Welcome to the Hackett Group Fourth Quarter Earnings Conference Call. Your lines have been placed in listen-only mode until the question-and-answer session. Please be advised, the conference is being recorded. Hosting tonight’s call are; Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin..

Thank you, operator. Good afternoon, everyone and thank you for joining us to discuss the Hackett Group’s fourth quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett Group and myself, Roberto Ramirez, CFO.

A press announcement was released over the wires at 4:05 PM Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data discussed on this call that is not contained in the body of the release on the Investor Relations page of our website.

Before we begin, I would like to remind you that in the following comments, and in the question-and-answer session, we will be making comments about expected future results, which may be forward-looking statements for the purposes of the federal securities laws.

These statements relate to our current expectations, estimates and projections and are not a guarantee of future performance. They involve risks, uncertainties and assumptions that are difficult to predict, and which may not be accurate, especially in light of COVID-19. Actual results may vary.

These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors contained in our SEC filings. At this point, I would like to turn it over to Ted..

Thank you, Rob and welcome everyone to our fourth quarter earnings call. As we normally do, I will open the call with some overview comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results, cash flow as also – as well as to comment on outlook.

We will then review our market strategy related comments, after which we will open it up to Q&A. When we started 2020, we were aggressively ramping headcount in anticipation of increased demand, only to be disrupted by the COVID pandemic. All of the disruption was significant and swift.

We have experienced increased client engagement since Q3 of 2020, consistent with our pre-COVID expectation, we are experiencing strong demand for our services.

It is clearly evident that that organizations have recognized the need to embrace digital transformation as a requirement to remain competitive, and the rate of digital innovation and related change is clearly unprecedented. Before I move to our quarterly results, let me start by congratulating our associates for their outstanding 2021 performance.

Our revenues were up 18%, but more impressive was our record pro forma EPS of $1.31, which exceeded our prior year results by 90% and our 2019 pre-COVID results by 31%. Given the circumstances, I wanted to acknowledge their performance at the onset of our call. Moving on to our quarterly results.

This afternoon, we reported net revenues of $69.8 million and pro forma earnings per share of $0.33, both above our quarterly guidance and up strongly on a year-over-year basis. All our Groups experienced strong demand and contributed to our results.

US results were up 18% driven by the strong performance of both our S&BT and EEA Groups nearly across all of our US practices. Our SBT Group was up sequentially for the sixth consecutive quarter with improving rates, utilization and gross margins on a year-over-year basis.

Additionally, our IP-based higher margin Executive Advisory offerings grew at a higher rate than our S&BT Consulting Services and are expected to continue to grow at a higher rate into 2022. Our EEA growth was driven by strong Oracle and OneStream growth.

We also saw improved European performance, which is expected to carry over into the first quarter of 2022 as well.

Strong demand for our services along with increasing leverage of high margin IP-based benchmarking Executive Advisory and – iPaaS offerings, as well as the efficiencies from our virtual sales and delivery business model are expected to continue to contribute to our performance.

This increased momentum should allow us to perform at the higher end of our long-term growth and profitability targets.

Additionally, the investments we have made to fully digitize all of our IP and the development of our digital platforms which include Quantum Leap, our state-of-the-art global benchmarking platform, and our proprietary Hackett Digital Transformation platform or DTP are allowing us to highly differentiate and expand our offerings, and are important drivers of our long-term growth.

These platforms are allowing us to develop new relationships, and invest in rapidly growing cloud, workflow automation and process mining technology providers across all areas of the enterprise. We believe these new and potential relationships are key to our digital transformation strategy, and are important components of our growth strategy.

It is worth noting that our reported results were achieved without any additional iPaaS relationships in the quarter, which we believe should benefit our future results. On the balance sheet side, our ability to generate strong cash flow from operations has allowed us to increase our dividend in our buyback program.

We’d also plan to expand our current – credit facility to fund acquisitions we identified and to buyback stock, while continuing to invest in our business. With that said, let me ask Rob to provide details on our operating results, cash flows, as well as outlook.

I will make additional comments on strategy and market condition following Rob’s comments.

Rob?.

Thank you, Ted. As I typically do, I’ll cover the following topics during this portion of the call.

An overview of our 2021 fourth quarter results, along with an overview of related key operating statistics, an overview of our cash flow activities during the quarter and I will then conclude with a discussion on our financial outlook for the first quarter of 2022.

For purposes of this call, I will comment separately regarding the financial results of our Strategy and Business Transformation Group or S&BT; Our EPM, ERP and Analytics Solutions Group or EEA; our International Group and the total company.

Our S&BT Group includes the results of our North America IP-as-a-Service offerings, our Executive Advisory programs and Benchmarking Services, and our Business Transformation practices. Our EEA Solutions Group includes the results of our North America Oracle, SAP solutions and OneStream practices.

Our International Group includes the results our S&BT and our EEA resources that are based primarily in Europe. In addition, please note that all references to net revenues represent revenues excluding reimbursable expenses.

Reimbursable expenses are primarily project travel-related expenses passed through to our clients and have no associated impact to our marginal profitability. Given the limited amount of business travel resulting from the pandemic, we encourage investors to continue to focus on net revenues to assess revenue growth and margin trends.

During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information to investors. We included reconciliations of GAAP to non-GAAP financial measures in our press release filed earlier today. Additionally, my comments today are all based on results from continuing operations.

Before I move to our fourth quarter results, I would like to discuss a few highlights regarding our annual performance for fiscal 2021. Annual net revenues from continuing operations totaled $277.6 million, an increase of 18% over the prior fiscal year.

Annual pro forma earnings per diluted share were $1.31, an increase of 90% over the prior fiscal year and an increase of 31% when compared to the pre-COVID 2019 fiscal year. Pro Forma EBITDA for the fiscal year was $61 million, an increase of 88% over prior year, and represented 22% of net revenues for fiscal 2021.

For the fourth quarter of 2021, our net revenues increased to $69.8 million, up 18% when compared to the prior year, which is above the high end of our revenue guidance range, as we continue to see strong demand for our services throughout the quarter. This is also up 9.5% when compared to the pre-COVID fourth quarter of 2019.

The Q4 2021 reimbursable expense ratio on net revenues was 0.7% as compared to 0.1% when compared to the prior year. Reimbursable expenses have been significantly reduced in 2020 and 2021 due to our transition to a remote service delivery model.

Our US operations, which represents 91% of our total company net revenues in the fourth quarter were also up 18% when compared to the fourth quarter of the prior year. This is also up 12% when compared to the pre-COVID fourth quarter of 2019.

Net revenues for our S&BT Group were $28.4 million, an increase of 22% when compared to the same period in the prior year, reflecting the continued demand for our Enterprise Digital Transformation initiatives. Net revenues for our EEA Solutions Group were $34.8 million, an increase of 16% when compared to the fourth quarter of the prior year.

The year-over-year increase was driven by the growth in our Oracle and OneStream implementation service offerings. The fourth quarter also had higher than expected SAP software sales. Net revenues for our International Group were $6.6 million, an increase of 14% on a year-over-year basis.

This momentum As Ted mentioned, is expected to continue until the first quarter of 2022. Total company international net revenues accounted for 9% of total company net revenues as compared to 10% in the fourth quarter of the prior year.

Our recurring revenues, which include our Executive Advisory, IP-as-a-Service, multiyear benchmarks and AMS Groups accounted for approximately 21% of our total company net revenues, and approximately 28% of our total company practice contribution in the quarter.

Total company pro forma cost of sales, which exclude reimbursable expenses, totaled $40.8 million or 58.5% of net revenues in the fourth quarter of 2021, as compared to $36.8 million or 62.1% of net revenues in the previous year.

Total company consultant headcount was 1,072 at the end of the fourth quarter, as compared to total company consultant headcount of 1,049 in the previous quarter, and 928 at the end of the fourth quarter of 2020.

The year-over-year increase was primarily a result of hire activities, and increased utilization of sub – subcontractors resulting from higher demand. Total company pro forma gross margin on net revenues was 41.5% in the fourth quarter of 2021, up when compared to the prior year of 37.9%.

S&BT gross margins on net revenues were 51.4% in the fourth quarter of 2021, up as compared to 44.8% in the fourth quarter of the prior year.

The margin increase is primarily due to increased revenues resulting from higher rates, high utilization and revenue mix from our higher margin IP service offerings, partially offset by increased headcount and incentive compensation accruals commensurate with improving demand.

EEA gross margins on net revenues were 32.5% in the fourth quarter of 2021, up as compared to 31.7% in the fourth quarter of the prior year. The margin increase is primarily due to increased revenues, partially offset by the incremental use of subcontractors and increased headcount commensurate with improving demand.

International gross margins on net revenues were 46.2%, up as compared to the prior year of 42.7%, primarily due to increased revenues. Pro forma SG&A was $14.4 million or 20.6% of net revenues in the fourth quarter of 2021, as compared to $12.5 million or 21.2% of net revenues in the prior year.

The year-over-year absolute dollar increase is primarily due to increased incentive compensation accruals associated with increased company performance.

Pro forma EBITDA was $15.4 million or 22% of net revenues in the fourth quarter of 2021, as compared to $10.8 million or 18.3% of net revenues in the previous year, primarily resulting from increasing revenues.

Total company pro forma net income for the fourth quarter of 2021 totaled $10.9 million or $0.33 per diluted share, which represents a year-over-year increase of 43% in pro forma diluted earnings per share and is above the high end of our earnings guidance range.

This compares to pro forma net income of $7.4 million or $0.23 per diluted share in the fourth quarter of 2020. Pro forma diluted earnings per share in the fourth quarter of 2021 is up 38%, when compared to the pre-COVID fourth quarter of 2019.

GAAP diluted earnings per share was $0.50 for the fourth quarter of 2021 as compared to GAAP diluted earnings per share of $0.03 in the same period in the prior year. GAAP results for the fourth quarter of 2021 included a $7.7 million or $0.23 per diluted share tax benefit related to the exercise of outstanding share appreciation rights.

GAAP results for the fourth quarter of 2020 included a $5.5 million or $0.12 per diluted share, restructuring and asset impairment charge primarily related to the reduction in the company’s global office space requirements resulting from the emerging work from home delivery model.

The company’s cash balance were $45.8 million at the end of the fourth quarter as compared to $52.9 million at the end of the previous quarter.

Net cash provided by operating activities in the quarter was $19.9 million, primarily driven by net income adjusted for non-cash activity, increases in accounts payable and accrued expenses and contract liabilities, partially offset by decreases in income taxes payable, and increases in accounts receivable.

Our DSO or days sales outstanding at the end of the quarter was 66 days, as compared to 63 days at the end of the previous quarter. The company’s $45 million credit facility remained unused during the fourth quarter of 2021.

During the quarter, we repurchased 1 million shares of the company’s stock for an average of $19.83 per share at a total cost of approximately $20 million, primarily driven by the net settlement of tax obligations associated with the exercise of stock appreciation rights that we discussed last quarter.

Our remaining stock repurchase authorization at the end of the quarter was $11.2 million. In November 2021, the Board declared a quarterly dividend of $0.10 per share, which was paid in December 2021, making this the second dividend payment made in the fourth quarter.

At its most recent meeting, the company’s Board of Directors authorized a 10% increase in its annual dividend from $0.40 to $0.44 per share to be paid quarterly, and declared the first quarterly dividend of $0.11 per share for its shareholders of record on March 25th, to be paid on April the 8th 2022.

Before I move to guides for the first quarter of 2022, I would like to remind everyone of the seasonality of our business relative to costs, as we move sequentially from Q4 to Q1.

Specifically consistent with our first quarter guidance provided in previous years, our first quarter guidance for 2022 will reflect the sequential increase in US payroll related taxes, and the sequential buildup of our vacation accruals. As Ted mentioned in this conference, demand continues to be strong.

The company estimates total net revenue for the first quarter of 2022 to be in the range of $70 million to $72 million. We expect year-over-year total revenues to be up to 10%, 13% with increases across all three Groups. We estimate pro forma diluted earnings per share in the first quarter of – 2022 to be in the range of $0.31 to $0.33.

At the midpoint, this would represent an increase of 90% over the first quarter of the prior year. We expect the pro forma gross margin and net revenues to be approximately 38% to 39%. We expect the pro forma SG&A and interest expense for the first quarter to be approximately $13.8 million.

We expect first quarter pro forma EBITDA on net revenues to be in the range of approximately 20% to 21%. We expect cash balances, excluding the impact of share buyback activity to be tampered due to the payment of 2021 performance-related bonuses and the payment of employee income tax withholdings triggered by net vesting of restricted shares.

At this point, I would like to turn it back over to Ted to review our market outlook and strategic priorities for the coming months..

Thank you, Rob. As we look forward, let me share our thoughts on the near-term and long-term demand environment and on the growth opportunity it offers our organizations.

As I have mentioned, although the pandemic created unprecedented demand disruption, it also created heightened awareness that accelerate – that accelerated the demand for digital transformation initiatives.

This mean that digital innovation in enterprise cloud applications, analytics and infrastructure, workflow automation and process mining are dramatically influencing the way businesses compete and deliver their services.

Digital Transformation is redefining all activities at an accelerated pace, forcing organizations to fundamentally change and adopt these new capabilities in order to remain competitive.

The strong digital transformation demand that I have mentioned is also resulting in increased competition for experienced talent, unlike we have seen in a very long time.

We believe that the emerging service delivery model should help us address the short-term recruiting and retentions’ concerns, as we hope to be able to attract associates from a broader pool of global candidates.

The emerging service delivery model I’m mentioning is our ability to deliver our service virtually that we had for the last couple of years.

We are also hopeful that we are now finally on a path to our next normal, which results in a highly engaged client base with a sales and delivery model which provides our clients and our associates with greater personnel flexibility to perform their defined responsibility.

This will allow us to attract and retain talent that we struggled to retain many times because of the demanding travel requirements of our industry, we believe this is changing.

In order to increase our revenues across all of our IP-led offerings, we will continue to invest in our IP platforms and increase our sales and marketing resources dedicated to this area.

This will include our IP-as-a-Service offerings, the partners that desire to license our IP and brand permission to bolster their business case development, and value selling and delivery efforts.

As we’ve said, we had over 10 such opportunities with formal proposals, pilots launching and/or contract negotiations, we believe these opportunities should further benefit our 2022 results.

We also expect to leverage our brand, IP and platforms to launch a series of new vendor intelligence programs that will help assess and highlight the unique capabilities of technology and service providers across selected categories.

This is another key initiative that we believe has great potential to add high margin recurring revenue over the next few years. Strategically, our focus will remain the same, which is to continue to build our brand with our new offerings and capabilities focused on digital transformation around our fully digitized and unmatched IP.

This should allow us to serve our clients strategically, increasingly remotely and whenever possible, continuously. Specifically, we will continue to redefine our global benchmarking leadership through enhancements in Quantum Leap, our digital benchmark Software-as-a-Service solution.

This platform allows us to deliver more information with significantly less client effort. It also allows us – our clients to leverage our IP to track the transformation initiatives over the life of their respective efforts. We believe there is no comparable platform in the market. We also know that it is a critical component of our iPaaS offerings.

We will also continue to enhance our digital transformation platforms to further differentiate our unique IP and related solution design capabilities. DTP allowed us to fully digitize our IP and align proven software configuration and organization solutions to help our clients drive transformational change.

DTP is a core asset to our benchmarking Executive Advisory, iPaaS, digital transformation and cloud application implementation offerings. We are now seeing some of the targets that we’ve been discussing on the iPaaS side, consider some of the solution and capabilities to be a unique element of some of the relationships we’re trying to define.

As I mentioned on our last few calls, we have added a 20-minute demo to our Investor Relations page of our website so that investors can become more familiar with the capabilities of our two platforms.

Lastly, even though we believe that we have the client base and the offerings to grow our business, we continue to look for acquisitions and alliances that strategically leverage our IP and at scope, scale or capability, which can accelerate our growth.

As always, let me close by congratulating our associates on an outstanding year and by thanking them for their tireless efforts and always urge them to stay highly focused on our clients, our people, especially in light up any short-term challenges we may encounter. Those conclude my comments.

Let me turn it over to the operator and let us move on to the Q&A section of our call..

Thank you, sir. Our first question comes from George Sutton with Craig-Hallum Capital Group. Sir, your line is open..

Hey guys, this is [James] [ph] on for George, great quarter. So every day obviously we’re seeing a lot of headlines, labor shortages, supply chain issues, inflation, just a bunch of challenges that businesses are now facing.

Now just be kind of curious to hear sort of what some of the top challenges new or existing clients are coming to you to help them solve, because I think you guys are sort of in a unique position to help within the current environment..

Well as you can imagine, supply chain issues, retention, higher wages all place pressure on our clients’ operating performance.

So, as we always say, the way you address those performance issues, we’ve always said we believe 75% of the answer comes from the deployment of technology, workflow automation, of which, we’re seeing an unprecedented pace of – of such a technology being introduced into the marketplace.

The other remaining piece is to for the clients that properly consider or if they’re properly – organized in order to take full advantage of the technology that they decide to implement.

Our job is to help clients understand what’s missed, what’s being oversold and what is technology and organizational changes, which can be considered and implemented to help our clients remain competitive. We think we do that incredibly well.

So, these kinds of pressures with this kind of technology, innovation just creates a very strong demand environment for us. But those are the primary ways, James that – that we do that. They come in, in a lot of different tactical type requests.

But it’s productivity pressures that are then addressed by digitizing your business, leveraging new technology and understanding how to organize to make sure you’ve taken advantage of those investments..

Very helpful. And then very encouraging growth across the entire business obviously compared to last year and 2019. I guess, could you just provide sort of some color on whether that growth is coming from existing clients, new clients, larger deal sizes? Or just some more color there would be helpful..

Well, we – you know, we first start by telling people that we’ve worked with client a lot of different ways.

But there’s something we call the Hackett network effect and these are the clients that utilize our Benchmarking or Advisory and Consulting Services, we talked to a lot more corporate executives, believe it or not, through our Benchmarking and Advisory Services, that then our Implementation Services because they are spread globally.

And – and they just always seem to be a little broader across the enterprise. We believe that the number of – of people in that network is in excess of 80,000 that we track back over the last five or 10 years. So, a majority of our business comes from what we call that, Hackett network.

So if it’s not from someone who’s been directly exposed to Hackett through one of our offerings, it’s normally someone who then picks up the phone or response to somebody who asked the question on how you’re addressing some of these issues.

Tell me what the art of the possible is, what’s the most efficient way to good – to get a good, trusted credible answer. And we believe that’s the way then we attract new clients. The last way we attract clients, as you know, we put out research that talks about the performance improvements that we’re seeing around our global client base.

And we’ve come out with research that defines what we call Digital World Class. And that research has picked up across all types of different mediums throughout the year. We will be mentioned in – in any single year, we believe in excess of 365 times.

So we- we think that when we are continuously putting that information out, and it’s being picked up by all sorts of different both business technology, economic mediums around the world, that – that allows us to also be able to promote our business pretty efficiently.

So, a combination of all of the three, but the pace, the base, the big, big base are those that have been directly exposed to Hackett have – had a favorable experience know that’s an efficient, highly collaborative way to work with someone and they returned to us..

Got you. And then just last one for me.

Would you be able to quantify the contribution from the Oracle practice and OneStream in the quarter?.

I can’t quantify it since we don’t – provide information at that level. But suffice to say, that it grew very strongly, high level probably consistent with the growth that we’ve reported in the overall quarter. And then just to provide a little bit more color.

As you know, our SAP Business has just been on fire for you know even throughout the pandemic, but clearly, since the middle of 2020 throughout that year, that – that business took a little bit of a breather this quarter. And so the performance in EEA is primarily driven from the growth from Oracle and OneStream. So you know, it’s very substantial..

Thanks, guys. Congrats again..

Thank you..

[Operator Instructions] Our next question comes from Vincent Colicchio with Barrington Research. Your line is open sir..

Yeah. Ted, did you increase your offshore mix in the quarter? And you know, what does the labor dynamic look like? I know India and South America, I think Uruguay are two offshore markets you’re looking to expand in.

What’s the labor – dynamic looking like? Are you able to you know easily get the right people in those markets?.

The answer is that if you go back to the beginning of 2020, approximately 25% of our consulting or billable resources were offshore or nearshore, but outside the US and Western Europe, that number is now approximately 40%. So the move over the last few years has been very significant.

Bringing that resource on – on fold has allowed us to be very competitive in engagements that are a little bit more pricing sensitive. And it’s also helped us in – in competing for and winning larger engagements across those businesses that are leveraging that – those offshore resources.

So, it’s been a meaningful part of our strategy and clearly contributing to some of the success that we’re reporting on today..

And are you able to pass through any of your cost increases through increased pricing? And also part of that, are you thinking about building inflation escalators in some of your contracts?.

No, we’ve – over that same period that I just mentioned, we’ve put through two price increases, and we believe we are realizing some portion of those increases. So it’s been part of that improvement that you’ve seen since the middle of 2020. And clearly in 2021.

So, no, the marketplace understands that in order to get talented people is costing more, they realize it in their own, if you want to call it environments. So we’ve had – let’s put it, we – pricing has been favorable in light of those circumstances for so it’s another one of the contributors to our performance..

And your – your longer-term financial targets. The revenue, I believe is 5% to 10%. And if I remember correctly, the – the earnings is 10% to 20%, you had mentioned that you should be able to achieve your financial targets in ‘22.

Were you just referring to revenue and – and or you’re referring to EPS? And if you were to referring to EPS you have that number right on the high end?.

Yeah. The combo what I wanted – what I – what I’d wanted to make sure people knew and a lot of what we’ve reported in – in the guidance we provided in Q1 is that, the indications are that that we – we should be performing at the higher end of that.

And if you – so if you drive that to the higher end of that 5% to 10%, then you can go back and then take a look at our – the leverage that it drives into our business model. So then it would move the EPS targets upper – to that upper side as well.

Just as a word of – just to comment, and so that we don’t forget our – recall then our overall results benefited in the second quarter from that large maternal sales which we reported that way so that people knew the with or without, but look, the growth we experienced in this quarter, what we’re guiding I mean is a combination of all the things we’re discussing today, strong demand, improved execution, more leverage of our IP and the services – and our IP-based services, for example, our Executive Advisory business, which as you know is a recurrent part of our Strategy and Business Transformation Group, the annual contract value sales increases during the year were in excess of 20%.

So, we’re just seeing – we’re just seeing favorable activity and that’s why we made that comment, Vince..

Thank you. Nice quarter, Ted..

Thank you, Vince..

Thank you, Vince..

Our next question comes from Jeff Martin with ROTH Capital Markets. Your line is open..

Hey, guys. This is [Ray] [ph] on for Jeff here today. Just had a couple of questions. So for – it seems like client engagement has been a key trend this year. And you mentioned in the third quarter that it rose 7% over 2019 I believe it was.

Can you talk a little bit to how that has trended? And are there specific drivers beyond the broader trend of digital transformation that you’ve been experiencing?.

First of all, you’re correct on the 7%. And just to put some context on then, that trend when we go from third quarter to fourth quarter, if you recall, when we provided guidance, we talk about the fact that given the holidays, primarily in the US, 91% of our revenues are in the US.

Between Thanksgiving and New Year’s, that we lose and I’ll ask Rob to check me, approximately 9% of the available days in the quarter, Rob is double checking. So if that number is wrong, he’ll stop me, but it’s going to be some number in the 7% to 9% range, I think it’s going to be closer to 9%, but he’ll confirm it.

So when you look at the sequential revenue that we experience with – with the loss of those available days, what it basically infers to us is that, the – that demand and trend that we were experiencing that you mentioned, into the third quarter, continued into the fourth quarter.

And given our guidance into Q1, that it – it looks that momentum, we’re able to carry over into 2022. So, look, it’s – it’s been favorable. So client engagement, which we’ve talked about it as a way of describing the recovery of the client activity from mid – from the third quarter of 2020 through the end of 2021.

We specifically you know have changed that commentary from, if you want to call it recovery or client engagement to really just simply describe that as a favorable or strong demand environment.

Since we believe it’s – we’re now beyond recovery, even though obviously they’re still, most of our clients and ourselves we’re – we’re not in offices, but that virtual delivery model and client engagement remains very high.

Does that answer your question, Ray?.

Yeah, definitely helpful. Thank you.

And actually, are there any strategic initiatives that could accelerate that trend going into 2022 and 2023?.

Well to us, the ones that – one – the one that we’ve been working very hard, and we expect – we expect that to contribute in ‘22 has been the iPaaS related relationships which as I had mentioned, we have many – I’ll use the word percolating, but they’re in all stages.

So that’s why we continue to speak to the fact that we expect those relationships to start materializing in 2022. The second one that – that I think it’s important to note, which was – I think, rather new commentary. Our Research Advisory business has been focused on corporate or enterprise clients historically.

And if you recall, we had a significant relationship with one of the large cloud infrastructure companies, which came in, in the latter part of the year. And as a result of the feedback we got from that very significant client, which was, they wanted our help with research and support with client related initiatives.

Their feedback was that, they believe that our ability to provide research to support vendor related initiatives to evaluate technology and competencies and take them to the marketplace is really very significant. So, you will see us make a very – we are and have started to make an investment in hiring individuals.

And you’ll see us launch a series of new programs in that vendor intelligence space throughout 2022, which we believe could be very significant as I mentioned in my comments. I would say those are two.

Our third one could be the fact that we continue to add some cloud implementation partners, I think you may have seen in our release the announcement of a relationship with Anaplan, that is new. We’re also evaluating a couple others, some on the strategic enablement side, some on the implementation side.

So just think about it, we got two – two sides of our business. So, and we think all these – all these activities are important growth drivers.

And that’s what we mentioned – well that’s why I mentioned on our script and haven’t mentioned them over the last few quarters, but the vendor intelligence ones which I hired for the first time, this time is a new one and we believe has meaningful potential..

Great, thank you. That’s super helpful..

Thank you, Ray..

And then you did – I did hear something much in the call. Unfortunately, I got dropped from the call, had to dial back in.

But, can you talk a little bit about the strategies that you’re employing to both acquire and retain talent? And then also what’s the current pricing environment? Are you seeing opportunities to offset any wage inflation with the improved pricing?.

You – well you – if you didn’t hear me a little earlier, Ray, we did mention that pricing was favorable. And that over the last 18 months, we had put through a couple and we think we’re realizing some of those pricing increases. On the employee retention and ability to attract. Look, we are facing more competition for talent than we ever have.

I said that in the comments. But I think it’s equally important to understand that we had some headwinds that were structural, pre-COVID.

And those headwinds were significant, the primary reason that we had turnover or ability to retain people for a longer period of time, were the travel requirements that were imposed by our business where the majority of our people are a large number would get on an aircraft on a Monday and come back on a Thursday and work from home on a Friday.

And that becomes you know pretty significant, and in some cases, it becomes an issue as some of our individuals start a family or the family expands or who knows what responsibilities change at home, we think that we will come out of this pre-COVID – the post-COVID environment, this next normal will not have nearly the same travel requirements that we experienced pre-COVID.

For a combination of reasons. One, is that our clients will not want to pay the reimbursable client expenses that come primarily when we deploy people on site.

But I think also we’ve learned that we can have a very effective meeting virtually, and I think the number of meetings or the number of people that attend the meeting will actually come through in a more efficient manner.

What that means to our people is, one, they can utilize the time that they were spending, getting on flights and making arrangements, getting to and from clients to serve clients. Same for those who may not have had traveled, but may have come to an office to do their work. Again, some of those benefits will accrue to them as well.

We’ve tried to be very flexible with our people that we want to find the best and optimal way to serve clients, as well as be responsive to their individual, personal and family requirements. We think that provides significant opportunity for us to, one, attract globally – attract talent pool deploy globally.

And I mentioned the number of resource – the increase of our offshore niche or nearshore resources, how much that had increased over the last eight – the combination of those things are favorable. So, we expect to fight for talent.

But we think we provide an outstanding work environment with great flexibility, ability to work with great clients, and a great team of people. And we’re not too big, where you’re lost, you’re playing a meaningful role on the client.

You know – you know people know each other, and if they don’t personally, they know they can reach me or some of the other leaders and – and hear back immediately, virtually on any question that they have. We think all those things are – will accrue to us.

And that we will be able to deal with the talent demands both in terms of cost and as well as ability to provide a flexible and favorable work environment that allow us to attract and retain talent more favorably than it was pre-COVID. We hope we’re correct, because it’s absolutely critical to our success, but so far, so good..

Great, thank you. And then one more question, if I can. IP-as-a-Service offering has seen pretty strong interests over the past 18 months.

Are there any recent developments or maybe any anticipated developments that you can share with respect to the potential contribution from IP-as-a-Service?.

Well, first I’d said on the call that in the increased results from this quarter, and just under recent quarter, remember, we had the significant infrastructure, cloud infrastructure clients that we have – that came in during the third quarter that impacted our third quarter, but we didn’t have any new ideas to serve as clients in the quarter.

But when we look at the activity that we’re having across those that we’ve been working with over the last year or so and those that are new, since we have – we have new inquiries coming in, I’m going to say, you know a couple per quarter, I was going to say 1 per month but let’s just say no, let’s say, you know 2 per quarter.

We believe that IP-as-a-Service revenue contribution relationships will expand throughout 2022..

Great, thank you so much. I appreciate it..

Thank you, Ray..

There are no further questions in the queue. I would now like to turn the call back over to Mr. Fernandez..

Thank you, operator. Let me first, again congratulate our associates on an outstanding 2021 and thank everyone for – participating on our fourth quarter earnings call and we look forward to catching up with everyone again when we report the first quarter. Thank you and good night..

That concludes today’s conference. Thank you for your participation. You may disconnect at this time..