Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2019 ExlService Holdings, Inc. Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Steven Barlow. Thank you. Please go ahead, sir..

Thank you, Carol. Good morning, and thanks to everyone for joining EXL's Fourth Quarter and Year-end 2019 Financial Results Conference Call. I'm Steve Barlow, EXL's Vice President of Investor Relations. With me today in New York are Rohit Kapoor, our Vice Chairman and Chief Executive Officer; and Maurizio Nicolelli, our Chief Financial Officer.

We hope that you've had an opportunity to review our Q4 2019 earnings release we issued this morning. We've also updated our Investor Fact Sheet in the Investor Relations section of EXL's website. As you know, some of the matters we'll discuss on this call are forward-looking.

Please keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties include, but are not limited to, general economic conditions, those factors set forth in today's press release, discussed in the company's periodic reports and other documents filed with the Securities and Exchange Commission from time to time.

EXL assumes no obligation to update the information presented on this conference call. During our call today, we may reference certain non-GAAP financial measures, which we believe provide useful information for investors. Reconciliation of these measures to GAAP can be found in our press release as well as the Investor Fact Sheet.

I'll now turn the call over to Rohit Kapoor, EXL's Chief Executive Officer.

Rohit?.

Insurance, Healthcare, Analytics and Emerging. The deeper verticalization in Insurance and Healthcare will accelerate our growth by bringing together our capabilities across operations, analytics, data and digital with an industry-specific lens.

Our Analytics business will continue to remain a growth engine for EXL, and we will expand our investment in data and advanced analytics solutions. Finally, the Emerging business unit consolidates our other verticals as well as parts of our F&A and consulting practices.

With this, we have the opportunity to build new and profitable sources of growth for EXL. At the same time, we have invested significantly to strengthen and expand our senior leadership, including the executive committee, by attracting market-leading talent as well as promoting internally.

We also created an operating committee of diverse senior leaders to expand executive bandwidth to drive enterprise-wide initiatives. Lastly, we have successfully exited the Health Integrated business within the time lines communicated early last year.

I am pleased with how we have met our cost expectations, appropriately enabled employee transitions and successfully managed our client relationships. The wind down of Health Integrated operations is now complete, and there will be no more restructuring charges going forward. Overall, our pipeline remains strong.

We continue to win new clients as well as expand within our existing clients. In Operations Management, our pipeline is strong with strategic deals and engagements that drive end-to-end digital transformation. Our Analytics business also continues to enjoy a healthy demand, spread across industries and geographies.

The momentum for our business is strong heading into 2020. Our clients see EXL as a strategic partner who can help them reimagine business models and generate value from advanced technologies. I look forward to 2020 being another great year for EXL. And lastly, it is my pleasure to introduce you to our new CFO, Maurizio Nicolelli.

Maurizio joined us earlier this month. He has a strong background of driving growth and profitability in a large global and data and analytics company. His rich experience and unique perspective will generate value for our clients, for our employees and for our stockholders. With that, I will turn the call over to Maurizio..

Insurance, Healthcare, Analytics and Emerging business to align with certain operational and structural changes inherent in our business. For more details on the change in segment reporting, refer to details built in our press release and our 10-K that will be released after the market closes today.

In conclusion, as Rohit mentioned, the business is very healthy and growing in insurance, healthcare and analytics with solid traction in 2019. We delivered organic revenue growth of 9.8% year-over-year on a constant currency basis and adjusted EPS of $3.31, up 10.7% year-over-year.

All of our verticals are performing very well with strong visibility into 2020, and we are confident with meeting our revenue and profitability goals. Now, Rohit and I would be happy to take your questions..

[Operator Instructions]. Your first question comes from the line of Maggie Nolan with William Blair..

Ted, on for Maggie.

So as you shift more towards transformational work and they become larger and more complex, how has that changed the types of contracts that you have with clients? Are you seeing changes in the amount of transaction or outcome-based contract? And how does that - how does the margin profile of outcome-based contracts compared to FTE based?.

Sure. So as we do more digital transformation work that is end-to-end, one of the things that happens is that these become much larger size contracts and these expand across multiple buying centers within existing clients. The nature of the commercial arrangement also shifts and it becomes a lot more focused on delivering tangible business outcomes.

Our experience has been that as we engage with clients in commercial constructs involving business outcomes, it actually is a win-win situation for our clients as well as for EXL.

We are very confident of being able to deliver and execute to those business outcomes and make tangible improvements to our clients' businesses and participate in the value that we create by doing so. The margin of our outcome-based businesses, in general, is higher than those, which are on structure on a pure FTE basis.

However, there is, of course, a lead time for us to be able to get to that efficiency level and that contribution. So this is a very favorable trend that is playing out in the marketplace, and I think EXL is very well positioned to take advantage of that..

Great. That's really helpful color. So then switching over to healthcare here as a follow-up.

So now that the wind down of Health Integrated is substantially complete, could you talk about the best opportunities for expansion within the Healthcare segment? And then how does the segment change your go-to-market approach within the vertical?.

Yes. So we are very, very pleased with our investments in healthcare and the franchise that we've built up in the healthcare insurance of industry vertical. The healthcare market, as you all know, is extremely large and broad-based marketplace.

We think that there is a huge amount of opportunity for us to be able to serve clients with our capabilities around operations management and data analytics.

With Health Integrated behind us, the entire leadership team of the healthcare industry vertical can focus our attention on growing and developing our relationships with existing clients and adding on new client relationships out here.

We have a leadership positioning in clinical operations within healthcare, particularly amongst the payers, and we work with 6 of the top 10 payers in this particular industry vertical.

We are looking to expand our capability set and our customer base more towards the provider space as well as get much more engaged in pharmacy and other related areas.

The opportunity for us in healthcare is one which will allow us to actually provide a much faster growth rate in healthcare as compared to the rest of EXL and allow us to propel the growth rate of EXL going forward. So we're very excited by the opportunity in healthcare.

We've also invested very significantly in leadership talent, which understands the healthcare domain really, really well. So in 2019, we added a number of senior executives in our healthcare industry practice and, of course, with the acquisition of SCIO, we brought on very, very talented senior executives that are healthcare industry experts.

So we think we are very well positioned for this industry vertical and we are excited about what we can do in 2020 and beyond..

Your next question comes from the line of Mayank Tandon with Needham..

This is actually Kyle Petersen, on from Mayank. Just wanted to start on the margin progression. I appreciate the color with the drag from Health Integrated and how that should benefit margins this year.

How should we think about the margin benefit from those operations being wound down? Is that going to be a big step up? Or is the expansion going to kind of build throughout the year? I just want to make sure we're thinking about that the right way..

Yes, it's Maurizio. So our adjusted operating margin for 2019 ended at 14.6%. We - Health Integrated hurt our margin during the year by about 120 basis points, and that's behind us. We see adjusted operating margin right around 15% with a 30 to 40 basis point improvement for 2020.

And that's really a result of us going through our planning process earlier in the last couple of months for 2020 looking at different areas to really find efficiencies and improve it, and then that's slightly offset by incremental investments, specifically in digital that we're making..

Great. That's good color. And then I noticed that the utilities in the U.K. revenue seemed a little soft compared to a lot of those strong trends you guys are seeing elsewhere in the business.

Just want to see, are those two things connected? Or is there anything kind of specific going on in either of those you might want to call out, just wanted to see if you guys could expand on that a little bit?.

Sure. So our utilities practice is largely U.K. based and it is focused out there. Our U.K. business in 2019 was pretty much flat as compared to 2018. We have invested in more leadership in U.K., and we expect to be able to take advantage of a much stronger pipeline in the U.K. - in our geography, so that's something, which we will be focused on.

We don't think this is something which is going to continue. We think that there's a growth opportunity for us in the U.K. market, and we'll continue to focus in on that. The utilities industry vertical has been folded in along with other industry verticals into our Emerging business unit.

And we think that this will allow us to actually get some size, scale, it will allow us to be able to refocus our go-to-market efforts in a consolidated manner and be able to actually provide this the focus and attention that it deserves. So we think there's a huge opportunity for us to create a new growth engine for EXL going forward..

Your next question comes from the line of Joseph Foresi with Cantor Fitzgerald..

Rohit, I can't believe we're headed to $1 billion in revenue. I'm not sure how that - what that says about how old both of us are. But I remember the Invesco, that's how for back - Conseco, I'm sorry, how far back I go. Anyways, I wanted to ask about Analytics. I think you talked about some of the partnerships that were being developed in that business.

I know you said you're divesting some of the kind of low-quality business you do there. It seems like you're kind of reevaluating the direction of that business.

Maybe you could talk about why you're doing that now? Why the realignment now? And your expectations of growth rate short-term and long-term?.

Sure. So, Joe, yes, it's been a while, but it's been quite a journey, and we're really delighted with where we are ending up right now and the fact that we continue to build and grow this franchise is really exciting. The Analytics business for us is a great opportunity for us to be able to deliver really value-added services to our clients.

It's a segment that we invested early on, and we've built up a market-leading position in data analytics. And we think that going forward, over the next 3, 5, 10 years, the opportunity set in data analytics is going to be tremendous.

So it's just a great place for us to be in, and it matches very well with the skill set and the talent and the capabilities that we've got internally, and it aligns very well with the market opportunity that we've got going forward.

One of the things which we are doing in Analytics, which is part of healthy portfolio management, is to prune down our portfolio such that we can focus in on larger strategic accounts and the more profitable and growth-oriented accounts.

This is something which, I think, needs to be undertaken after several years of very, very rapid growth in this business and making sure that we've got a very healthy portfolio that can continue to build and grow going forward.

We also have a tremendous opportunity to expand our Analytics business on the dimension of data and data management, and we are focusing on that. We are also focused in on building up capabilities around advanced analytics that really leverage AI and machine learning. And again, we've got strong capabilities of that.

Now many of these capabilities, we will develop internally, but a few of them we will develop in partnership with other providers and other partners that are externally available to us. Over the past few years, we've built up partnerships with a number of credit rating agencies.

We've built up partnerships with some of the analytics infrastructure providers. We've built up great win and partnerships with providers that allow data to be migrated to the cloud. And so a number of these partnerships that we've created are going to allow us to expand the playing field in which we operate.

We think going forward, analytics is going to become really, really big and huge. And with our market-leading position, we should be able to take advantage of that. And so we are very excited about that..

Okay. And then, Maurizio, I guess our past meet again, any particular area of focus as you make your initial way into the business? And then any thoughts specifically on M&A? There's been, obviously, with Health Integrated, a spotty track record there.

Any thoughts on how you're planning on going about that particular practice?.

Joe, so a couple of things to just mention, given that I'm 4 weeks in. Couple of areas that really are kind of high focus for me are really working with the team on our strategic initiatives to really grow the business. We've gotten to $1 billion, but the opportunity for us to really scale the business and really double it is significant.

And it's one of those things that is really staring right at us. And my opportunity is really to work with the group and really help with growing the business with internal growth, but then also supplement it by M&A. And we've had a number of discussions regarding M&A, and we're getting our arms around kind of our strategy really for the go forward.

And you'll see us growing the business going forward really as a combination of both internal growth supplemented by M&A that will help us accelerate the rest of the business.

And another focus area for me, but this also will be the return of capital, it's really ensuring that we're getting our highest return of capital in the various businesses, in the various projects that we implement and then also in M&A going forward. So I would say, initially, those are really 2 big areas for me to really focus on.

On the M&A front, that's one whereby we look at all the different businesses, and now that we restructure ourselves, we are really working with each of the leaders to really home in on our strategy for each particular piece of the business..

Your next question comes from the line of Bryan Bergin with Cowen..

I wanted to start on revenue growth.

Can you give us a sense of what the Analytics and the Ops Management ranges are that are baked into the fiscal '20 growth range? And given you've had the accelerating organic growth to 9.8% ex HI here, can you help us bridge starting at 6% to 9% for fiscal '20? Just wondering the level of prudence in there, if there's anything else to call out?.

Sure, Bryan. So as we stated previously, our expectations are that we provide growth rates for the medium term, we would expect Operations Management to grow at between 5% to 7% on a constant currency basis.

We would expect Analytics to grow at between 12% to 14% on an organic constant currency basis, and the blended growth rate for the enterprise would be between 8% to 10%. And that's our expectation for the medium term. If you take a look at our growth rate in 2019, that was 9.8%, and so it was at the very top end of that range.

The guidance that we've provided for 2020 is a growth rate on an organic constant currency basis between 6% to 9%, so it's right in the middle of that ballpark. As the year progresses, we'll provide updated guidance in terms of where we think we're going to end up..

Okay.

Can you give us a sense or quantify the amount that the pruning within Analytics weighed, whether it was second half or in 4Q?.

It's difficult to provide a quantification of that, Bryan. That's not something which we do. As we mentioned in the last earnings call, this is something which we began in the third quarter, it continued in the fourth quarter. And our expectation is that this will continue in the first quarter of 2020 as well.

By that time, we will be fully complete with this portfolio rationalization. And our expectation for the full year for Analytics in 2020 is going to be - that it will be consistent with our longer term projections..

Okay. Now just on gross margin, and Analytics that you had a nice uptick there.

Can you just talk about your view for sustainability? I heard your investments in digital, just curious, is that more so in the Ops Management piece? Or is it both?.

Sure. So one of the advantages of portfolio rationalization is getting a better margin, and that's the reason why we would rationalize our Analytics portfolio.

And even though it hurts our growth rate and our revenue growth rate in the short term, it improves our profitability, and you can see that clearly being demonstrated in the fourth quarter for the Analytics business.

Our expectation is that on a go-forward basis that we will continue to be able to sustain the margin improvement in our Analytics business and be able to manage that transition. Going forward, the digital investments that we're going to make, these are going to be made across both Operations Management and Analytics.

In Analytics, we're going to be focusing on lot more around data management and advanced analytics, and we think the digital investments will all fall into those buckets.

And in Operations Management, again, it's going to be across multiple technology levers, across robotic process automation, across other ways and smart workflow solutions, so they're going to be across a number of different capabilities that we will be using across Ops Management and Analytics..

Your next question comes from the line of Puneet Jain with JP Morgan..

Rohit, as we pursue multiple buying centers within client organization, will that require changes in the structure or focus of sales and business development teams?.

Yes, Puneet, I think it definitely will require a change of our go-to-market strategy. First of all, the conversations that we are having is now more with the C-level executives of our client organizations.

And therefore, we need to have more senior and more seasoned professionals having those conversations with the C-level executives of our existing clients.

Second, it's going to be a much more of a strategic conversation that cuts across business lines and cuts across new buying centers, so we've got to be able to articulate our vision for digital transformation that is much more applicable for the entire client enterprise rather than just for a piece of it.

It will also mean that our investment in client relationship managers, that's something which we will significantly enhance as we start to do a lot more work with our existing clients.

So definitely, there is going to be a shift in profile, in the quantum of client relationship managers and our investment on the front end associated with our existing clients..

Got it.

And are you seeing any impact, whether positive or negative, from coronavirus in your travel or any other vertical? And any impact on direct volume or any derivative impact on clients' decision-making or sales cycles from that?.

So let me address coronavirus and its impact on EXL and its clients in a comprehensive way since you've asked that question. First of all, we are extremely focused on monitoring the situation, which, as you know, is rapidly evolving, and it needs to be dealt with the utmost urgency.

Our number one priority is to make sure that we ensure the safety and security of our employees and that we are great custodians of our client businesses. So that's our focus. So far, we've not seen any real impact associated with coronavirus for our business or for our clients.

Fortunately for us, our client portfolio is geared and hence pretty well diversified. We don't have a concentration of clients in the travel in our industry, so that's not really something that's impacting us. A few things, which you should all know. One, in order to keep our employees safe, we've adopted a number of precautionary steps.

So we've started to provide sanitizers at all of our facilities, there's temperature monitoring, which is done through temperature guns at our facilities now. And we've got preparedness plans in place to be able to address this.

We also have stepped up our communication with our employees in a very, very significant manner letting them know what are some of the do's and don'ts, and these are being displayed at vantage points. And of course, we have a travel advisory in effect. We don't do any business with clients in China or in any of the impacted countries currently.

And therefore, the impact to us is not there at all. We do have contingency plans in place, which are adopted on the basis of best practices recommended by the World Health Organization. And these plans, we are in state of constantly monitoring these, updating these and sharing it with our clients.

The one industry vertical, which is likely to have an impact is our healthcare industry vertical. And should there be a spreading of this virus in the U.S., I think the healthcare industry vertical will likely get impacted.

And so we are developing contingency plans so that we are just prepared to be able to address this with our clients, should the need arise. At the current moment, like I said, there's nothing that has happened, and there's no real impact that we're seeing.

But we're just going into a very high state of preparedness so that we can react to it and keep our employees safe and help our clients out to the best extent possible..

Your next question comes from the line of Dave Koning with Baird..

Nice job. And I guess, my first question, it seems like the new clients are driving a lot of growth. Clearly, it seems like the momentum is good and everything. The one question, the new clients this year were about 28, I believe. I think last year, there were 50.

Is there just a different composition like the clients you're winning in the last year just are a lot bigger than the ones in the prior year?.

Yes, Dave. I think there's no real change in terms of the new client wins. If you take a look at the quality of new clients that we've signed up and the growth prospects of the 28 new clients that we've signed up in 2019, we think it's as good as the clients that we signed up in 2018.

You can see that in terms of our growth rate that, that traction is playing out really, really well. We're also seeing, obviously, much more growth take place from existing clients. So the mix and the balance between new clients and existing clients is actually very good and very healthy.

And we think that our track record of growth should continue out here..

Okay, great. And then on the new segmentation, what's interesting to me is you think where the new segments are going to be. Healthcare, you've had tremendous kind of reacceleration there; great acceleration in Insurance; analytics is strong; and Emerging is the last group.

And typically, we think of Emerging when we think of most companies as being the faster growth. I think it's going to be maybe even by far the slowest growth part of the business.

Is that the right way to think about it?.

So presently, the way our Emerging business unit is set up, it is a slower growing portfolio. But keep in mind, it is our most profitable portfolio as well. We do think there is an opportunity for us to be able to fix this portfolio and get it on to a growth track.

And by the focus and by the leadership attention that we are putting into place on the Emerging business, we think we'll be able to do that. We also have an opportunity to go into some new industry verticals within this portfolio that will act as catalysts for growth.

And so we are really excited about going into some of these new areas and creating opportunities of growth for us. And our expectation over the mid- to long-term is that the Emerging business unit will also be a growth-oriented unit for us, apart from being a highly profitable business unit..

Okay. Great. And just one final one.

Free cash flow like you crushed it, I think it was the best conversion you've maybe ever had, like is that - I wouldn't assume that's sustainable, but is maybe 100% conversion roughly kind of what you're thinking?.

Yes, about that - it's Maurizio. So we had a very strong year of free cash flow at $168 million versus the prior year $92 million. We had significant benefits from our operating line, especially in our DSOs, you saw free cash flow go up because of that.

But overall, we should see steady positive growth in our free cash flow, maybe not as strong as this year because we had a couple of one-timers in there, but still significantly benefiting the business going forward..

Your next question comes from the line of Vincent Colicchio, I'm sorry, with Barrington Research..

Yes, Rohit, most of mine were answered, but the 5 clients you added in the quarter, are you particularly excited about any of them becoming a large strategic client potentially?.

So Vincent, I think, for us, like I said, the new clients that we've been adding on, we think the quality and growth opportunity of these client relationships is very meaningful and very significant. You can see that in Analytics, we now have clients. We have 4 clients, which are well above $25 million in annual revenue.

In our Operations Management business, we have several clients, which are of that kind of magnitude. And we do think that some of these clients that we've added on as new clients, well over the years, grow and expand their relationships and get to those types of levels..

Your next question comes from the line of David Grossman with Stifel..

So Rohit, I know you don't really speak specifically about bookings.

However, can you maybe just share with us the booking trends in 2019 versus 2018? And perhaps talk a little bit about the cadence of bookings throughout the year?.

Sure, David. So first of all, I guess, the best color I can provide to you is that when we take a look at our pipeline, the pipeline has become much larger in size and scale as compared to the previous year, and so that's something which is very positive.

It's - the pipeline has broadened out, the pipeline has become a lot more mature, and in terms of value has significantly increased in size. The second part of it is, in terms of our win rate, we are actually quite pleased with how we are winning new deals.

Of course, if it is a new deal with a new buying center at an existing client, our win rates are very high, and that obviously is driven from the high levels of customer satisfaction and trust and credibility that we've established with our existing clients, and so that's working really well.

And then our ability to win new clients, that's continuing on at a good pace as well. So when you kind of think about the bookings and the amount of business that we have won in 2019, we are very pleased with how that has shaped up and played out.

And when we think that's reflecting in a much faster growth rate for us in 2019, and then we expect to be able to maintain that growth rate as we've provided in our guidance in 2020..

Right.

But any - can you give us any color on how that - those bookings, how they ran through 2019 versus how much you expect to run through in 2020? And how much visibility you have on 2020 right now vis-à-vis where you were last year at the same time?.

Yes, David. We just don't provide that data externally. And even internally, for us, it's very difficult to be able to get a real grip on that data because it depends on the tenure of the contract, it depends upon how quickly the clients want to ramp up.

And therefore, we think that there is a fair amount of inconsistency with that data and it's just something which we don't feel comfortable in terms of sharing externally and buying ourselves for that..

Okay, fair enough. So just - I think this question came up earlier about the healthcare vertical.

And now that Health Integrated and the wind down of that is behind you, can you give us any more specificity about really what are you really going after in the healthcare business? What are the core offerings today? And how do you expect that - those offerings to evolve? What are you really focused on driving here in terms of areas that you think you can be relevant and grow?.

Number one is the payers; number two would be the providers; and number three would be the pharmacy and the PBMs.

And we've got a strongest penetration of our existing business on the clinical care and care management side with the payers; we've got a pretty strong practice on data and analytics with the providers; and the business that we have with pharmacy, PBM and some of the life sciences companies is nascent and developing.

So those are the 3 broad segments that we would go after. The kind of services and the kind of capabilities that we are providing out here, number one is care management services or clinical services.

What these are is it requires a registered nurse or a qualified nurse or a doctor to be able to help in processes like utilization management, utilization review, precertification of certain procedures, all the way to the claims settlement that we are helping our clients out with.

The second area that is in the healthcare area is around data and analytics.

We do a lot of work around fraud, waste and abuse, as you know, in our payment integrity programs and as well as helping our clients with population health management and being able to see what kind of risk are they are really underwriting, and as they move towards self-insured plans for the providers, how should they think about managing that risk.

We are - we also have a population health management platform and, therefore, the ability for us to provide end-to-end and delegated authority on taking some of these decisions on behalf of our customers, that is a new capability that we've added on.

We've also added on capabilities that provides a lot more transparency and visibility to our clients in terms of the type of requests that are coming in from their - the groups that they've ensured. So it's a whole variety of service offerings that we have for the healthcare industry.

And I think there are very few players, which are the traditional players, that play in the healthcare space, and this is a rapidly evolving marketplace, and we hope to be able to benefit out here. And certainly, the growth rate in 2019 validates our investment in the healthcare industry vertical..

Okay. And just 1 last question. Just you had mentioned that you have some partners in Analytics. And you talked about that, I can't remember in the Q&A or your prepared remarks.

So are those partners just adding capabilities? Or are they actually acting as a channel partner as well?.

So they do both. So let me give you an example. We have a partnership with TransUnion and we are taking out to market capabilities around CECL and they will act as a distribution partner as well as a capability partner along with EXL.

We've - as you know, we've invested in a company that provides for a smart decisioning platform for analytics, and that becomes a capability as well as a distribution channel for us for analytics.

We've also partnered with a client, like HSBC on KYC, and there it is much more about the capability development and providing a test ground for implementing some of these advanced analytics capability in a comprehensive manner and then expanding it to other clients.

So we're going to use multiple formats in terms of partnerships with providers and clients in the analytics space. And I think that's a very fast-evolving space as such..

Your last and final question comes from the line of Justin Donati with Wells Fargo..

The first one, if I heard you correctly, you ended the year at $3.31 of EPS, excluding Health Integrated. And when I look at the guidance for $3.46 to $3.58, it seems a little bit low relative to revenue growth, given that you're projecting margin expansion.

So can you walk me through kind of some of the headwinds and tailwinds there?.

It's Maurizio. You have that correct. So we ended the year at $3.09, adding back the loss of $0.22 gets you to $3.31. Our guidance is $3.42 to $3.58, which is our initial guidance for the year, it is based on the 6% to 9% growth of revenue.

And so right - that middle 7.5% with revenue growth gets you to right around $3.50, with a little bit of margin improvement up to right around 15% for our adjusted operating margin. And given all the other items below the line that I gave ranges on will get you to right around that $3.50, the middle of the range.

And again, that is still our initial guidance. And as the year goes along, we'll update it..

Okay. And then just last question for me. You talked a lot about the technology investments that you're making in both sides of the business. I think previously, you've sized that at about $100 million over the past 3 years.

So should we think about a level consistent with that run rate on an annualized basis or higher, lower?.

Yes. So I think our investment on that is pretty much going to be consistent with that hypothesis. We will be stepping up our investments as we grow the size and scale of the company and as we see traction build up in terms of the commercialization of some of those digital investments.

So you should expect a tick up in terms of those investments as we go forward..

There are no further questions at this time. Mr.

Barlow, are there any closing remarks you would like to make?.

Thank you, Carol. No. We are concluding the call, and we look forward to presenting our Q1 '20 earnings at the end of April. Thank you all for listening..

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..