CNXC - NASDAQ

Good day, and thank you for standing by. Welcome to the Concentrix's Fiscal Fourth Quarter FY 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Sara Buda, Vice President, Investor Relations.

Terrific. Thank you, operator, and good evening. Welcome to the Concentrix fourth quarter and fiscal 2024 earnings call. This call is the property of Concentrix and may not be recorded or rebroadcast without the written permission of Concentrix. This call contains forward-looking statements that address our expected future performance and that, by their nature, address matters that are uncertain. These uncertainties may cause our future results to be materially different than those expressed in our forward looking statements. We do not undertake to update our forward-looking statements as a result of new information or future expectations, events or developments. Please refer to today's earnings release and our most recent filings with the SEC for additional information regarding uncertainties that could affect our future financial results. This includes the risk factors provided in our Annual Report on Form 10-K and our other public filings with the SEC. Also during the call, we will discuss non-GAAP financial measures, including adjusted free cash flow, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP EPS and constant currency revenue growth. A reconciliation of these non-GAAP measures is available in the news release and on the company's Investor Relations website under Financials. With me on the call today are Chris Caldwell, our President and CEO; and Andre Valentine, our Chief Financial Officer. Chris will provide a summary of our operating performance and growth strategy, and Andre will cover our financial results and business outlook. Then we'll open the call up for your questions. And now, I'll turn the call over to Chris.

Thank you, Sara. Hello, everyone, and thank you for joining us today for our fourth quarter and fiscal year 2024 earnings call. Before we get into the details of our results, I think it might be helpful to look at how our business has evolved over the past few years to show why we are confident that we will continue to grow profitably in 2025 and believe mid-single digit growth is achievable in later years. As we have stated and provided many examples over the last two years since GenAI started to be mainstream, we have executed with intent to focus our offerings on taking advantage of GenAI and expanding into new areas, while keeping our underlying business healthy by [de-investing] (ph) in commodity work. As a result, we have more than 2,000 clients including 155 of the Global Fortune 500 with extremely high client revenue retention rate of approximately 99% in fiscal 2024. We have built a defensible market leadership position as a provider of integrated technology led business solutions that power our client success. This means we have the scale, technologies and capabilities to broaden our market and address the evolving needs of our clients. Our top 25 clients, which are all leading global brands have an average tenure of over 16 years with us. Our revenue with these top clients continues to grow faster than the rest of our business, as we introduce ancillary services and complementary solutions to expand our value and grow our share, while automating and innovating work for them. In fact, nearly $1 billion of our revenue in 2024 is derived from new Concentrix solutions that didn't exist at scale in our business 24 months ago. Solutions such as data annotation, data modeling, analytics, B2B sales enablement, AI design and deployment, cybersecurity, financial crimes and compliance are now today and even now with our commercial available software products, combining our revenue from these offerings grew above mid-single digits in fiscal 2024. Additionally, we have our Catalyst IT services offering, which represents roughly 8% of total revenue and is also growing well. As we have grown these ancillary services and we have also proactively reduced the percentage of our business related to low complexity transaction from 13% three years ago to 7% today. As we expect to continue to reduce this percentage further in fiscal 2025. And finally, as AI emerged as a business imperative, we have consistently grown and evolved our business to take advantage of this opportunity and use it as a source of differentiation. In fact, with generative AI deployments across half of our clients, approximately 200,000 desktops in our own operations using GenAI, and with tens of thousands of digital workers that are autonomous, we’re confident saying that we have one of the larger deployments of AI technology at scale in the world. We have found that as we deploy our technology to grow revenue faster with these clients, and we are particularly encouraged that as we have completed the Webhelp integration, we have a large pipeline of new clients in Europe who we will deploy our technology in fiscal 2025. While the market focused on the erroneous perception of AI as a headwind for our business, we have turned it into a tailwind, using generative AI to take advantage to create new opportunities while making our traditional business better. We have given numerous examples on our last few calls of how we lead our clients through their AI journey from designing and building their operations to deploying automation and reducing low value transactions to enhancing their internal productivity. In doing so, we reduced our clients' total cost while increasing our revenue, as they consolidate spend with fewer providers and unlock new sources of revenue for us. This has been the case throughout our history and continues to be the case today. I am delighted with the progress we have made as we have adapted and innovated to address our clients' evolving needs. While we see a clear disconnect today between our underlying fundamentals and our public market valuation, I am confident that as we execute our multi-year growth strategy, our valuation will align with the strength of our business and the value of our distinguished and unique market leadership position. With this context as a backdrop, let me give you my view of our most important achievements of 2024 and our expectations for 2025. I'll then turn the call over to Andre, who can provide more details on our financials and outlook. 2024 was a remarkable year for Concentrix. We integrated Webhelp with Velocity, aligning our sales, marketing, delivery and operations team within the first year. We aligned our cultures around one company, one team, ensuring we delivered global scale consistently with local relevance and expertise for every client in every location around the globe. We are delighted to say the Webhelp integration is now complete, with ongoing net synergy benefits showing through in 2025 and beyond. We secured a number of key transformative wins in 2024, both with our own technology and technology from leading partners, and our pipeline continues to be strong going into 2025. We have made prudent investments in our business that we believe will allow us to drive growth and margin expansion in the future. This included founding a new software products organization with strong leadership, enhancing AI tools and technology, and expanding our relationship with partners. And we have our first commercial win with our GenAI iX product suite. All in all, 2024 was a strong year for Concentrix. We delivered solid financial results, growing revenue well ahead of most peers in the broader BPO and ITO service sector while generating strong free cash flow. We have evolved our business to take advantage of our clients want, fewer providers that can do more and invested more that take global scale and technology capabilities to meet their needs. But what gets me most excited is the strong fundamental platform we put into place to drive sustainable growth into the future. For 2025, let me be very clear. We expect to grow our revenue, our non-GAAP operating margin, and our free cash flow while paying down debt. We will continue to expand our GenAI offering both from leading companies like Salesforce, Microsoft, and Google and others on top of our own technology in order to offer our client base the best solution for their business. We'll expand our key relationships by demonstrating the power of Concentrix, combining our design-build-run capabilities and innovative AI-led solution domain expertise and business process excellence to fuel our clients' success. And we will continue to secure new transformational wins that demonstrate the value of our broad-based technology solutions while decreasing our low complexity business. As we look into the years ahead, I am excited about what we are in our journey to become the world's most trusted partner for business and technology solutions that power world that works. I'd like to thank our dedicated game changers for their hard work and commitment to excellence and our clients for their trust and their business. Now I will turn the call over to Andre.

Well, thank you, Chris, and hello everyone. 2024 was a year of significant operational achievement for Concentrix. We integrated Webhelp ahead of plan, culminating in the migration of our financial ERP system at the end of the year. We proactively and intentionally invested in the productization and commercialization of our internally developed products while driving strong cash flow. We reduced our leverage through debt paydown while increasing our share repurchase program and increasing our dividend. And strategically, we continued to diversify and broaden our value to clients through a diversified set of service offerings. With a successful 2024 behind us, I'm confident in our position as we enter 2025. With that, let me delve into the details of our financial results for the fourth quarter and fiscal 2024 and then discuss our business outlook for fiscal 2025. In Q4, we delivered revenue of approximately $2.45 billion growing 1.5% on a pro forma constant currency basis, which is at the high-end of our September guidance range. Looking at our fourth quarter revenue growth by vertical, on a pro forma constant currency basis, revenue from retail, travel and e-commerce clients grew almost 9% year-over-year, a continuation of the solid growth we've been seeing in this vertical. Revenue from banking, financial services and insurance clients grew 5% relatively consistent with prior quarters this year. Our recent wins and pipeline give us confidence this vertical will continue to remain strong for us. Revenue from communications and media clients decreased 1% on a pro forma basis, a slight improvement from prior quarters in the year. This decrease in revenue reflects ongoing decreases from a few North American communications clients partially offset by increases with media clients. Our technology and consumer electronics clients also decreased 1% on a pro forma constant currency basis, as did our revenue from clients in the healthcare vertical. Turning to profitability. Our non-GAAP operating income was $347 million, in the top half of our guidance range that we provided on our last call. Non-GAAP operating income margin was 14.2%, a decrease from Q4 2023, primarily due to our increased technology spend, upfront investments in some transformational wins, and duplicate costs related to accelerated shore shift in Q4, all of which we discussed last quarter. Adjusted EBITDA in the quarter was $403 million, a margin of 16.5%. Non-GAAP net income was $219 million in the quarter, an increase of about $6 million compared to the fourth quarter of last year, and non-GAAP diluted EPS was $3.26. GAAP net income was $116 million for the quarter and GAAP diluted EPS was $1.72 per share. Reconciliations for GAAP and non-GAAP measures are provided in today's earnings release. Looking at our results for the full year 2024, we grew 2.7% on a pro forma constant currency basis, at the high-end of the guidance range we provided a year ago and above many peers. Non-GAAP OI was $1.32 billion, up slightly over prior year on a pro forma basis. Non-GAAP operating margin was 13.7%. Adjusted free cash flow was $475 million. Our free cash flow included spending on integration costs to generate increased synergies in fiscal 2025. We returned approximately $220 million to shareholders. Specifically, we repurchased $136 million of our common shares, representing 2.2 million shares at an average price of approximately [$61.74] (ph) per share. And we paid $84 million in dividends during the year. We reduced our net debt by approximately $209 million during the year, and we further reduced our off-balance sheet obligation related to receivables factoring by $46 million during the year to approximately $162 million at year-end. At the end of the fourth quarter, cash and cash equivalents were $241 million, and total debt was $4.736 billion, bringing our net debt to $4.495 billion at year end. Our liquidity remains strong at approximately $1.5 billion, including over $1 billion on our line of credit which is undrawn. With this, let me now talk about our outlook for 2025 and the first quarter. First, as Chris mentioned, we are on an exciting journey as we broaden our offerings to address the evolving needs of our clients. And while the macro continues to affect our business, as it has for all services companies, we expect to deliver growth in 2025 based on the following: incremental revenue from business we won in 2024 that will ramp throughout the year; share gains with our largest clients as they consolidate spend with us because of the capabilities and scale that we offer to meet their business needs; and continued growth in outsourcing as clients seek partners that can help them embrace and adopt AI to reimagine their business while ensuring customer experience excellence, data security and business stability. As always, these drivers of growth will be balanced by the underlying effect of the macro on our clients' businesses, our proactive automation as we continue to intentionally migrate away from low complexity business, and continued movement to lower cost delivery countries as we've seen over the past several years. Turning to margins. We expect non-GAAP operating income and adjusted EBITDA margins to uptick slightly, as we balance synergy savings with investments to power our future growth. We do expect our spending on software product development to decrease throughout the course of the year. And finally, we expect adjusted free cash flow to grow to between $625 million and $650 million in 2025 driven by synergy savings, lower integration costs and lower interest expense. With this context, our guidance for the full year is as follows: full year reported revenue of $9.47 billion to $9.61 billion. Our guidance implies constant currency revenue growth for the full year in a range of 0% to 1.5%. Based on current exchange rates, our expectation assumes an approximately 150 basis point negative impact of foreign exchange rates compared with 2024. Non-GAAP operating income is expected to be in the range of $1.3 billion to $1.34 billion. Non-GAAP EPS is expected to be in a range of $11.18 per share to $11.77 per share, assuming non-GAAP interest expense of $273 million, approximately 63.6 million diluted common shares outstanding and approximately 5% of net income attributable to participating securities. The effective tax rate is expected to be approximately 25.5% to 26.5%. And finally, as a signal of confidence in our long-term growth strategy, the Board has refreshed our share repurchase authorization to $600 million. We expect our spending on fiscal year 2025 repurchases to modestly exceed the pace in fiscal 2024, taking advantage of what we believe is the extreme disconnect between the fundamentals of our business and our current valuation. We remain committed to maintaining investment grade principles, repaying our debt to move closer to our target leverage ratio, and continuing to support our dividend. For the first quarter, we expect reported revenue of $2.355 billion to $2.37 billion, implying a constant currency revenue growth rate of 0% to 0.75%. Non-GAAP operating income is expected to be in the range of $305 million to $315 million. Non-GAAP EPS is expected to be between $2.49 per share to $2.64 per share, assuming non-GAAP interest expense of $74 million, approximately 64.1 million diluted common shares outstanding and approximately 5% of net income attributable to participating securities. The effective tax rate in the first quarter is expected to approximate 25.5% to 26.5%. As in prior years, we expect adjusted free cash flow in the first quarter to be negative although improved as compared to last year's Q1, followed by consistent strong cash flow generation over the remaining quarters of the year. Our business outlook and cash flow expectations do not include any future acquisitions or impacts from future foreign currency fluctuations. We remain confident in the growth of the business and believe we are taking a conservative position in our guidance for 2025. As we look back on 2024, we are delighted with our market position. We have intentionally and strategically expanded our value to clients by broadening our portfolio of solutions across the spectrum of business and technology solutions. We've embraced the opportunity of generative AI and have established a clear market leadership position that is allowing us to win large transformational programs and drive new revenue streams. We believe we’re making the right investments in the business to future-proof our offerings and position us for growth upside in the long-term while growing margins and cash flow. We remain steadfast in our commitments to driving shareholder value through a combination of long-term revenue and margin expansion, having the right capital structure, and continued capital return through a combination of share repurchases and dividends. We are excited about the road ahead. With that, Josh, please open the line for questions.

Thank you. [Operator Instructions] Our first question comes from Joseph Vafi with Canaccord Genuity. You may proceed.

Hi guys. Good afternoon. Nice to see progress in the business on a lot of fronts. I thought maybe we'd just kind of drill down first on the revenue outlook. Appreciate your discussions on incremental revenue wins, share gains and more volume switching to outsourcers. Just wanted to also get some input on -- I know you mentioned that the less complex work was going to continue to decline. I was wondering if you could provide some commentary on perhaps how many points of kind of revenue headwind that may comprise in 2025. And then also if there is any headwind coming from a geographic delivery mix change from perhaps on-site or onshore to offshore, et cetera? And then I have a quick follow-up.

Yes, for sure, Joe. So a couple of things. Let's start with the last one first. In terms of geo shift and revenue headwinds, we are seeing that from Europe into Africa and Eastern Europe. We are continuing to see that from North America. We talked about that a little bit where we had some healthcare programs going offshore. Cost for delivery is certainly a big issue with clients. And so we expect that, that kind of offshoring of work will continue. Similar to what we've talked about as a point, bit of headwind of growth in the last little while. In terms of the low value transaction going down, our expectation is that we’ll lower that by another 1% to 2% in the course of 2025, so you'll get down to that sort of 5 percentage range. There is always stuff that kind of falls into that. But we've done what we are really happy with, a very good job over the last year of not growing that, not going after any business that would add to that and continue to automate and drive that down. So our expectation is if you just think of 7% going down to 5% of our business of that type of headwind as we look at 2025 and what we're looking at.

Great. Thanks for that color Chris. And then maybe more of a detailed update. I know last quarter, you indicated that there was a large transformational win, I believe, where you were going to finance some of the upfront costs there. Just kind of an update on those types of transactions, progress and when they may kind of reverse and start generating revenue and how they may contribute to the P&L in 2025. Thanks a lot.

Yes. For sure, Joe. So well, the large transformational deal that we had to upfront some of the costs will start to generate revenue in 2025, but it's more in the sort of third and fourth quarter for it to be more meaningful. There's really not too much in Q1 outside of some costs that are running through, and Q2, we'll start to see some revenue but then it is really on the back half of the year. We have not done any deals of that size in Q4 that you'll see through, but we have done a number of smaller transformational deals relative to the large one. And they'll start, frankly, generating revenue within Q2 and Q3, but again more back half of the year. The transformational deals tend to take a little longer just because we have to build out the platform forward to move across, move the work across and then start to drive it. But you are not seeing that sort of upfront capital requirement that we saw with the one very large transformational deal.

Sure. Great. Thanks very much Chris.

Thank you.

Thank you. Our next question comes from Dave Koning with Baird. You may proceed.

Yeah. Hi guys. Thanks so much. Great Q4. And maybe first of all, just when we look across CX or BPO or IT, in the last couple of years, businesses have just wanted to spend less, tighten the belt a little bit. We kind of get that. Are we getting to a point where consumers are starting to push back? We have to go through a whole bunch of bots and then finally talk to somebody on the phone. And that takes extra time that really we are having, as consumers to take longer while businesses are getting to lower their handle time? But is there enough pushback that you're starting to see companies say, hey, we need to outsource more here, not less because there is consumer pushback and we want to reinvest in service again. Is that starting to shift back?

Yes, that's a very interesting question. We see it in certain industries. We see it in BFSI. We see it in some high value goods. We see it in a bit of auto. Where we don't actually see that pushback from consumers is in telecom for instance or in consumer electronics, for instance because there's no one really raising the bar high enough that people can do the compare to kind of maybe a set of affairs but that's generally what we are seeing. And so where we see businesses really want to separate and differentiate their offering, they are outsourcing more and they're outsourcing more of the tech and they're kind of doing it in a combined manner that really drives a better customer experience. We do think as consumer purchasing power, hopefully rebounds in 2025, that companies will kind of try to differentiate a lot more. And I think generally, what we are seeing is that probably there will be some human involved in that. And most likely, that human will be in an outsourced relationship.

Yes, that's great to hear. And then maybe my follow-up. I know you kind of indicated that in the beginning of the call back to mid-single digits at some point. Is there a time frame which you kind of expect to get back to that? Are there indications in the pipeline or anything in the demand environment that you are seeing that would say, hey, we're -- maybe we're only three, four, five quarters from that? Just a little context around that.

Yes, for sure. I mean if you look at what we called out and you just simply take the $1 billion of business that we talked about in the opening comments growing sort of high-single digits, when you talk about the Catalyst business, which is growing roughly in that range. And then we have a number of other capabilities within our business growing within that range. You can see that at scale right, that's a few billion dollars. At scale, we are growing above that single-digit mark. So clearly, what do we need to do? We need to continue to be faster at automating some of the work that we can get done because we -- when we do that, we tend to win more work. We need to continue to focus on bringing down our lower value work so that we don't have that overhang within our business. And if you kind of do the math, we talk about other years but it is not multiple years. Our expectation is that getting out of 2025 and if we can continue to drive what we want to drive, then that's something that we should be able to achieve shortly thereafter.

Gotcha. That’s great. Well, thanks guys.

Thank you very much.

Thank you. Our next question comes from Ruplu Bhattacharya with Bank of America. You may proceed.

Hi, this is Aisling on for Ruplu. My first question is for Chris. Can you just talk about how your digital CX or Catalyst business is trending? What was the revenue growth year-over-year this quarter? And how should we think about growth in fiscal '25, since you've talked about some potential large deals you're pursuing? Thanks.

Yes. So our Catalyst business is doing very, very well. We talked about it being roughly 8% of our business, and we talked about it growing well, which you consider mid-to-high single-digit growth through the course of the year. There's some fluctuation in that as we continue to add more partner implementations in it. Our expectation is that's what it's going to continue to grow. It is one of the bigger growing areas as we implement more and more technology. And we are kind of quite happy with what we are finding with it, and it's adding a lot of value to our overall relationships within our client base.

Thanks. One for Andre. Can you just talk about priorities for cash in fiscal '25 and how you balance reinvesting in the business versus M&A versus buybacks? Just any color around that would help. Thanks.

Yeah. Sure, happy to do it. So we feel really confident in the free cash flow generation in 2025 and that, that will give us the opportunity to continue doing what we have been doing, which is obviously first and foremost, investing in growing the business organically and then having the free cash flow left over to continue to pay down our debt and as well as return capital to shareholders. So we feel great about the confidence that our Board has shown in us, in increasing the authorization for share repurchases up to $600 million. We've said that we'll continue certainly during this period where we feel like there is a disconnect between our valuation and the underlying fundamentals of the business, we'll be active in share buyback. In my commentary, I said we'd buy back slightly more, modestly more than what we've repurchased in fiscal year 2024. So you can kind of figure out from that what the priorities will be. Generate the strong free cash flow, share repurchases slightly more than the $136 million that we did this year. Our dividend was $84 million this past year, that we've increased it in the past by 10% each year. We might like to do that again this year. And then with the remainder left to move closer to -- pay down debt to move closer to our targeted leverage ratio.

Great. Thank you. I’ll pass it back.

Thanks.

Thank you. Our next question comes from Divya Goyal with Scotiabank. You may proceed.

Good afternoon everyone. So I wanted to further talk about this demand environment that we're talking about here. Chris, could you help us understand the sustainability of these revenues? Obviously, the growth is bleak for fiscal 2025. How should the market get confident in terms of the company returning to, say, even the mid-single digits from a revenue growth standpoint? And if you could potentially also help us understand how should -- how could or should we expect the margins to potentially grow on a go-forward basis? Thank you.

Yes, Divya, so a couple of things. As we talked about, we've got a lot of businesses growing within our portfolio that are at mid-single digits if not higher, and some even higher. And as they get more and more scale of our business, that is what gives us the confidence to believe that we can get to mid-single digit. As Andre also talked about, if you think about this year ahead, not only are the wins that we've gotten within 2024 that will layer into our business over the course of the year, but we will also drive down our transactional sort of low value business from 7% to 6% to 5% through the course of the year. So there is some headwinds to that. But ultimately, we are quite confident that we can grow past that with all the different areas that we are making. And the areas that are growing are things that are in demand around generative AI, whether it be the data annotation, whether it be our analytics business. Analytics business is doing very, very well, whether it be some of our GenAI prototyping and tooling and implementation. We've signed up with Salesforce, Microsoft, and Google this year to do more and more partner work, just certainly expanding and we are happy with that. So there's lots of momentum in the business. And as Andre pointed out, we are also being somewhat prudent with our guidance for fiscal '25 because we will do the right thing for our clients, but we also want to make sure that we are messaging to investors, being prudent with what we want to get done. And if there is an opportunity to move stuff offshore that will drive a higher margin for us, we would probably do that, whether it creates a revenue headwind or not. I think in terms of the margin expansion process, through the course of 2024 we were pretty clear about where we were making additional investments, whether it be in our software platforms, whether it be in some of the new capabilities that we are building out with our partners. And obviously, we have to hire, in some cases a different skill set of individuals for some of the work that we've gotten into, whether it be our financial crimes and compliance, whether it'd be some of our BFSI work, et cetera. And I think all of those are higher margin businesses that we are growing and were going well. And so my expectation is that, that will start getting layered in and we'll start to see that grow. And as Andre also pointed out in the prepared remarks, we do not expect to spend the same on our software development this year, as we did last year. We told investors that we needed to get everything into a multi-tenant, more commercially ready state that we would be spending up until sort of the end of the year. And then we would be looking at kind of reducing that spend through the course of 2025, more in-line with how we are driving revenue. So that's our plan. Also one thing that we should call out is that we are very happy with the number of IX product sales we got within the first couple of weeks. We've got a very strong pipeline with that. And clearly, that's very low dollar value to begin with, but frankly it is software margins. And so as we layer more and more of that into our business, we have the ability to grow our margins through that as well.

That's helpful. Maybe I'll just ask one more question in the interest of the concerns around the CX sector. Could you help us understand, like with the increased prevalence of agentic AI, how will Concentrix managed services play out? Or what specific role would Concentrix have to play with the increasing prevalence of automation, AI and agentic AI? And that's all for me. Thank you.

Yes, for sure, Divya. I go back to our prepared remarks. Like right now, what I think investors don't quite understand is that we have half our clients on GenAI right now. We have literally tens of thousands of autonomous agentic agents doing what they need to do and continue to drive it. These things do require tuning. They do require data management, they do require analytics to make sure that they're doing the right things. There does need to be some regulatory compliance around them, depending on which countries they're deployed on. There's just a lot of other management that goes around with it. And here, we have grown our revenues, while in the last two years, driving of GenAI deep into our client base and doing a lot of autonomous work. And what we are finding is that even the big software providers are coming to us to say, look, you understand the domain expertise around this. You understand how the systems are built. You have time with all the technology. You understand the data and the domain expertise around what we are trying to achieve. You understand the client relationship. So help us try to figure out how to get our products in there, sell our products in there, and then maintain the products as they go. And so that provides new revenue streams for us that two years ago, we didn't have. I think the other thing that we called out in the prepared remarks and sort of our businesses that weren't at scale two years ago and now are at scale is even revenue generation. A lot of people are thinking generative AI is simply for reducing costs and taking out costs. We found that clients are actually open to try and figure out how to use GenAI for driving revenues and figuring out how to improve the experience and actually delivering better outcomes for their clients. And again, that requires consulting, analytics, and data modeling and data annotation and managed services around that and security and compliance, et cetera, et cetera, et cetera. And I just don't think that people appreciate, this isn't -- despite the best commercials on TV and as you walk through the airport about -- how what and done this stuff is, it isn't. And it requires professional services companies to be able to support them.

Very helpful. Thank you.