Q3 2025 Dye & Durham Ltd Earnings Call
Five earnings call.
Speaker Change: I would now like to turn the call over to <unk> from VP Investor Relations of <unk>. Mr. <unk> you may begin your conference.
Speaker Change: Great. Thank you and good afternoon, and welcome to the <unk> Conference call.
Speaker Change: 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 statements made during this call may include forward looking statements and information and future oriented financial information regarding <unk> and its business and disclosure regarding possible events conditions or results that are based on information currently on our currently available to management, which indicate managements' expectations.
Sid Singh: So again, I'll point us towards what really drives the company forward as an operating plan. It's customers first. There's clear things we're doing under that pillar. It's product transformation. There's a lot of innovation happening inside of that pillar. And then there's portfolio optimization. So we don't expect major changes to the strategy. And rest assured, the organization is by no means at a standstill while the CEO search is being finalized. Okay.
Speaker Change: Patient of future growth.
Speaker Change: <unk> of operations business performance and business prospects and opportunities.
Speaker Change: Such statements are made as of this date hereof, and <unk> assumes no obligation to update or revise them to reflect events disclosures or circumstances, except as required by applicable securities laws such statements involve significant risks and uncertainties and are not a guarantee of future performance or results.
Sid Singh: And then I guess, are you still in contention for the role, Sid? I'm sorry to ask that question. But I mean, the potential for the business to continue forward under disrupted versus a new CEO stepping in and maybe changing things? I mean, that's material. Thank you so much for this information. Yeah, like I said, the strategies and the priorities are being agreed between the board and the management team. So those don't expect any changes there. I think there are always going to be tweaks. And even the current management team will continue to tweak, you know, the finer points of the strategy.
Speaker Change: Of these risks or uncertainties could cause results to differ materially from the results discussed today.
Speaker Change: Given these risks and uncertainties, one should not place undue reliance on these statements and information.
Speaker Change: Please refer to the forward looking statements and information and future oriented financial information section of our public filings without limitation of our MD&A and our earnings press release issued today for additional information.
Frank: Joining us on our call today are <unk> interim Chief Executive Officer, and Frank <unk>, Chief Financial Officer, a question and answer period will follow the formal remarks for research at all.
Sid Singh: But the broad pillars are pretty much as we've outlined. These are part of the operating plan. There's a lot of work happening under these. So I want to make sure you all understand that these unlock really good, strong revenue growth potential for D&D. It has a good portfolio of products. And by allocating capital towards the most important aspects of our business, which is customers, you know, the product innovation that's been starved for many, many months and quarters, I think will unlock value. And I think that's where I would encourage our analysts and shareholders to look towards, which is organic growth going forward.
Now I will turn the call over to set for opening remarks.
Speaker Change: Thank you <unk> good.
Speaker Change: Good afternoon, everyone and thank you for joining us today.
Speaker Change: This afternoon, we released our third quarter fiscal 2025 results.
Speaker Change: The business continues to perform well.
Speaker Change: Despite the uncertainty in the broader environment as a result of the tariff and trade negotiations.
Speaker Change: <unk> are having an impact on real estate activity in Canada.
Speaker Change: This quarter marks a turning point for <unk>.
Frank DeLiso: And then in the subsequent notes in the financials, it says that you increase the debt by 13 million, you generated cash this quarter, even after a contingent. So I'm just curious, like, what, what was the decision to increase the debt? Like, if EBITDA has declined and, or it's flat, and debt is higher than leverage would have necessarily increased. So I'm curious about that decision. why you did that. And then the five to 10 million reduction in net interest payment, is that mostly due to the swap extension or was there some sort of a debt reduction that we would expect after the quarter?
Speaker Change: In addition to today's financial results, which Frank will cover shortly we have released our go forward operating plan.
Speaker Change: Storing growth and market leadership.
Speaker Change: Billed under the direction of our reconstituted board and new leadership.
Speaker Change: Since stepping into the interim CEO role in February.
Speaker Change: Were closely with the team to assess the state of the business.
Speaker Change: We found a strong foundation, but also critical issues that needed addressing.
Speaker Change: We're tackling those head on with a focused and disciplined approach.
Frank DeLiso: or After Update, it's right here. Thanks for the question, Rob. The subsequent event of the $13 million drawdown, that was really of a timing basis, you know, as we have the semi-annual bond interest due in mid-April. So that was done from a timing perspective to facilitate that payment. You're right to point out that we had some big payments on contingent considerations in the quarter that used up most of the free cash flow. And your second question relating to where we expect the $5 to $10 million, it's a combination of both the swap extension, so extending longer into the term, given the lower interest rate curves that we're seeing in Canada and the U.S., as well as the current lower variable rates that we're experiencing on our variable flow.
Speaker Change: I will now outline the three core strategy pillars under this new operating plan.
Speaker Change: Number one customers first.
Speaker Change: This is our number one and top.
Speaker Change: Priority.
Actively rebuilding trust and credibility with our customers.
Speaker Change: Over the past 90 days, our team has engaged thousands of customers.
Speaker Change: We have reinstated net promoter score.
Speaker Change: We've improved <unk>.
Speaker Change: <unk> responsiveness dramatically.
Speaker Change: Including our customer E Mail response times by 75% are foreign response time by 85% in some of our key markets.
Speaker Change: And we've also implemented a regional operating model to create stronger local accountability.
Speaker Change: This past quarter I am pleased to announce that we have named Colin Bahama as managing director for our UK business.
Frank DeLiso: Last question, I'll pass the line after. You said that renewals, I think you said 23% of the 2022 vintage contracts renewed, you had 85% gross retention. Is that customer retention or dollar retention? And then I think you said it was 90% after the quarter, so the retention has improved after March 31st. If you could just clarify Why? Why?
Speaker Change: Colin joined the team last year and has played a key role in enhancing our global sales function, particularly in new sales.
Speaker Change: Having a dedicated regional leader in the UK allows us to deepen our understanding of our customer base and the products we offer.
Speaker Change: While establishing a strong leadership presence in this key region.
Frank DeLiso: those churn statements, and then I'll pass. Yeah, Rob, that's correct. So through our March 31st results, which is our Q3 quarter, we had achieved a growth retention of 85%. And when you now include April into that metric, so call it a calendar year to date basis, that has now increased to over 90%. And that is on a customer basis, measuring the number of teals that have renewed with a contract. If you were to consider dollar retention, would it be better or worse than the 85? Yeah, we're, we're obviously, we're not providing that metric externally right now, Rob, but right now we're focused on measuring on a gross retention basis.
Speaker Change: We are also hyper focused on retention as a key outcome.
Speaker Change: 23% of our 2022 contracts came up for renewal this quarter.
Speaker Change: We achieved over 85% gross retention.
Speaker Change: That is proof that our <unk> customer base still values, what we deliver when we show up the right way.
Speaker Change: Our second pillar and the new strategy product transformation.
Speaker Change: We are investing in product led customer driven innovation.
Speaker Change: Our core platform unity has been redesigned with a 100 plus improvements.
Speaker Change: And we are accelerating its launch in the British Columbia market a major milestone later this calendar year.
Speaker Change: To be clear.
Speaker Change: We are not pursuing one global platform for the entire global legal tech market. Instead, we are smartly investing in the region specific product portfolio to drive local innovation.
Frank DeLiso: And as part of my script, we are flexible, we are becoming more flexible with some of the ARR minimums that we provide given the macro economy. But we are focused on just providing that metric on a gross retention basis now. Okay, thank you.
Speaker Change: Both capital efficient and quick to market.
Frank DeLiso: I'll hop back in. Thank you.
Speaker Change: We're also embedding AI into a workflow and practice management solutions to help customers automate tasks reduce risk and improve efficiency.
Thanos Moschopoulos: And your next question comes from Thanos Moschopoulos from BMO Capital Markets. Please go ahead. Hi, good afternoon.
Speaker Change: In parallel we are.
Thanos Moschopoulos: Can you provide some more color just in terms of the nature of the client discussions you had around renewals and your approach to securing those renewals? Was it primarily a function of more flexibility in contract terms? What were the concerns you heard from clients? And what was your strategy in addressing those to secure the renewal? Yeah, so Rob, sorry, Thanos. As I mentioned in the script, we are looking at all terms in the contract, whether it be contract length is one of them, actual amounts of commitments that on a go forward basis, As well as, you know, appropriate tiering.
Speaker Change: We're executing a cloud first modernization strategy.
Speaker Change: One that prioritizes usability.
Speaker Change: Capability and long term competitiveness.
We're also following a very disciplined investment and execution framework as it relates to these two pillars are.
Speaker Change: Our investments are very intentional.
Speaker Change: We have deployed over $4 million to enhance service sales and product support.
Speaker Change: Which helps us enabled retention faster delivery and long term scaling.
Speaker Change: We're also managing our margin profile carefully.
Speaker Change: Balancing short term margin impact with long term growth.
Thanos Moschopoulos: So obviously, the more volumes that customer commits, the bigger discount that they would get. So those are the primary three factors that basically are allowing us to achieve such a high retention ratio.
EBITDA margins are expected to remain strong in the 50% range.
Speaker Change: Boarded by cost control as well as productivity gains.
Lastly, the third pillar of our strategy is portfolio optimization.
Thanos Moschopoulos: Okay, um, can you clarify your comment regarding the prior period recognition impact that that affects the revenue comparability year over year? What exactly does that pertain to? Yeah, yeah, so it was a similar instance in what we reported in Q1, Thanos. So we had just basically on from various aftermaths of acquisitions and the timing of our desktop applications, they are renewed periodically. And so in the in the prior year of 2024 Q3, we had renewed some of those desktop applications for multi-year periods, which essentially recognizes the revenue based on the service provided all in that current quarter.
Speaker Change: Frank will expand on this but I want to underscore we are no longer pursuing acquisitions.
Speaker Change: We are laser focused on sharpening the portfolio and.
Speaker Change: And we will divest non core assets to reinvest in what matters.
Speaker Change: As our customers our people and organic growth.
Speaker Change: We will focus on driving growth in our core markets, where we are best positioned to win in.
And as such this will help improve the long term financial profile of the business.
Speaker Change: In closing we are in the simplify phase of our turnaround.
Speaker Change: Regarding complexity.
Speaker Change: Restoring customer trust.
Speaker Change: And aligning execution.
Frank: Frank will now address the quarterly performance our outlook <unk>.
Frank: And our portfolio optimization strategy Frank.
Sid: Thank you Sid and good afternoon.
Frank: This afternoon, we reported our third quarter 2025 results.
Thanos Moschopoulos: So that impacts that that adjustment that you saw in the in the in the results. Okay, so term license revenue in the prior period. Got it. Sorry. Basically, it was term license revenue, like you're recognizing a term license for a three-year period. Yeah, yeah. Okay.
Sid: Our results continue to demonstrate the underlying strength of our diversified business.
Sid: <unk> continues to grow despite the macro economic uncertainty, which has negatively impacted activity in the real estate market.
Sid: We reported revenues of $108 3 million, an increase of $1 million compared to the corresponding period in fiscal 2024.
Thanos Moschopoulos: And then the $11 million in acquisition, restructuring, other costs was higher than I would have thought. Just maybe clarify what the bulk of that pertains to. Is that the shareholder engagement activities? Was it kind of more focused on restructuring internally? Just what does that pertain to? Yeah, there. So the 11 million that you saw in the current quarter is a combination of a few factors. Obviously, we are spending some money on the Competition Bureau investigation, which we think will be non-recurring. There has been some restructuring charges from changes in our senior leadership team that essentially eliminated some of the positions, and some further integration work with a third party IT provider.
Sid: Organic revenue in the third quarter declined by 2% taking into consideration the revenue adjustments in the prior year period relating to timing impacts of entering into three year contracts.
Sid: Excluding these revenue impacts organic growth increased by $1 5 million, while revenues from acquisitions completed in the prior 12 month period were $3 million in the quarter.
Sid: Annual contracted revenue or ACR remains robust at 61% of total revenue compared to 53% at the same point in fiscal 2024.
Sid: Contracted revenue includes minimum commitment levels of <unk> plus revenue from contracted to Overages and other service arrangements.
Thanos Moschopoulos: Those were the three main factors.
Sid: Mainly in our financial Technology service lines sequentially ACR grew by $10 6 million to $263 million as of March 31, 2025.
Thanos Moschopoulos: Okay, I'll pass the line. Thank you.
Kevin Krishnaratne: And your next question comes from Kevin Krishnaratne from Scotiabank. Please go ahead. Hey there, good afternoon. I have a question as well on the renewal activity so far. So I think you said 23% of the way through Q1. What are the months where you've got the biggest level of activity remaining? Is it right now? Is it sort of like April, May, June? Just remind us there of how much the big chunk is when that's up for renewal. Yeah, the majority of the renewals will happen this quarter. So being Q4, Kevin. So that would be through the next couple of months.
Sid: Annual recurring revenue contracted was 30% 36% of total revenues as of March 31, 2025, compared to 30% at the same point in the prior year.
Sid: <unk> was $134 million up 23% or $28 4 million as of March 31, 25.
Sid: Compared to the same point last year sequentially.
Sid: Sequentially AAR grew by $1 5 million to $134 million as of March 31, 25.
Sid: Looking ahead to dynamics will influence our <unk> exposure to real estate as the interest rates have moved down in normal periods I won't expect real estate activity would improve.
Sid: However, given the uncertainty as a result of the global tariff and trade dynamics real estate activity has softened in the early stages of calendar 2025.
Kevin Krishnaratne: April was a pretty big month as well. So we'd be anticipating that we'd be done two thirds of the deals through June. got it.
Sid: Structure of our minimum volume contracts and the practice management business enables us to capture a base level of revenues in periods of low activity and capture upside from increase real estate activity.
Kevin Krishnaratne: And this is and you're and I know you're not gonna you're not willing to provide the you know, your views on revenue retention, but do you have a bunch of big, big clients up for renewal, and you're pretty confident of at least maintaining them as customers that you're thinking about when you talk about 90 over 90% renewal, it's just the fact that you're going to be, you know, not losing them all together. But you know, just trying to get any any kind of color you can provide us on what you're doing to sort of preserve preserve revenue.
Sid: The minimum portion of these contracts are included in <unk>.
Andy: Andy over usage is that included an annual contracted revenues.
Andy: We introduced the minimum volume contracts offerings three years ago. The majority of those contracts were on three year terms, which means calendar 2025 is an important period for renewals.
Kevin Krishnaratne: And I don't think you can do pricing as easily. But is it are you going to be selling them more services, different parts of your bundle, just trying to get a bit more more help here on how to think about your ability to preserve revenue. I mean, you gotta remember, Kevin, a lot of these renewals are still multi-year deals. and a lot of them have various legal practice management wants and needs. So in many of the deals, it's not just the conversation around conveyancing. It's a conversation amongst all facets of their business. So we were able to bundle in other products and services as part of the renewals that would essentially lift the net revenue retention ratio along with that.
Andy: As of March 31, 2025, 23% of the three year contract signed in calendar 2022 have come up for renewal.
Andy: As Sid mentioned, we are pleased to report that we have achieved more than an 85% gross retention rate on this first tranche of contract renewals as a result of more flexible contract terms and active engagement with our customers.
Andy: When factoring contract renewals that occurred in April 2025.
Andy: Gross retention rates are now over 90%.
Most of the remaining contracts come up for renewal over the next few months.
Andy: With the implementation of our customer first strategy, which should mentioned earlier the.
Andy: The account team is focused on contract renewals through the remainder of this fiscal period.
Kevin Krishnaratne: So we're not just focused, obviously, on transactions of conveyancing going forward. We're still focused on providing an encompassing solution to the customers that we're actively renewing.
Andy: We generated adjusted EBITDA of $55 2 million down, 8% or $4 5 million in the third quarter of fiscal 25 compared to the previous period.
Andy: The change was driven by lower revenues after direct costs caused by higher amounts of revenue recognition from executing on multi year contracts in the prior period and.
Kevin Krishnaratne: Okay, okay, that's helpful. A question on, I appreciate the description on the three-year sort of plan, strategic plan. When Enjin had put out their, you know, value creation plan, I think is what they called it back in December, I think they were calling for a view of 10% organic growth split between 3% transaction, 3% pricing, 4% cross-sell upsell. So now you've landed on sort of high single digits. So I'm just wondering if you can update us there on sort of, you know, you know, what went into that decision and sort of how you think about, you know, your target on the growth algorithm for organic growth.
Andy: And lower practice management revenues in Canada, driven by the recent macro conditions.
Andy: This was partially offset by the contributions of acquisitions and higher due diligence and Canadian financial services revenues.
Andy: Excluding the timing impact of these noncash multiyear contract work recognitions in the prior year the year over year performance in adjusted EBITDA would be approximately flat.
Adjusted EBITDA margins was 51% in the in the current quarter.
Andy: With the investment strategy and the product team, we believe EBITDA margins will remain consistently in around $50 to 55% range as compared to the 50% to 60% range under the previous strategy.
Kevin Krishnaratne: Yeah, it's the same components that made up that high single digit plus range. So we're giving ourselves a bit more of a range there, Kevin. So, you know, obviously, we're looking at market growth, we're looking at pricing levers, the ability to track new logos, the ability to cross sell, upsell, as well as winbacks, right? So we're looking at all of that, a net of obviously current churn that we've that we have been experiencing. So those are all the relevant factors that made up that, that long term target.
Andy: Total adjusted operating expenses, which includes direct costs technology costs, G&A sales and marketing were $53 $1 million in the quarter or 49% of revenues.
Andy: Direct costs increased by $3 $9 million this quarter, mainly due to new reseller relationship agreement signed.
Andy: Higher than anticipated third party cost in the period and higher revenues.
Kevin Krishnaratne: But we're not, we're not in a position to disclose the individual elements at this time.
Andy: Working towards reducing direct costs from third party vendors with active partner engagements and by replacing these with internal comparable data products.
Kevin Krishnaratne: Okay, the last one for me as well. So I know you've given you know, the target for EBITDA margin 50 to 55%. Frank, I think you, you may have mentioned towards the 50% range. You know, in the near term, I don't know if Yeah, so we've already been making advancements, right, as we speak in Q3. So some of that's trickled into Q3, Kevin. The comment I made before around 50 to 60, that was the previous guidance range. And we're just essentially fine tuning that to a more tighter range of 50 to 55. And I mean, you got to look at that over a rolling period of time.
Andy: Excluding the impact from acquisitions indirect costs adjusted operating expenses decreased by <unk> 4 million.
Andy: For the third quarter of 2025, as a result of cost reduction initiatives compared to the prior year.
Andy: Adjusted finance costs, which adjusts for changes in fair values and contingent consideration was $32 8 million down.
Andy: Down $2 6 million from the prior period.
Andy: On a year to date basis, adjusted finance costs were down over $15 million from the prior year.
Andy: The improvement primarily reflects the savings from our refinancing transactions completed in April 2024.
Andy: And the positive interest spread earned on investments held to retire the 2026 convertible debentures.
Andy: We expect to see a continued decrease in interest costs from the current lower variable rates on our term loan B, Florida portion.
Andy: And the benefits of a $218 million U S cross currency swaps that we extended in April 2025, which will further serve to reduce our net effective interest payments moving forward.
Kevin Krishnaratne: And you know, certain quarters are going to be lower and certain quarters will be higher based on the profile of our revenues, Q3 being one of our seasonally lower periods. So it really is going to be more of a rolling four-quarter amount. In terms of the next quarter or so, I mean, obviously, we're heading into our seasonally high period. But we are still making more investments, as Sid alluded to. So we're confident we're going to be in that range.
Andy: We anticipate reduced interest payments of between five and $10 million in the next 12 months as compared to the last 12 months ended March 31 2025.
Andy: Acquisition restructuring and other costs were $11 million for the quarter compared to $7 1 million in the prior year.
This figure is significantly lower than the sequential period due to the costs related to the shareholder engagement in the lead up to the 2020 for AGM.
Gavin Fairweather: Okay, thanks a lot. I'll pass the mic. Thank you.
Andy: There are no material cost for meeting related to that shareholder engagement beyond the third quarter.
Gavin Fairweather: And your next question comes from Gavin Fairweather from Cormark. Please go ahead. Oh, hey, thanks for taking my questions.
Andy: We expect this item to normalize below prior levels prior year levels, given the focus on organic growth ongoing completion of integration activities and the suspension of new acquisitions.
Scott Fletcher: Maybe just to start on the upcoming BC rollout of Unity, can you just describe how the user experience will change versus conveyancer, which I think is your product in that market? And generally, how you're kind of approaching that rollout and whether we should think about, you know, some some type of pricing left associated. I can start there and try and chime in. You know, one thing we've done is we've spent a ton of time with our customers in the BC market, and there's one consistent feedback we get. They love the D&D product set. They're very well managed in terms of workflow.
Andy: We anticipate these savings more than $40 million on acquisition restructuring and other costs in the next 12 months relative to the last 12 months ending March 31.
Andy: Leveraged free cash flow was $24 5 million up $31 6 million for the third quarter compared to the negative $7 1 million in the prior year.
Andy: This change is primarily result of higher cash from operating activities.
Andy: Lower capital expenditures lower cash taxes, and lower interest costs paid in the quarter.
Scott Fletcher: They're very connected from an ecosystem perspective in terms of how data exchange takes place. So there's a lot to offer them with the new platform. And one of the things we are focused on is incorporating a ton of innovation, but without dramatically changing the day-to-day workflow of these customers. So it's a balance that we are taking, and the way we're validating that is going through an alpha, which gets us early feedback from customers. We're launching our beta, which then expands the number of users to a larger pool of customers that give us even more feedback.
Normalizing for the <unk>.
Andy: <unk> semi annual bond interest impact of approximately $60 million in Q3 25.
Andy: Leveraged free cash flow is still significantly up in the period.
Andy: Our net debt stood at approximately 135 billion as of March 31 unchanged as compared to December 31 24.
Andy: As I mentioned last quarter, we are now required a classifier 2028 outstanding convertible debt as current.
Andy: This is to comply with <unk> presentation requirements.
Andy: This results in a mismatch in our stated current ratio while no such discrepancy exists in substance.
Scott Fletcher: So we're working hand-in-hand with these customers to make sure the launch is actually accretive to their business.
Andy: We have sufficient resources to manage our debt and the business generates strong sustaining cash flows.
Andy: As Sid mentioned earlier as part of our 100 day plan set out under the direction of the of the New Board and portfolio optimization is one of our three core pillars.
Scott Fletcher: Frank, did you want to jump in on the pricing side? Should we should we think about ARPU moving up or is it mostly just a switchover? Yeah, no, I mean, I think we're, we're competitively priced today in the market. part of our AR growth in the quarter is continuing to attract new clients and conversions to existing transactional. So, you know, the current pricing we believe is adequate, and we're looking at this more of a functionality play as opposed to a pricing play at the current time. Yeah, one thing we are not doing, one thing we're not doing, just to add a finer point, is forcing any customer migrations.
Andy: All M&A activity has been passed.
Andy: We are actively assessing noncore divestitures to sharpen our operational focus.
Andy: We are taking a pragmatic approach.
Unlike the customer first pillar, which extends in the one to three year timeline and the product transformation pillar of our plan, which will be permanent we expect to wrap up our portfolio authorization by the end of fiscal 2026.
Andy: Just more than a year from today will.
Andy: We will be measured in our approach to ensure we receive optimal value for shareholders proceeds from any potential devices here will be used to reduce our leverage ratio.
Andy: All capital allocation decisions will be taken within the aim to unlocking long term value and improving the resiliency of the business.
Scott Fletcher: So we will offer this platform and we will make sure customers see the value on it. And we'll work with them to make sure that they move from this platform or their existing platform to UnityPC. But we're by no means shutting down our existing platforms. This gives customers more optionality and gives them time to manage their workflows and operations. So this is a very positive move for our customer base in the PC market.
Andy: We are actively managing the business to drive key metrics, we are targeting organic growth in the high single digit plus range over the long term compared to the 3% retrieved in the last 12 month period.
As I mentioned earlier adjusted EBITDA margin target is in the range of 50% to 55%.
Andy: We are targeting EBITDA and cash flow from operation conversion of 85% plus.
Andy: Just on the strength of our business model and the recurring nature of our cash flows.
Andy: Both the material reduction in acquisition restructuring and other charges together with working capital improvements support us achieving that level of conversion.
Andy: Organic growth.
Andy: EBIT margins leverage and strong cash flow conversion are the key financial metrics, we are measuring the progress of our strategy to restore growth and market leadership.
Scott Fletcher: Yeah, I mean, obviously, Gavin, the five year, we're approaching the five year mark since COVID. And that'll hit us over the next 12 months. So a lot of people would have taken those five-year deals on their mortgages just after COVID when it was super low on the fixed side. Our percentage of refinancing transactions has remained consistent. It's roughly a quarter of the volumes. And, you know, we're also optimistic as you are on, you know, some of the refinancing that are coming our way in the Canadian market over the next 12 months. So that, you know, that is something that we're going to be ready for as it hits.
Andy: And with that I'll turn it back to the operator for the Q&A session.
Andy: Thank you.
Andy: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on you touched on film.
Andy: We'll hear prompts that your hand has been raised CD rates to decline from the polling process. Please press the star followed by the Q.
Andy: We are using a speaker phone please of the handset price Anarchy one moment. Please for your first question.
Speaker Change: And your first question is going to come from Robert Young from Canaccord Genuity. Please go ahead.
Robert Young: Hi, Good evening I guess, the first question would be just an update on the CEO search and said if you could confirm whether or not youre still in contention for that because I think investors are looking at potentially a longer period of.
Scott Fletcher: Thanks so much for passing along.
Stephen Boland: Thank you. And your next question comes from Scott Fletcher. from CIBC. Please go ahead. Hi, good evening. There's some more concrete language around non-core asset divestitures.
Robert Young: Maybe reassessment of if a new CEO comes and steps into the role. So just anything you can give on timeline and process and where you are in that process.
Robert Young: Yes. Thanks for the question. So I would also point you to a letter that our board of directors has released directly addressing the specific point, we know it's top of mind for.
Stephen Boland: Just wondering if you could share anything, any incremental details on what that might be, whether that's geography, assets, and then Yeah, maybe I'll just leave it there. Yeah, I appreciate the question. At this stage, unfortunately, we cannot go into that level of detail. But I can tell you that there is a tremendous amount of portfolio analysis we've undertaken. We've looked at more than 60 different product applications that are within Dye & Durham globally. We've looked at the assets which we believe we can grow, and we've looked at the assets which we believe don't belong inside of D&D.
Robert Young: Many of our analysts and stakeholders so as it.
Robert Young: Stands today, we are nearing the completion of our search for a permanent CEO.
Robert Young: With lead the search has lasted longer than expected, but as you can imagine the board once the right individual.
Who can lead time darden during this transformation period in the letter you will also see the priorities that the board has laid out in partnership with the management team. So again I'll point us towards.
Robert Young: It really drives the company forward as an operating plan its customers first there's clear things, we're doing under that pillar.
Stephen Boland: Like, we're not the best owners. So we are actively working to figure out the right market, the right value for these assets. And we keep you all updated as those conversations progress into something more definitive.
Robert Young: Its product transformation there is lot of innovation happening inside of that pillar and then there is portfolio optimization. So we don't expect major changes to the strategy.
Robert Young: And rest assured.
Stephen Boland: The one thing I do wanna call out is that you fast forward 12 months from now, as Frank alluded to in his comments, we would not be operating with the same number of software assets as we have today. Okay, thank you. That's that helps.
Robert Young: Organization is by no means at a standstill, while the CEO search is being finalized.
Robert Young: Okay.
Robert Young: And then I guess.
Robert Young: Are you still in contention for the role.
Robert Young: I am sorry to ask that question, but I mean, the potential for the business to continue forward under disrupted versus a new CEO stepping in and maybe changing things I mean thats <unk>.
Stephen Boland: And then, you know, mentioned early in the call the some costs related to the Competition Bureau investigation. Is there anything you can share update wise on on the timing of that or how it's progressing? Well, yeah, we were required to deliver the first set of documents, Scott, in at the end of February. And, and so all the effort there has been devoted towards getting to that, to that, to that deadline. And we we've met that. And so moving forward now we're, we're, you know, obviously fielding some some q&a back, but no meaningful update to share at this point.
Robert Young: Material is.
Robert Young: Information like us like I said, the the strategies and the priorities are being agreed between the board and the management team. So those don't expect any changes there I think there are always going to be tweaks and even the current management team will continue to tweak.
Robert Young: The finer points of the strategy, but the broad pillars are pretty much as we've outlined at these are part of the operating plan. There is a lot of work happening under these so I want to make sure you all understand that.
Robert Young: These unlock really good strong revenue growth potential for DND. It has a good portfolio of products and by allocating capital towards the most important aspects of our business which is customers.
Operator: Okay, thanks a lot. I'll look at that. Thank you. And just as a reminder, if you wish to have a question, please press star one.
Stephen Boland: And your last question comes from Stephen Boland from Raymond James, please go ahead. All right, always last. That's okay.
Robert Young: The product innovation, that's being starved for.
Robert Young: For many many months and quarters, I think will unlock value and I think thats where.
Stephen Boland: I guess this is beaten to death, but I want to just kind of go back to the retention. It seems like, again, I appreciate the company's gone through a lot of turmoil over the last 18 months, but, you know, 85%, 90% retention, you know, like, why are these customers leaving? It seems like it's being celebrated as a good number, but like, you know, any company that loses 10% of their customers, you know, there would be a lot of panic, and maybe that's kind of why the stock is where it is. But, you know, where are these customers going, and why are they leaving?
Robert Young: I would encourage our analysts and shareholders to look towards which is organic growth going forward.
Robert Young: Okay.
Robert Young: And then in the subsequent.
Robert Young: Note in the financials.
Robert Young: Since that you increased the debt by $13 million you generated cash this quarter even after.
Robert Young: Contingent payment.
Speaker Change: So I'm just curious like what was the decision to increase the debt.
Robert Young: If ebitdas declined.
Robert Young: Or it's flat and that is higher than leverage would have.
Robert Young: Necessarily increase so I'm curious about that decision and why.
Robert Young: You did that.
Robert Young: And then the $5 million to $10 million reduction in net interest payment is that mostly due to the swap.
Sid Singh: Is it service? Is it the pricing? You know, I'm just trying to get a better idea why you're losing 10% or 15%, depending on, you know, when the measurement takes place. Yeah, so it's a good question. What I would point you towards, you know, if you look at industry benchmarks in industry-specific software or vertical SaaS. Especially in the typical average customer size that we deal with, 90% gross retention is considered reasonably good. I think in the context of what you just outlined, the company has gone through, especially, and you all have seen the customer reports, the news publications, et cetera, around sentiment in general, of how the company has increased prices over the last two or three years.
Robert Young: Extension or was there some sort of a debt reduction that we would expect after the quarter.
Robert Young: Alright.
Frank: It's Frank here.
Frank: Thanks for the question Rob.
Speaker Change: Subsequent events of the $13 million drawdown LOE was really timing.
Timing basis, you know as we have the semiannual bond interest due in mid April.
Speaker Change: That was done from a timing perspective.
Speaker Change: I'll take that that payment.
Speaker Change: Youre right to point out that we had some big <unk>.
Speaker Change: Payments on contingent considerations in the quarter that you.
Speaker Change: Used up most of the free cash flow.
Speaker Change: And your second question relating to where we expect a $5 million to $10 million is a combination of both the swap extension so.
Speaker Change: Ending longer into the term given the lower interest rate curves that we're seeing in Canada.
Speaker Change: In the U S.
Sid Singh: I think there is a sentiment that has to be overcome. Now what I'm seeing across hundreds of customer conversations, and me, as well as the executive leadership team, are actively having direct customer conversations, is that customers actually like our workflow product. It manages a ton of complexity. There's a lot of training and retraining required of their staff to learn a new platform. We have very clear indication from our customers that the new platforms are nowhere close to D&D from a functionality perspective. At the same time, we have also unlocked new resources to continue to innovate on the platform.
Speaker Change: As well as the current lower variable rates that we're experiencing on our variable flow.
Speaker Change: Okay.
Speaker Change: Last question I'll pass the line after.
Speaker Change: Said that renewals. So I think you said, 23% of the 2022 vintage contracts are renewed at 85% gross retention is that customer retention or dollar retention.
Speaker Change: And then I think you said it was 90% after the quarter. So that retention has improved after March 31 biggest clarify.
Speaker Change: Those churn statements and then I'll pass by.
Speaker Change: Yes, Rob that's correct.
Speaker Change: <unk> March 31 results, which is our Q3 order.
Sid Singh: So considering all of those factors, I think these metrics are very encouraging. Although we are early in this index, we're less than a third of our way in, but these metrics in a vertical SaaS business at our size of ARR, I would say these are reasonably good numbers.
Speaker Change: <unk> achieved gross retention of 85% and when you now.
Speaker Change: Now include April into that metric so call it a calendar year to date basis.
Speaker Change: That has now increased to over 90%.
Speaker Change: And that is on a customer basis.
Speaker Change: Measuring the number of deals that have renewed with a contract.
Sid Singh: And would you say, like, are they leaving, like, when a customer goes in and you're, you know, maybe was convinced that they had purchased and a couple of other services, are they, like, leaving all products or some products? Or, you know, are they getting unbundled? I'm just trying to get a better idea. Yeah, I mean, we're referencing specifically the conveyancing products when we talk about these renewals. Although, I'm sure, you know, when you go across hundreds of contracts, there's going to be a lot of variation in there where customers do have other products from us and they're part of a multi-year deal.
Speaker Change: Okay.
Speaker Change: If you were to consider dollar retention would it be better or worse than the 85.
Speaker Change: Yes.
Speaker Change: We're obviously, we're not providing that metric externally right now Rob, but right now we're focused on measuring on a gross retention basis and.
Speaker Change: As part of my script, we are flexible.
Speaker Change: <unk> can be more flexible with some of the IRR minimums that we provide given the macro economy, but.
Speaker Change: But we are focused on just providing that metric on a gross retention basis now.
Speaker Change: Okay. Thank you I'll hop back in the queue.
Speaker Change: Thank you and.
Sid Singh: What we definitely see in these negotiations is that customers don't want to leave D&D And if anything, what we're hearing from the customers is that this is a new chapter in the company. We're focused on the right priorities. And most of them, as you can imagine, 90% plus actually want to work with us and want to continue to buy more products and services from us. And we are actually confident that with increased investments in our go-to-market motion, which is sales and marketing, we do expect in fiscal 26 to actually start winning back some of the customers we have lost.
Speaker Change: And your next question comes from MS. Anna <unk>, Ms Jacqueline and BMO capital markets. Please go ahead.
Speaker Change: Hi, good afternoon.
Speaker Change: Can you provide some more color just in terms of the nature of the client discussions you have around renewals and your approach to securing those renewals was it primarily a function of more flexibility and contract terms.
Speaker Change: What were the concerns here from clients and.
Speaker Change: What was your strategy in addressing dose through the renewals.
Thanos: Yes, so Rob sorry Thanos.
Speaker Change: I mean as I mentioned in the script.
Speaker Change: We are looking at all in terms of the contract whether it be contract lengths is one of them.
Speaker Change: Actual amounts of commitments.
Sid Singh: So expect more updates on win-backs as we progress through the next quarterly updates as well.
Speaker Change: But on a go forward basis.
Speaker Change: As well as.
Speaker Change: The appropriate sharing.
Sid Singh: Second, second question is, you know, in MD&A, you say you're rehiring employees. You know, is this indicate, you know, like, I'm not trying to try to figure out like number of people cost, and these mid, you know, account managers, senior, like senior, partly senior leaderships, vice presidents, you know, and, you know, rehiring is these people that were laid off and or fired or, you know, coming back to work? I'm just trying to get the churn there. Yeah, I think you're referring to the, the board letter to shareholders, where we had that statement in there. Stephen?
Speaker Change: Obviously, the more volumes that the customer commits.
Speaker Change: The bigger discount that they would get so those are the primary three factors that.
Speaker Change: Basically are allowing us to.
Speaker Change: Achieved such a.
Speaker Change: Our high retention ratio.
Speaker Change: Okay can.
Speaker Change: Can you clarify your comment regarding the <unk>.
Speaker Change: Prior period recognition impact that that affects the revenue comparability year over year.
Speaker Change: What impact does that pertain to you.
Speaker Change: Yes, so it was a similar incidence and what we reported in Q1 that also.
Speaker Change: We've had.
Speaker Change: We just basically on from various.
Sid Singh: Yeah, okay. So I mean, there is no, you know, civic positions or class, I mean, it's across the board. You know, I think we're seeing, you know, we have a Sid mentioned, we have a rich product suite of products that require a lot of institutional knowledge. And as we're actively developing those products, we have, you know, invited some employees to come back to fill some of those vacancies or to fill some of those incremental investments. And obviously, we're always going to pick the best, the best candidate for the given position. And in many cases, these have been former employees.
Speaker Change: After massive acquisitions and the timing of our desktop applications they are renewed.
Speaker Change: Periodically and so in the in.
Speaker Change: In the prior year of 2020 for Q3.
Speaker Change: Had renewed some of those desktop applications for multiyear periods, which essentially recognize the revenue based on the service provided all in that current quarter. So really is a function of the timing of these three year deals and when they actually.
Speaker Change: <unk> renewed that impacts that that adjustment that you saw in the in the in the results.
Speaker Change: Okay. So a term license revenue in the prior period.
Speaker Change: Got it sorry.
Speaker Change: Basically it was term license revenue like Youre, recognizing it's a term license over a three year period, yes, okay.
Frank DeLiso: And then last question just on the banking technology revenue. Thank you for splitting that up. That was great. I don't remember and I haven't had time to go back and check. But what would you say the revenue was at acquisition a few years ago when you bought that business? I don't know. Is it higher, lower, similar? Or margin? Can you provide anything on that? Yeah, we've seen We've seen some good growth on the financial services side, Stephen. So, I don't have the numbers handy, you know, four years ago or three years ago when we acquired that.
Speaker Change: And then.
Speaker Change: The $11 million in acquisition restructuring other costs was higher than I would've thought just maybe to clarify with the bulk of that pertains to the shareholder engagement activities was it kind of more focused on restructuring internally with applicator.
Speaker Change: Yes.
The 11 million that you saw in the current quarter is a combination of a few factors.
Speaker Change: We.
Speaker Change: Obviously, we are.
Speaker Change: Spending some money on the competition Bureau investigation, which we think will be nonrecurring.
Frank DeLiso: But a lot of the organic growth is coming from Canadian financial services, mainly in the mortgage instruction and discharge business, where we have a substantial share across Canada, including Quebec. And if you look at the CREA data, it's Quebec market is still net positive year over year from that perspective. So, I know it's been ticking up over the last several quarters, but I would imagine we were lower when we first acquired that business. Okay, thanks very much, guys. Thank you.
Speaker Change: There has been some.
Speaker Change: Some some restructuring charges from changes in our leaders senior leadership team that.
Speaker Change: Essentially eliminated some positions.
And some further integration work with a third party provider those are the three main factors.
Speaker Change: Okay ill pass the line. Thank you.
Speaker Change: Thank you.
Speaker Change: Next question comes from Kevin Krishna from Scotiabank. Please go ahead.
Kevin Krishna: Hey, there good afternoon, I have a question as well on the renewal activity. So far so I think you said, 23% of the way through Q1.
Kevin Krishna: Like what's the what are the months, our <unk> got the biggest level of activity.
Huss Hirji: And there are no further questions at this time. I would now like to turn the call back over to Mr. Hirji. Please continue. Great. Thanks for all who attended and we look forward to connecting with you for our Q4 Foliar 25 results to be communicated and update later in the near future. Until then, have a great day. Thank you.
Kevin Krishna: Remaining as it is at right now is that sort of late April May May June just remind us there.
How much.
Kevin Krishna: The big chunk is when that's up for renewal.
Kevin Krishna: Yes.
Kevin Krishna: The majority of the renewals will happen this quarter, so if you're being Q4 Kevin.
Operator: Ladies and gentlemen this concludes your conference call for today. We thank you very much for your participation and ask that you do please disconnect. Have a great day.
Kevin Krishna: So that would be through the next couple of months April was a pretty big month as well.
Kevin Krishna: So we'd be anticipating that would be.
Kevin Krishna: Done two thirds of the deals through through through June.
Kevin Krishna: Got it and this is and your and I know you are not.
Speaker Change: We're not willing to provide the your views on revenue retention, but do.
Kevin Krishna: You have a bunch of big.
Kevin Krishna: Big clients up for renewal and you are pretty confident of at least maintaining them with customers about how youre thinking about when you're talking about 90 over 90% renewal.
Kevin Krishna: That youre going to be not losing them altogether, but.
Speaker Change: Just trying to get on any kind of color you can provide us on what youre doing to sort of preserve preserve revenue I don't think you can do pricing as easily but is it are you going to be selling them more services.
Speaker Change: Different parts of your bundle just trying to get a bit more more healthier on how to think about your ability to preserve revenue.
Speaker Change: Yes.
Speaker Change: Well, you've got a minute Kevin a lot of these renewals are still multiyear deals.
Speaker Change: And a lot of them have various legal proxy management wants and needs.
Speaker Change: And many of the deals it's not just the conversation around conveyancing.
Speaker Change: It's a conversation amounts in all facets of their business. So we will we're able to bundle in other products and services as part of the renewals that would essentially lift.
Speaker Change: Net revenue retention ratio along with that.
Speaker Change: So we're not just focused obviously on transactions on convincing going forward.
Speaker Change: We're still focused on providing an all encompassing solution to the customers that we are actively renewing.
Speaker Change: Okay. Okay. That's helpful.
A question on.
Speaker Change: I appreciate the.
Speaker Change: The description on the three year sort of plan strategic plan.
Speaker Change: When engine had put out their value creation plan I think what they call. It back in December I think they were calling for a view of 10% organic growth split between 3% transaction, 3% pricing, 4% cross sell up sell so now you've landed on sort of high single digits. So I'm just wondering if you can update us.
Speaker Change: There on sort of.
Speaker Change: What went into that decision and sort of how you think about your target on the growth algorithm for organic growth.
Speaker Change: Yes, it's the same components that made up that.
Speaker Change: High single digit plus range, so, we're giving ourselves a bit more of a range there Kevin.
Speaker Change: So.
Speaker Change: Obviously, we're looking at market growth, we're looking at pricing levers.
Speaker Change: The ability to attract new logos the ability to cross sell up sell.
Speaker Change: As well as the Wimax right. So we're looking at all of that.
Speaker Change: Net of.
Speaker Change: Obviously current churn that we that we have been experiencing so so those are all of the relevant factors that made up that.
Speaker Change: That long term target.
Speaker Change: But we're not we're not in position to disclose individual events at this time.
Speaker Change: Okay.
Speaker Change: The last one for me as well so I know you've given.
Speaker Change: Target for EBITA margin, 50%, 55%, Frank I think you may have mentioned towards the 50% range.
Speaker Change: In the near term I don't know if im just.
If I misheard you, but just how do we think about what the margin profile might look like in Q4 and Q1 <unk>.
Speaker Change: And youre in Youre going through some of these that CSR and product and the product investments and ongoing one but.
Speaker Change: Are you confident that you're going to stick around like at 50% of your potential. It can go lower just how do we think about just the very near term on the model.
Speaker Change: Yes, so we've already been making investments right as we speak in Q3, so some of Thats trickled into into Q3, Kevin.
Speaker Change: The comment I made before around 50 to 60 that was the.
Speaker Change: The previous guidance range and were just essentially fine tuning that to a more tighter range of $50 to 55, and you got to look at that over a rolling a rolling period of timing certain quarters, we're going to be lower in certain quarters will be higher based on obviously the.
Speaker Change: The profile of our revenues for Q3 being one of our seasonally lower periods.
Speaker Change: So it really is going to be more of a rolling four quarter amount.
Speaker Change: The amount in terms of the next quarter or so I mean, obviously, we're heading into our seasonally high period.
Speaker Change: So, but we are still making more investments as to deluded too.
Speaker Change: So we're confident we're going to be in that range.
Speaker Change: Okay. Thanks, a lot pipeline. Thank you.
Speaker Change: Thank you.
Speaker Change: And your next question comes from Gavin Fairweather, who caremark. Please go ahead.
Gavin Fairweather: Good morning, Thanks for taking my question, maybe just to start on the upcoming DC rollout of unity can you just describe how the user experience will change versus conveyance, there, which I think here is there product in that market and generally how you are kind of approaching that rollout and whether we should think about some type of pricing lift associated with us.
Speaker Change: I can start there and Frank can chime in.
Gavin Fairweather: One thing we have.
Speaker Change: Done is we've spent a ton of time with our customers and.
Speaker Change: In the PC market and Theres, one consistent feedback we get.
Speaker Change: They love the Dnb product set.
Speaker Change: They are very well.
Speaker Change: Managed in terms of workflow, they're very connected from an ecosystem perspective in terms of how data exchange take place. So there is a lot.
Speaker Change: Lots to offer them with the new platform and one of the things we are focused on is.
Speaker Change: Incorporating a ton of innovation, but without dramatically changing day to day workflow of these customers. So it's a balance that we are taking and the waiver validating that is going through an.
Speaker Change: <unk> Alpha which gets us early feedback from customers.
Speaker Change: We're launching our beta, which then expands the number of users to a larger pool of customers that give us even more feedback. So we are working hand in hand with these customers to make sure.
Speaker Change: The launch is actually accretive to their business.
Speaker Change: Okay.
Speaker Change: Frank did you want to add.
Speaker Change: On the pricing side should we should we think about our pre moving up or is it mostly just the switchover.
Speaker Change: Yes.
Speaker Change: I think we are.
Speaker Change: We're competitively priced today in the market.
Speaker Change: Part of our growth in the quarter is continuing to attract.
Speaker Change: New new clients and conversions to existing transactional.
Speaker Change: So the current pricing we believe is adequate.
Speaker Change: And we're looking at this more of a functionality play as opposed to a pricing play at the current time.
Speaker Change: Yes, the one thing we are not doing.
Speaker Change: One thing we're not doing just to add a finer point is.
Speaker Change: Forcing any customer migrations. So we will offer this platform and we will make sure customers see the value on it and.
Speaker Change: And we worked with them.
Speaker Change: To make sure that the move from this platform or their existing platform to unit at BC, but we're by no means.
Speaker Change: Starting down our existing platforms. This gives customers more optionality and gives them time to manage their workflows and operations. So this is a very positive move for our customer base in the PC market.
Speaker Change: I appreciate that color is quite helpful. And then maybe on the macro and we can all say that the Canadian home sales numbers, but one area that we can't really see is the refinancing transactions in the market and there's obviously been a lot of.
Speaker Change: News articles about the kind of upcoming refinancing wave. So curious if you could just.
Speaker Change: Kind of your expectations into context for us in terms of how many refi transactions have you seen Medicaid platform in recent years and how are you thinking about the potential upside in calendar 'twenty five 'twenty six.
Speaker Change: Yes, I mean honestly.
Speaker Change: And the five year, we're approaching the five year Mark since Covid.
Speaker Change: That will get us over the next 12 months.
Speaker Change: So a lot of people would have taken those those five year deals on their mortgages just after COVID-19.
Speaker Change: Super low.
Speaker Change: On the fixed side.
Speaker Change: Our.
Speaker Change: Our percentage of refinancing transactions as we remain consistent.
Speaker Change: That's roughly a quarter of the volumes.
Speaker Change: <unk>.
Speaker Change: We're also optimistic as you are on some of the refinancing that are coming our way in the Canadian market over the next 12 months.
Speaker Change: So that.
Speaker Change: That is something that we're going to be ready for as it hits.
Speaker Change: Thanks, So much I'll pass along.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Scott That's fair.
Speaker Change: From CIBC. Please go ahead.
Speaker Change: Hi, Good evening, there was some more concrete language around noncore asset divestitures.
Speaker Change: Just wondering if you could share anything any incremental details on what that might be where whether that's geography assets and then.
Speaker Change: Yes, maybe I'll just I'll just leave it there.
Speaker Change: Yes, I appreciate the question.
At this stage. Unfortunately, we cannot go into that level of detail, but I can tell you that.
Speaker Change: There is a tremendous amount of.
Speaker Change: Portfolio analysis, we have undertaken.
We've looked at.
Speaker Change: More than 60 different.
Speaker Change: <unk> applications that are within <unk> globally.
Speaker Change: We've looked at the assets, which we believe we can grow and we've looked at the assets, which we believe.
Speaker Change: Don't belong inside of T&D like we're not the best owners so.
Speaker Change: So we are actively working to to.
Speaker Change: Figure out the right market the right value for these assets and we.
Speaker Change: We'll keep you all updated as those conversations progress into something more definitive.
Speaker Change: The one thing I do want to call out is that you fast forward.
Speaker Change: 12 months from now as Frank alluded to in his comments.
Speaker Change: We would not be operating with the same number of suffered assets as we have today.
Speaker Change: Okay. Thank you that helps.
And then I mentioned earlier on the call.
Speaker Change: Some costs related to the competition Bureau of investigation or anything you can share update was on the timing of that or how it is progressing.
Speaker Change: Well, yes, we're required to deliver.
Speaker Change: Deliver.
Speaker Change: The first set of documents.
Speaker Change: In at the end of February.
Speaker Change: <unk>.
Speaker Change: And so all of the effort there has been devoted toward.
Speaker Change: Getting to that to that to that deadline and we've met that.
Speaker Change: So moving forward now.
Speaker Change: Obviously fielding some months in Q&A back, but no meaningful update to share at this point.
Speaker Change: Okay. Thanks for that I'll leave it there.
Andrew: Thank you Andrew.
Speaker Change: And just as a reminder, if you wish to have a question. Please press star one.
Speaker Change: And your last question comes from Stephen Volkmann from Raymond James. Please go ahead.
Speaker Change: Alright always loss okay.
Speaker Change: I guess.
Speaker Change: This was beaten to death, but.
Speaker Change: I wanted to just kind of go back to the retention.
Speaker Change: It seems like.
Speaker Change: Again I appreciate your company has gone through a lot of turmoil over the last 18 months.
Speaker Change: 85%, 90% were.
Speaker Change: Our retention.
Speaker Change: Like why are these customers, leaving it seems like it's being celebrated.
Speaker Change: Good a good number but like any company that loses its 10% of their customers.
Speaker Change: There would be a lot of panic, and maybe thats kind of where the stock is where it is but.
Speaker Change: Where are these customers going and why are they leaving.
Speaker Change: As a service is it the pricing.
Speaker Change: <unk>.
Speaker Change: I'm, just trying to get a better idea of why youre, losing 10 or 15% depending on the.
Speaker Change: The measurement takes place.
Speaker Change: Yes, so it's a good question.
Speaker Change: What I would point you towards.
Speaker Change: If you look at industry benchmarks.
Speaker Change: In industry specific software our vertical SaaS.
Speaker Change: Especially in the typical average customer size.
Speaker Change: We deal with.
Speaker Change: 90% gross retention is considered.
Speaker Change: Reasonably good.
Speaker Change: I think in the context of what you just outlined the company has gone through.
Speaker Change: Especially.
Speaker Change: You all have seen the customer reports.
Speaker Change: The news publications et cetera around sentiment in general.
Speaker Change: <unk>.
Speaker Change: The company has increased prices over the last two or three years.
Speaker Change: I think there is there is a sentiment that has to be overcome now what I am seeing across hundreds of customer conversations and me.
Speaker Change: As well as the executive leadership team are actively having direct customer conversations is that customers actually like our workflow product.
Speaker Change: It manages a ton of complexity.
Speaker Change: There is a lot of training and retraining required of their staff to learn a new platform.
Speaker Change: We have very clear indication from our customers that the new platforms are nowhere close to bnb from a functionality perspective.
Speaker Change: At the same time, we are also unlocked new resources to continue to innovate on the platform. So considering all of those factors I think these metrics are very encouraging. Although we are early in the ascending traded where we're less than a third of our way, but these metrics and our vertical SaaS business at our size of <unk>.
Speaker Change: Our.
Speaker Change: I would say these are these are reasonably good numbers.
And would you say.
Speaker Change: Leave it like when a customer calls in and your.
Speaker Change: Maybe it was convinced that.
Speaker Change: <unk> purchased a couple of other services.
Speaker Change: Leaving all products or some products or.
Are we getting on bundled or I'm, just trying to get a better idea of.
Yes.
Speaker Change: Referencing specifically.
Speaker Change: That you're convincing products when we talk about.
Speaker Change: These renewals, although I'm sure when you go across hundreds of contracts theres going to be a lot of aviation and their customers do have other products from us and theyre part of a multi year deal.
Speaker Change: What we definitely see.
Speaker Change: In these negotiations is that customers don't want to leave Dnb.
Speaker Change: And if anything what we're hearing from the customers is that this is a new chapter in the company. We're focused on the right priorities and most of them as you can imagine, 90% plus actually want to work with us and want to continue to buy more products and services from us.
Speaker Change: And we are actually confident that good.
Speaker Change: Increased investments in our go to market.
Speaker Change: Motion, which is sales and marketing we.
Speaker Change: We do expect in fiscal 'twenty six to actually start winning back some of the customers. We have we have lost so to expect more updates on win backs as they progress through.
Speaker Change: The next quarterly updates as well.
Speaker Change: Okay.
Speaker Change: Second question is.
Speaker Change: And you said Youre rehiring employees.
Speaker Change: Does this indicate.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: I'm not trying to transfer that <unk>.
Speaker Change: Number of people cost.
Speaker Change: Are these mid account managers senior like senior partly senior leaderships Vice presidents.
Speaker Change:
Speaker Change: In rehiring those are these people that were laid off in.
Speaker Change: Or fired or coming back to work on this chart.
Speaker Change: The churn there, yes, I think youre, referring to the.
Speaker Change: The board letter to shareholders.
Speaker Change: We had that statement in there.
Stephen Volkmann: Stephen Yes, okay.
Speaker Change: So I mean, there is no.
Speaker Change: Specific positions our philosophy, it's across the board.
Speaker Change: I think we're seeing.
Speaker Change: We have mentioned we have a.
Speaker Change: A rich product suite of products that require a lot of institutional knowledge.
Speaker Change: And as we are actively.
Speaker Change: <unk> those products.
Speaker Change: Have.
Speaker Change: Invited some employees to come back.
Speaker Change: To fill some of those vacancies order fill some of those incremental investments.
Speaker Change: And obviously, we're always going to pick the best of the best.
Speaker Change: Kennedy given physician.
Speaker Change: And in many cases these have been former employees.
Speaker Change: Okay and then last question just on the.
Speaker Change: The banking technology rugby thank you for splitting that up.
Speaker Change: Great.
Speaker Change: I don't remember and I am not climbed from Bakken Chuckle, what would you say the revenue was acquisition a few years ago. When you bought that business I don't know is it higher lower or similar.
Speaker Change: I don't know or margin can you point to anything on that business now.
Speaker Change: Yes, we've seen.
Speaker Change: We've seen some good growth on the financial services side Steven.
Speaker Change: I don't have the numbers handy four years ago or three years ago, when we acquired that.
Speaker Change: But a lot of the.
Speaker Change: The organic growth is coming from in financial services.
Speaker Change: Mainly in the mortgage instruction and discharge business.
Speaker Change: Where we have some.
Speaker Change: Essential.
Speaker Change: As a share across Canada, including Quebec.
Speaker Change: And if you look at the credit data.
Speaker Change: Quebec market.
Speaker Change: It's still <unk>.
Net positive year over year.
Speaker Change: From that perspective so.
Speaker Change: I know, it's been ticking up over the last several quarters.
Speaker Change: But I would imagine we were lower when we first acquired that business.
Speaker Change: Okay. Thanks, very much guys.
Speaker Change: Thank you and there are no further questions at this time I would now like to turn the call back over to Mr. <unk>. Please continue.
Speaker Change: Great. Thanks for all who attended and we look forward to connecting with you for our Q4 full year 2005 results to be communicated an update later in the near future until then have a great day. Thank you.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you very much for your participation and ask that you do please disconnect have a great day.