.
Speaker Change: Yeah.
Speaker Change: The intersection of those two products in all markets really is key to our ability to drive extreme stickiness with our clients, but also drive drive that cross sell I.
Speaker Change: I would say over and beyond that adding on exhilarate products, whether it's accounting module or whatever it may be that we know with law firms require to manage their practice every day.
Matthew Proud: I'd say over and beyond that, you know, adding on auxiliary products, whether it's, you know, an accounting module or whatever it may be that we know law firms require to manage their practice every day. The strategy remains the same in all markets.
Speaker Change: The strategy remains the same in all markets.
Matthew Proud: And with, you know, you're rolling out unity into the, I can't, I think it was in the UK. Are you seeing a lift in, in, you know, in ARPUs, you know, law firms, are you actually seeing that materialize? Do we see that benefit into the next quarter?
Speaker Change: And with your rolling out your entity into that I can't really I think it was in the UK or are you seeing like a lift in in Rps law firms are you actually seeing that materialize do we see that benefit into the next quarter.
Matthew Proud: Well, we only started early this year selling contracts in the UK, and it's a great trajectory so far. We're starting to see some momentum in customers signing up contracts, and a cross-sell as well, as we kind of go to market with both the practice standard offering, as well as all their diligence capabilities under one platform. So that cross-sell has been very real and very good to see.
Speaker Change: But we won't be so we only started early earlier this year selling.
Speaker Change: Selling contracts in the U K.
Speaker Change: And it's a great trajectory, so far where we're starting to see some some momentum and cut in customers signing up contracts.
Speaker Change: So in a cross sell as well as we kind of go to market is both the <unk> standard offering as well as all the diligence capabilities under one platform.
Speaker Change: So that cross sell has been a very real and very good to see.
Kevin Krishnaratne: All right. Okay. Thanks, Matt. I'll pass the line.
Speaker Change: Alright, Okay. Thanks, Matt I'll pass along.
Speaker Change: Thank you once again should you wish to ask a question. Please press star followed by one on your telephone keypad.
Ina: Thank you. Once again, should you wish to ask a question, please press star 4 or press the 1 on your telephone keypad. And your next question comes from the line of Stephen Boland from Raymond James. Please go ahead. Okay.
Steven <unk>: And your next question comes from the line of Steven <unk> from Raymond James. Please go ahead.
Stephen Boland: Okay, I guess I'll be the one to ask the question, Matt, what can you talk about with Engine Capital? I know there was probably dialogue earlier, but now it seems to have gone into a more formal press release type of relationship. Is there ongoing dialogue with them, or are you just going to be waiting for the meeting to occur?
Speaker Change: Okay.
Speaker Change: I'll be the one to ask a question that what can you.
Steven <unk>: Talk about.
Steven <unk>: Capital.
Speaker Change: I know there was probably dialogue earlier now seems to have gone into a more formal.
Speaker Change: Yes release type of relationship is there ongoing dialogue with them or is or are you just going to be waiting for the meeting to occur.
Matthew Proud: Um, yeah, look, I'm happy to take that question. And thanks for setting the table.
Speaker Change: Yes look I mean, I'm happy to take that question.
Speaker Change: Thanks for putting on the table look there.
Matthew Proud: Look, we're willing to talk to all shareholders and have a constructive dialogue. We, you know, it's always good to listen and hear people say, and you know, you often hear you often get good feedback from all shareholders, including the engine. We've had some very constructive conversations with them on how to run the business, and we'll continue that again with Engine and all shareholders. That said, we're continuing to run the business. We're very happy with the performance. The trajectory, we think, is extremely strong. So that's our main focus, and we'll continue to engage with all shareholders.
Speaker Change: We're willing to talk to all shareholders and have a constructive dialogue.
Speaker Change: We it's always good to listen and hear Bill to say and you often hear you obviously get good feedback from our shareholders and including engine.
Speaker Change: We've had some very constructive conversations with them on how they see the business and we'll continue that again engine and all shareholders.
Speaker Change: That said, we're continuing to run the business, we're very happy to performance with <unk>.
Speaker Change: <unk>, we think is extremely strong.
Speaker Change: So that's our main focus.
Speaker Change: And we will continue to engage with all shareholders.
Speaker Change: Okay.
Stephen Boland: Okay, there was a slide in the deck that was somewhat new, just on the product side. And you talked about some of the fastest growing segments, and I guess practice management, I understand, but analytics is another one that you're offering. Can you just explain what legal firms are doing, what analytics they're using?
Speaker Change: There was a slide in the deck that was somewhat new.
Speaker Change: Just on the product side.
Speaker Change: And you talked about some of the fastest growing segments and I guess practice management I understand but analytics.
Speaker Change: This is another one that youre offering can you just explain what legal firms are doing what analytics, they're using.
Matthew Proud: Yeah, so for what our customers do, it's, I mean, it's risk, it's analyzing risk, right? If you're doing legal due diligence as a law firm on behalf of your clients, we provide the software that enables them to assess risk on really any given corporate transaction or property transaction. We'll go to the client and say, hey, this is a risk associate transaction and provide insight into that risk. And so again, we're sitting, you look at like the key growth areas, practice management, and analytics.
Speaker Change: Yes, so for what our customers do it.
Speaker Change #100: It's risk it analyzing risk right, if youre doing legal due diligence as a law firm a happier clients, we provide the software that enables them to actual risk.
Speaker Change #101: Im really any given corporate transaction of property transaction really go to their client and say Hey, This is a risk associates transaction.
Speaker Change #101: And provide insight into that risk.
Speaker Change #101: And so again, we're sitting you look at like the key growth areas practice management analytics.
Speaker Change #101: These are core competencies of <unk>, so as this market globally.
Matthew Proud: These are core competencies of Dye & Durham. So as this market globally looks to expand from almost double from kind of 26 to just under 50 billion US by 2030, you know, we're very well positioned, particularly given our existing market share, and where we're focused on growth in capturing that market, that market [inaudible].
Looks to expand from almost double from kind of 26% to just under $50 billion U S.
By 2030.
Speaker Change #102: Well positioned, particularly given our existing market share and where we're focused on growth and capture that market.
Speaker Change #103: Thanks, Mark as Youre uplift.
Stephen Boland: Okay, and then the last piece of there was the legal research. Maybe just if you could explain to me what that is. And, you know, is this something that you're going to need in the next couple of years?
Speaker Change #105: Okay and then the last piece of there was the legal research maybe just if you could explain to me what that is and.
Speaker Change #104: Is this a.
Speaker Change #106: Something that youre going to need in the night.
Speaker Change #106: Just a couple of years to be offering.
Matthew Proud: No, we don't see ourselves, I mean, today getting into legal research. It's a market that's fairly well dominated by the likes of Thomson Reuters and LexisNexis, probably the two largest legal tech companies in the world. They service it very well and do a very good job of, again, servicing their customers in that market. So we don't see ourselves, you know, trying to break into that market. It's not a focus of ours. Okay, I'll sneak one in.
Speaker Change #107: No we don't see ourselves I mean today getting into legal research, it's a market that's fairly well dominated by the likes of Thomson Reuters Lexisnexis.
Speaker Change #107: Probably the two largest legal tech companies in the world.
Speaker Change #107: They serve as a very well.
Speaker Change #107: And do a very good job of servicing.
Speaker Change #107: Servicing our customers in that market. So we don't see ourselves.
Speaker Change #107: Trying to break into that market, it's not a focus of ours.
Speaker Change #108: Okay ill sneak one more in just.
Stephen Boland: Okay, I'll sneak one more and just, you know, your focus has been on the balance sheet, but certainly, I know you've got a large pipeline of deals or are always looking at or evaluating. Is it fair to say that you maybe you saw a company or two that you liked, but you just thought the timing wasn't right, or is it just that there was nothing out there that you've seen that really fit your appetite?
Speaker Change #109: I know your focus has been on the balance sheet.
Speaker Change #108: But.
Speaker Change #110: Certainly I know you got a large pipeline of.
Speaker Change #111: Deals are always looking at or evaluating.
Speaker Change #112: Is it fair to say that.
Maybe you saw.
Speaker Change #113: A company or two that you like but you just thought the timing isn't right.
Speaker Change #113: Or is it just been nothing out there that you have.
Speaker Change #113: Seen that really fit your appetite.
Speaker Change #114: So good question I kind of answered it earlier like.
Matthew Proud: Oh, good question. I kind of answered it earlier, like, you know, we'll transact if we see something, but again, we're really focused on getting that leverage down. Look, we're We believe leverage remains a drag on the valuation of the business. You know, we have some slides in our deck, we looked at how it has performed kind of since IPO, and while we're doing good, we think we'd be a lot better. We think leverage remains one of the main drags.
Speaker Change #114: We will transact if we see something but again, we're really focused on getting that leverage down.
Speaker Change #114: Look were.
Speaker Change #115: We believe leverage remains a drag on the valuation of the business.
Speaker Change #115: No.
Speaker Change #116: We have some slides in our deck, we looked at kind of since IPO hottest performed at what we're doing good we think we'd be a lot better. We think leverage remains one of that main drags opens a key priority of us getting that leverage down we have a near term goal of below four times, but obviously longer term, we kind of beat.
Matthew Proud: So a key priority of us is getting that leverage down. You know, we have a near-term goal below four times, but obviously, longer term, we kind of be getting down closer to at least three, kind of operating in between that two and a half to three and a half for the long run. So again, we can't take our eye off that ball. But again, you also have to balance, and appreciate it.
Speaker Change #117: Dan closer to at least three.
Speaker Change #117: Operating imaging that two five to three and a half for the long run.
Speaker Change #117: So again cant take all of that ball, but again you also you got to balance it.
Speaker Change #118: Appreciate the comments.
Stephen Boland: I appreciate the comments.
Speaker Change #118: Yeah.
Speaker Change #119: Thank you and your next question comes from the line of Scott Scherr.
Ina: Thank you. And your next question comes from the line of Scott Fletcher. Please, from CIBC, please go ahead.
Speaker Change #120: From CIBC. Please go ahead.
Scott Fletcher: Hi, just a couple follow-ups from me. On an earlier question, when you announced the new debt package, you called out a run rate adjusted even number of $278 million. With Q4 being the seasonally strong quarter, should we be expecting adjusted even above the sort of $70 million quarterly run rate implied by that $278 number?
Scott Scherr: Hi, just a couple of follow ups for me.
Scott Scherr: On an earlier question.
Scott Scherr: So when you announced the.
Scott Scherr: The new debt package you called out.
Right adjusted EBIT number of $278 million with Q4 being the seasonally strong quarter should we be expecting adjusted EBITDA above the sort of $70 million quarterly run rate implied by that 278 number.
Matthew Proud: No, so the 278 was, I mean, we called it further justification, but it's really a lender metric. It's the kind of forward-looking outstanding synergies left in the business. And we kind of there's 27 million remaining from our December 20, December 31 LTM versus the remaining synergies, there's a $27 million difference. Look, we said by the end of calendar year 24, we've captured most of those synergies. And we will have, you know, from an execution perspective, had a lot of them kind of actioned on by the end of this quarter and early Q1.
Speaker Change #122: So the 278 was I mean, we call. It further adjusted EBITDA and really a lender metric.
Speaker Change #122: It's the kind of forward looking outstanding synergies left in the business.
Speaker Change #123: And we kind of theirs.
Speaker Change #123: $27 million remaining from our December 20 December 31st LTM versus.
Speaker Change #123: Versus the remaining synergies there's $27 million difference.
Speaker Change #123: Look we said by end of December calendar year, 'twenty four we captured most of those synergies.
Speaker Change #123: And we will have from an execution perspective.
Speaker Change #123: <unk> had a lot of them.
Speaker Change #123: Kind of action on by the end of this quarter early Q1, so feeling really good are making really good trajectory on kind of taking that those costs out of the business.
Matthew Proud: So feeling, you know, really good or making a really good trajectory on kind of taking those costs out of the business. So that's what that kind of relates to. As for Q4, I mean, look, our business, the trends in our business, the drivers, what we're seeing both from a macro perspective and what we're driving internally is really, really promising. And so, if you look at our historically Q4, it's been a very strong quarter. And we think this one will be set up to be one of the strongest.
So that's the that that kind of relates to as of Q4, when we look our business the trends in our business the drivers.
Speaker Change #123: What we're seeing both from a macro perspective, and what we're driving.
Speaker Change #123: Internally is really really promising.
Speaker Change #123: And so if you look at our historically Q4 has been a very strong quarter.
Speaker Change #123: And we think this one it will be certainly one of the strongest so far.
Speaker Change #124: Okay. Thanks.
Frank Di Liso: One of the factors, Scott. Yeah, one of the patterns, Scott, in Q4 was the, you know, there was an increasing number of business days relative to a previous year. So that's just the timing of the Easter holiday, just as another fact pattern.
Scott: Scott Yes.
Scott: Scott in that Q4 was the.
Speaker Change #126: There is an increase in the amount of business days.
Scott: Relative to our.
Scott: Previous year.
Scott: So thats just the timing of.
Scott: The Easter holiday just as another fact pattern.
Okay. Thanks, and then.
Scott Fletcher: Okay, thanks. Just on the deleveraging note, obviously you're freeing up... Free Cash, Access Free Cash with the new debt. Should we be, does that give you, does the new package give you the flexibility to make regular repayments on either of the new facilities? [inaudible]
Speaker Change #127: Just on the deleveraging note, obviously youre, bringing up some.
Speaker Change #128: Free cash access free cash with different new plant with the new debt should we be.
Speaker Change #129: Does that give you the new package give you flexibility to make regular repayments on either of the new facility.
Frank Di Liso: Um, as we would have seen in the disclosure, there's, it's obviously a lot easier to prepay the loan versus the bond. The bond has, you know, call protection on it that's quite substantial, but it's pretty straightforward to repay the loan should you wish to.
Speaker Change #130: As many of you would've seen it in the disclosure.
Speaker Change #130: It's obviously a lot easier to prepay the loan versus the bond.
Speaker Change #130: The bond has.
Call protection on it that was substantial but it's pretty straightforward to repay the loan surety wished it.
Speaker Change #131: Okay. Thanks.
Speaker Change #131: Okay.
Speaker Change #131: Thank you and your next question comes from the line of Robert Young from Canaccord. Please go ahead.
Ina: Thank you. And your next question comes from the line of Robert Young from Canaccord. Please go ahead.
Speaker Change #131: Rob.
Speaker Change #132: Sorry for that.
Robert Young: Sorry about that. Just to follow up, trying to understand the positive comments on Australia and the trends there. But in the quarter, revenue was down.
Robert Young: Just a follow up trying to understand the the positive comments on Australia, and the trends there, but in the quarter.
Robert Young: Revenue was down I think you.
Speaker Change #133: Someone asked the question, but I didn't catch the answer I was wondering if you could touch on that just trying to understand that.
Matthew Proud: I think someone asked the question, but I didn't catch the answer. I was wondering if you could touch on that, just try to understand the difference. Yeah, no; I was more talking.
Speaker Change #134: Difference, yes, I was more talking about and then probably pivoted more tower drivers a lot of that is due to FX as well.
Matthew Proud: Yeah, no; I was talking to her, and I probably pivoted more to talk about drivers. A lot of that is due to FX as well.
Speaker Change #141: All of it or all of it or maybe if you can break down the pieces there.
Robert Young: All of it or none of it or what? Maybe we can break down the pieces there.
Frank Di Liso: Rob, the FX had a portion of the change year over year. But we yeah, we can't disclose the pieces of typically what's FX versus the business. So, but we just want to mention that FX was one of the major drivers of the decline.
Unknown Executive: Rob Yes.
Unknown Executive: FX had a portion.
Speaker Change #134: The change year over year.
Unknown Executive: But yes, we agree.
Speaker Change #134: We can't disclose the pieces out specifically the.
Speaker Change #134: FX versus the business so.
Speaker Change #137: But we just want to mention that the FX.
Speaker Change #135: One of the major drivers of the decline.
Speaker Change #136: Okay. Thanks.
Speaker Change #136: Okay.
Speaker Change #138: Thank you there are no further question at this time I will now hand, the call back to Mr. HUS Hershey for closing remarks.
Huss Hirji: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Huss Hirji for closing remarks.
Speaker Change #139: Great. Thanks, all for attending and we look forward to connecting with you during our Q4 full year results.
Huss Hirji: Great, thanks everyone for attending, and we look forward to connecting with you during our Q4 full year results to be held in September. Until then, have a great day, and speak soon.
Speaker Change #139: Can be held in September until then have a great day and succeed.
Speaker Change #140: Thank you that concludes our conference for today. Thank you for participating you may all disconnect.
Operator: Thank you. That concludes our conference for today. Thank you for participating. You may all disconnect.