Good day, and welcome to the Information Services Group's Third Quarter Results Conference Call. Today's conference is being recorded, and a replay will be available on ISG's website within 24 hours..

At this time, for opening remarks and introductions, I would like to turn the conference over to Mr. Barry Holt. Sir, please go ahead. .

Thank you, operator. Hello, and good morning. My name is Barry Holt. I'm a Senior Communications Executive at ISG. I'd like to welcome everyone to ISG's Third Quarter Conference Call. I'm joined today by Michael Connors, Chairman and Chief Executive Officer; and David Berger, Executive Vice President and Chief Financial Officer..

Before we begin, I would like to read a forward-looking statement. It is important to note that this communication may contain forward-looking statements, which represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects.

These statements are not guarantees of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated..

For a more detailed listing of the risks and other factors that could affect future results, please refer to the forward-looking statement contained in our Form 8-K that was furnished this morning to the SEC and the Risk Factors section in ISG's Form 10-K covering full year results.

You should also read ISG's annual report on Form 10-K and any other relevant documents, including any amendments or supplements to these documents filed with the SEC. You will be able to obtain free copies of any of ISG's SEC filings on either ISG's website at www.isg-one.com or the SEC's website at www.sec.gov..

ISG undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

During this call, we will discuss certain non-GAAP financial measures, which ISG believes improves the comparability of the company's financial results between periods and provides for greater transparency of key measures used to evaluate the company's performance.

The non-GAAP measures, which we will touch on today, include adjusted EBITDA, adjusted net earnings and the presentation of selected financial data on a constant currency basis. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

For the reconciliation of all non-GAAP measures presented to the most closely applicable GAAP measure, please refer to our current report on Form 8-K, which was filed this morning with the SEC..

And now, I'd like to turn the call over to Michael Connors, who will be followed by David Berger.

Mike?.

Thank you, Barry, and good morning, everyone. We had a very strong third quarter even in the face of this global pandemic. Revenues were up 7% and EBITDA up 11% sequentially, with the Americas, in particular, coming in strong, with revenues up 11%.

Cash remained strong with operating cash for the quarter of $10 million and our cash balance growing to $38 million, up 21% over Q2. In the last 12 months, ISG has generated $52 million of cash, a testament to the cash-generating power of our business and our disciplined operating approach..

Much of our success this quarter is due to the extraordinary efforts of our global team. The ability of our people to quickly adapt to new ways of working, provide continuing high-quality services to our clients and win new business in a work-from-home environment has been outstanding..

Our Go Digital strategy launched well before the pandemic is helping us weather this economic and health crisis. Our results demonstrate the relevance of this strategy, the resilience of our business and our people, our disciplined management and the power of our relationships with the world's leading companies..

During the third quarter, we saw bright signs in a number of our industry segments. Our insurance, public sector, retail and telecom verticals were all up double digits over the prior year. And sequentially, we saw double-digit growth in our energy, life sciences and tech verticals.

On the flip side, hospitality, banking and manufacturing were all down double digits versus prior year..

Our pandemic-ready services from cost takeout and captive monetization, supplier governance and pricing benchmarks to cloud automation, data analytics, next-gen workforce solutions and networking are helping clients adapt to the current situation and prepare for a digitally turbocharged future..

Virtually every enterprise knows digital is the future and the best way to improve efficiency, reach customers, find new opportunities and keep employees connected even when working apart. That's why many of our clients continue to invest in digital. The pace of that investment may vary depending on the industry, but it is continuing..

With these market and industry insights as a backdrop, let me further detail our financial performance. Revenues, EBITDA and EPS for the quarter all exceeded expectations. Revenues were $62 million, up 7% sequentially over Q2.

On a year-to-year basis, revenues were down only about 6% when you exclude the billable T&E that was absent due to the ban on travel. This is a result of continued softness in the travel, transportation and hospitality industries.

And as mentioned last quarter, we are working with a number of clients in distress like our cruise lines and hotels to offer reduced rates and extended terms. During the quarter, we served 434 clients. That's up 6% since the beginning of the pandemic. And we generated $19 million in recurring revenues, representing 31% of our firm-wide total..

From a profit perspective, our adjusted EBITDA of $8.2 million was up 11% from Q2, thanks to our early and aggressive cost actions and our higher-margin mix of products and services that are helping clients weather this downturn.

We will likely continue to see revenue pressure in the near term as clients delay spending on major technology initiatives even as demand remains focused on our higher-margin pandemic-ready services..

As a result of our actions and our resilient portfolio, our capital position continues to grow even stronger. As I mentioned, we generated $10 million in cash flow from operations in the quarter, bringing our year-to-date total to $37 million.

And we ended the quarter with a cash balance of $38 million versus $14 million last year at this time even after investing $2 million from the Neuralify acquisition..

As discussed last quarter, in July, we acquired Neuralify, a market leader in intelligent automation enablement solutions and services. Since then, Neuralify's operations have been fully integrated into ISG Automation.

We are already benefiting from the combination with Neuralify's solutions providing a strong market differentiator for our ISG Automation business..

Now turning to our regions. The Americas delivered $35 million in revenue in the quarter, up 11% sequentially, down 13% versus the prior year. A reduction in client billable T&E contributed about 500 basis points of this decline. As mentioned last quarter, we accommodated a number of clients in the U.S.

on rate reductions, extended terms and other areas in some of the harder-hit segments like automotive, travel and hospitality. We did see good sequential growth in our higher-margin services of cost takeout, automation and in industries like energy, life sciences and tech, all up double digits sequentially..

Key client engagements in the third quarter included Corning, Centene, Hydro One, U.S. Steel, British Columbia Public Health and National Grid. Among our significant wins, ISG signed a 3-year GovernX deal for close to $2 million with a major financial services firm.

ISG will migrate more than 1,000 contracts for this client to our GovernX software platform. We also were awarded a $2.5 million 29-month GovernX contract with a major health care company, one of the leaders in the fight against COVID-19.

And all of this done in a remote selling and delivery environment at a time when we have seen an uptick in our client satisfaction scores..

Turning to Europe. Our Q3 revenues of $21 million were in line with Q2, down 7% from the prior year. During the quarter, EMEA more than doubled its network services revenue and delivered double-digit revenue growth in our research business.

Among our industry segments, consumer, energy, life sciences and financial services were up, offset by a decline in manufacturing. Key client engagements in Europe in the third quarter included Allianz, Wintershall, Aldi, Volkswagen and New Day ..

Among our wins, ISG has been awarded a $1 million contract in Germany with a multinational optics and medical device manufacturer to support their client's global strategic sourcing program. In addition, a leading global pharmaceutical and life sciences company has engaged ISG to lead the modernization of their enterprise landscape.

The win for nearly $1 million follows the successful delivery of an HR tech engagement with the client earlier this year..

Finally, in Asia Pacific, we reported double-digit sequential growth with revenues up 19% to nearly $6 million, driven by the public sector, tech, financial services and insurance industry verticals. During the quarter, ISG was awarded a $1.4 million GovernX engagement with a Japanese multinational brewing and distilling company.

This contract represents the largest total contract value annuity deal to date for ISG in Asia, and it builds on our success supporting this client through 10 engagements over the last 2 years.

Other key clients in the quarter in this region included Rio Tinto; the Australian Taxation Office; the Department of Defense; the Department of Home Affairs; insurance company, IAG; AMP Services and ANZ Banking Group..

Now let me turn to guidance. As we indicated last quarter, we're working through a still difficult COVID environment. And while it's too early to predict the trajectory for the recovery, we continue to plan for a return to prior levels of activity. The crisis, as we all know, is far from over.

Although there has been some flattening of the curve in some countries, we continue to see surges, and this is impacting our clients' decision-making, especially those in consumer-facing industries. This crisis likely only begins to subside with the introduction of vaccines..

Apart from the pandemic-induced impacts on client demand, in Q4, we are looking for a continued reduction to near 0 of client T&E reimbursable expense, which usually runs about 4% to 5% of our revenues.

And though we are planning for our live ISG-produced destination events to eventually return, we are not forecasting any revenue from in-person events for the balance of the year..

On the upside, as mentioned previously, we are seeing strong client interest in our rapid cost optimization services, supplier and risk management, network capability and resiliency, digital workplace solutions and business recovery planning.

Longer term, we think the pandemic will accelerate client demand for and investment in digital transformation services ISG provides..

Balancing all of this, we will continue to provide guidance on a quarterly basis based on assumptions we are making on a continuing volatile environment.

For the fourth quarter, we are forecasting revenues of between $56 million and $58 million and adjusted EBITDA between $7 million and $8 million as a result of the cost actions we have taken and in anticipation of higher-margin services being delivered in the quarter..

So with that, let me turn the call over to David Berger, who will summarize our financial results.

David?.

Thanks, Mike, and good morning, everyone. To reiterate what Mike said, we managed through a difficult operating environment and delivered a solid third quarter..

Revenues for the third quarter were $61.6 million, up 7% sequentially. This compared with $68.1 million in the prior year, down 10% on a reported basis and 11% in constant currency. Currency positively impacted reported revenues by $1.1 million versus the prior year.

Excluding reimbursable client travel costs of $2.4 million, which accounted for approximately 350 basis points of the year-to-year decline, revenue was only down 6% versus last year..

Reported revenues were $35 million in the Americas, up 11% sequentially and down 13% versus the prior year; $20.9 million in Europe, flat sequentially and down 7% on a reported basis and 11% in constant currency versus the prior year; and $5.7 million in Asia Pacific, up 19% sequentially and up 8% on a reported basis versus the prior year and up 4% in constant currency..

Third quarter 2020 adjusted EBITDA was $8.2 million, up 11% sequentially and compared with $10.3 million in the prior year's third quarter. We reported third quarter operating income of $3 million compared with operating income of $5.7 million in the third quarter of 2019.

Net income for the quarter was $2.1 million, up 19% compared with net income of $1.7 million in last year's quarter. Reported fully diluted income per share was $0.04, flat with the prior year..

Adjusted net income for the third quarter was $5.2 million or $0.10 per share on a fully diluted basis compared with adjusted net income of $4.4 million or $0.09 per share on a fully diluted basis in the prior year's third quarter. Utilization for the third quarter was 69%. Quarter end head count was 1,261, down slightly versus last year..

Our balance sheet continues to have the strength and flexibility to support our business over the long term. Net cash provided by operations for the third quarter was $10 million and $37 million year-to-date versus less than $6 million in the prior year's 9-month period.

We have generated $52 million of cash flow from operating activities over the last 12 months. We spent $2.3 million on the acquisition of Neuralify, and we ended the quarter with $38.1 million of cash, up from $18.2 million at year-end and $14.2 million in 2019 Q3..

We repaid $1.1 million of debt in the quarter and $7 million year-to-date, lowering our debt to $79.9 million. Our average borrowing rate for the quarter was 2.6%, less than half of last year's rate, and we had 48 million shares outstanding as of October 31..

Mike will now share concluding remarks before we go to Q&A.

Mike?.

Thank you, David. To summarize, ISG continues to gain momentum in the face of COVID-19, and I think it's a testament to our resilient operating model and pandemic-ready portfolio. Our revenue, EBITDA and EPS beat expectations, thanks to our early and decisive actions and improved mix of higher-margin products and services.

We had $38 million in cash at quarter end after generating an additional $10 million of cash in the quarter, and we continue to pay down debt with our debt down 8% since the end of last year..

We continue to serve our clients without interruption and deliver the higher-margin services they need to contend with this downturn. Longer term, we see the pandemic being an accelerator for our clients' digital transformations and demand increasing for our digital services in 2021.

As always, we are focused on creating shareholder value for the long term, and we are steadfast in our mission to deliver operational excellence to our clients..

So thank you very much for calling in this morning. And now let me turn the session over to our operator for your questions.

Operator?.

[Operator Instructions] Our first question will come from Joe Gomes with NOBLE Capital. .

Nice quarter. Just a couple of quick technical ones here. So it looks like for the quarter, the EPS beat, so to speak, was driven by a lower tax rate in this quarter versus the year ago quarter. Just if you can give a little more color on that and what we could expect possibly for the fourth quarter in terms of tax rate. .

Yes. Thanks, Joe. So yes, there was a reduction in foreign unremitted earnings related to tax law change in India, which favorably impacted the quarter. I think for the fourth quarter, if you use an effective tax rate of around 50%, you'd be good. .

Okay. And again, kind of on the technical part here real quick. So nice build in the cash, assuming some of that is the deferral of payroll taxes, which eventually do got to be repaid in '21 and '22.

Just wondering how much of the payroll taxes have been deferred, so we could kind of get an idea of how much of that cash actually just needs to go back to the federal government on a delayed basis, but does need to go back to them. .

Yes. I mean the -- on U.S. federal, it's not -- it's going to be paid over a 2-year period starting at the end of next year. So the impact is not -- insignificant, not that big. And some of the foreign taxes that were delayed actually were repaid in Q2 -- in Q3. So we would expect cash to go up slightly in the fourth quarter. .

Okay. And Mike, last quarter, you talked about this integrated delivery platform that you were going to talk a little bit more about in the future. And wondering if you might be willing to give us a little more insight into that, provide some more color and detail into what that integrated delivery platform can mean for the company. .

Okay. Thanks, Joe. Yes, we are in the process of implementing this.

And essentially what it is, is taking our global workforce and instead of operating it in its geographies, we are essentially -- because we are now primarily a work from home with the new environment with clients, we're essentially able to take the workforce, pool it together and have everyone available to every client anywhere in the world.

And what that enables us to do is we have experts, of course, and so our experts in the U.S. can help clients in Germany and in Australia and vice versa.

And what this will enable us to do is essentially, if you will, bring out more margin in our business because it will allow us to smooth a little bit of the resourcing that you get with the ups and downs when you have people traveling from city to city or country to country and you lose out on a little bit of that productivity when they're on the road..

So we'll talk about this more in March when we talk about 2021, but this is a fairly significant development for us. We're calling it ISG Next, which is our operating model going forward, and we'll talk about it further in March. But what we believe it will do is it will enhance our profitability to a significant degree as we move through 2021. .

Okay. One last one for me, and then I'll jump back in queue. So obviously, one of the concerns here in dealing with the pandemic is state budgets. I know you weren't expecting to see any slowdown, I think it was last quarter.

Just wanted to see kind of where you guys -- or what that market is looking like today in terms of selling into states and their budgets?.

Yes. So for the -- we have kind of 3 areas of government work for us. Let me just make sure we're all clear. One is in the U.S., where its state and local governments, no federal. In Europe, it tends to be the federal government, so things like the Ministry of Defense in the U.K. and the Ministry of Interior in Italy.

And then down under with the Australian government. So there's kind of those 3 areas..

Our public sector grew double digits year-over-year in the quarter globally and it approached 20%. And in the U.S., if you think about it from a state standpoint, it also grew 20%, not at those levels, but call it in the low teens in the quarter year-over-year. We are watching this.

As we've said before, we felt like there was a lull in the public sector spending. One of the areas that they certainly recognize is that they have to get cost out because of the way they're -- with the COVID situation, and of course, the tax before that is putting pressure on state and local budgets.

That can be good news for us because of the work we do tends to be around cost management, and we're seeing that reflected. So we're optimistic -- cautiously optimistic that we will see continued growth in the public sector in the fourth quarter. .

Our next question comes from Vincent Colicchio with Barrington Research. .

Nice quarter.

I'm just curious, what are your expectations per your guidance by geography sequentially? And do you expect some of the same vertical market drivers as you saw this quarter?.

Okay. So look, I think on a global basis, I would say the U.S. is faring a bit better only because you can tell where the surges are happening in the moment in Europe. So U.K., France, Germany are all in a kind of semi-lockdown for the month of November.

So if we were looking at our geographies, I think you'll see that Asia Pacific, with the public sector spending the way it is, is going to be in good shape. We think that the U.S. will also be in good shape and Europe likely would be more in the flat arena. And depending on how the lockdown pursues in December, we'll keep an eye on that.

We've taken all of that into consideration in terms of trying to get to what we think is a good guidance number for everyone for the quarter. .

Okay. And your margins are 40%-ish gross margin. They're down year-over-year, pretty similar sequentially.

I'm just curious, is the decline all volume? Or is there any pricing pressure you're seeing?.

So last year, you might recall that the Q3 was a record quarter for the company, and that was driven -- in the quarter, we had 2 gain shares in the network services area that added to the margin last year. So we would expect the margin to be consistent with that.

But last year was an anomaly -- not an -- well, last year was driven by the fact we had those 2 deals that contributed to the margin. Also during the quarter, it was actually -- licenses were up associated with our automation business, and those margins tend to be lower than the firm average. .

Although I would say, our EBITDA margin is up about 50 points -- 50 basis points for the quarter over Q2. And again, I think it's the mix of our margins and the beginnings -- I'll call, only the beginnings of our integrated delivery platform, Vince. .

And recurring revenue, I may have missed it, how did that perform in the quarter? And what are your thoughts about that going forward?.

Yes. So it performed well. We did $19 million, roughly 31% in the quarter. I would say that repeatable kind of platform sales continue to resonate and grow. I mean our goal -- for example, our GovernX platform for software and contract management, it's a full SaaS kind of cloud-based solution that takes our AI data and best practices.

And we've seen a tripling of the number of contracts that we have managed since the pandemic began. We now have -- nearly, we were 10,000 last quarter. We now have nearly a little over 12,000 users on this software platform now.

So you can see that, that has picked up considerably, and it has to deal with suppliers -- the supply chain, supply chain management, risk management along -- around a lot of these enterprise clients. So we continue to think that, our research business, in particular, those 2 areas will continue to drive our recurring revenue streams. .

[Operator Instructions] Our next question comes from Marco Rodriguez with Stonegate Capital. .

Mike, I was wondering if maybe you could talk a little bit more about GovernX. It kind of sounds like you guys had a lot of success in the quarter kind of with that service.

What do you attribute perhaps to that strength there? Was it just maybe some timing issues or additional marketing efforts that you guys underwent?.

So I think what's happened is since COVID hit, a lot of enterprises had their supply chains interrupted. There were issues with a lot of industry supply chains. And what GovernX brings to the table is an ability to manage the risk around their supply chain management and manage the contracts, the good, the bad, et cetera..

And so we have had a large uptake in our GovernX interest level from large enterprises to use our platform, which is a SaaS cloud-based solution that enables us to take all of the contracts from these major enterprises, put them into our -- onto our software and allow our enterprises then to manage and help risk mitigate some of their supply chain issues they've seen during the pandemic..

So I would say the pandemic has kind of turbocharged this area. We ended up with 2,000-plus new users during the quarter over quarter 2, and we're now up to 12,000 users. Pre pandemic, that number was in the 4,000 to 5,000 category, and we're now up to 12,000. It gives you kind of an indication of the usage of the software that we have on GovernX.

So it's a great, great, great asset and a recurring revenue stream. .

Got it. And would you attribute that strength you saw there -- I mean, aside from all the other digital aspects of it, obviously customers are moving more towards and perhaps accelerating with the pandemic. Just trying to get a better sense as far as the revenue strength you saw in the quarter versus your guidance.

I mean, obviously, very strong results on the top line. Just kind of trying to understand where the big surprises were. .

Yes. Definitely, the recurring revenue streams, research was very hot, GovernX was hot. We certainly had a pickup in several industry segments in the U.S. that I mentioned. Think about insurance, the public sector, the technology sector, all in the U.S grew, which helped contribute and have a little bit of overheating at 11% growth quarter-over-quarter.

And I think when we look at the -- when you look at the kind of third-party risk, you look at spend management with enterprises. It all kind of ties together..

And I would say the other aspect is around cloud adoption. Cloud adoption has certainly accelerated over the last 6, 7, 8 months. A lot of it is the inability of enterprises to access their data centers as effectively from kind of a work-from-home posture, if you will.

And then, of course, the e-commerce area with a lot of these clients has gone through a lot of multi-years of learning in the last 6 months. So think about online store builders like Shopify, Squarespace and others. This is a whole area that is beginning to explode.

So where the retail environment was shut down and no one was going into stores, e-commerce has picked up a lot of the slack.

And then, of course, you have your health care industry as well that's in kind of a lot of turbulence with the health sciences area, whether it's the vaccines and the researchers on that side or whether it's the health care environment overall with COVID..

So lots of kind of factors that are merging together that's enabled us to take our portfolio of products and services and kind of focus them around the cloud adoption, focus them around supply chain management, informing them with our research and also continue to allow our clients this digital journey that many of them were on prior to COVID, but certainly is accelerating.

And depending on the industry, they'll move at a pace that they can do it. The pace with hospitality and travel and automotive is a little slower, but they all will be there. They just have to continue to work through this kind of lull in the environment. So that's what I would say is what's driving things. .

Got it. Very helpful. Then just kind of shifting here toward cash flows. Obviously, very strong results here year-to-date, driven looks like primarily through some, obviously, liquidation of working capital. Just kind of wondering how should we be thinking about cash flows from operations, free cash flow..

As we kind of head into fiscal '21, where do you think that sort of normalizes? Obviously, assuming that the environment normalizes in fiscal '21, you guys have revenue growth. Working capital will obviously have to be there to support that growth.

But just any sort of color or any sort of drivers that you can talk about to help us think a little bit more about cash flow from ops in fiscal '21 would be helpful. .

Yes. So as you pointed out, the big driver of this year's cash flow is a change in the working capital. We've been able to -- strong collection effort has increased the amount of cash driven. Taxes have been very low. We paid $2 million of taxes through 3 quarters.

On a more ongoing basis, you would expect cash to be more in the 50% of EBITDA range would be a more normalized cash flow for the business. .

Our next question comes from Marc Riddick with Sidoti. .

So very encouraging, a lot going on that's moving in the right direction given everything that's taking place out there. So wondering if you could talk a little bit and maybe touch on Neuralify a little bit on some of the things that have taken place since the acquisition.

And then give a sense of maybe how that then leads you to think about kind of where we are with the acquisition pipeline and what that prioritization might look like going forward to fit the portfolio and service offerings. .

Okay. Great. Well, first of all, just to remind everyone, Neuralify -- the key asset that we wanted to get our hands on at Neuralify is what we believe to be an industry-leading digital enablement platform that allows kind of enterprises -- enterprise clients to kind of quickly scale the adoption of RPA.

And in considering that everyone's kind of working from home, having a digital platform to be able to scale couldn't have fit at a better time for us..

So number one, that is the asset that we wanted to get our hands on at Neuralify. The reason for that is, coupled with the services that we as ISG Automation have, you add this digital enablement platform, you then have a unique selling proposition in the market.

And we saw that in the third quarter when we were able to sell to a client we had been chasing unsuccessfully. But by adding a digital enablement platform, we ended up selling an over $1 million piece of business in September to this kind of Fortune 20 company and the digital enablement platform is the one that allowed us to kind of get there.

We think it's kind of the gold standard on hands-on kind of continuous digital learning around RPA..

The second asset that Neuralify had for us that we wanted to get our hands on was what is called in the industry a code quality analyzer, CQA is how we refer to it as, which essentially allows enterprises to automate their code review process. And that helps accelerate, if you will, the scaling of RPA.

So those are the 2 reasons we went after Neuralify, and we fully integrated it in its first 30 days when we did that back in July..

I would just comment on the overall automation business that we have discussed in the past. The pipeline is very strong in automation. We still believe, however, that this asset is completely undervalued by the market, and we will continue to focus on exploring ways where we may be able to enhance that value for all of our shareholders.

So Neuralify, in our view, in its early days, has delivered on what we expected it to deliver on for us. .

Okay. Great. And I wanted to touch a little bit on -- and this is fairly a common place for a lot of folks that are in the midst of cost cuts that they saw earlier in the year. I was wondering if you could sort of give everyone an update as to sort of how you're viewing the cost actions that have been taken up to this point.

And then maybe what you think is either that might have greater legs going forward or might be sort of short term in nature until a lot of revenue -- other revenue opportunities pick up. .

You're talking about for ISG or with our clients?.

For ISG. .

Okay. Yes. So just as a reminder, we've eliminated the bulk of discretionary spending or reduced it significantly. We've eliminated internal travel. And for the most part, clients are allowing us all to work from home. We do have a few exceptions to that, that we're on-premises. But we have that elimination of travel.

So keep in mind, that's all flow through expense. And we likely, going forward, will talk about our revenues on a net basis, so that you can see kind of year-to-year, what we're talking about, excluding the travel -- T&E because we think that will be out for some time. We reduced our marketing expenses..

And at the end of the day, what we've done is we've taken the opportunity during COVID with this new business model that enterprises are allowing, and that's why we've launched what we call ISG Next, which includes kind of resetting our cost base, including this integrated delivery platform that, as I said, we'll chat more about in March when we talk about 2021..

So as we move forward, we think we have a good set of cost structure going forward. We've also moved out of a few areas. We've moved out of Spain. We've moved out of a few other areas. We've sunset a few products and services. And yes, that revenue will not come back, but that revenue was not very profitable revenue.

So our view was that we will be a more profitable firm by having sunset some of our products and services and sunsetting some of our on-the-ground teams in Europe in certain points. And as we move through '21, we expect to see that the margins in our firm will continue to advance. So that's how we see all of that, Marc. .

Okay. Great. And then the last thing for me, and this is sort of more bigger picture, I suppose. But I was wondering if you could sort of talk -- you talked a little bit about those -- especially the consumer-facing clients that were having more of a timing impact as to their decision-making and activity with second wave onset.

I was wondering if you could sort of talk about the differences of what you're seeing from the industry -- the customers and the industries that are able to sort of move a little further forward.

And maybe what it is that they're implementing, the things that you're seeing them kind of -- the ones that are a little further along as to making that digital transformation as opposed to those that are dealing with more of consumer-facing challenges?.

Yes. So just to contrast, you have your travel, you have your hospitality, you have some manufacturing and some automotive that I would put on the scale of still struggling. You have others that are focused on areas like the health care, the health sciences, the pharma.

Some of the retailers, we talked about, with e-commerce, et cetera, are all, I think, doing pretty well..

So what are they doing? The ones that are advancing, if you will, at the moment is really around cloud. They are trying to move as much work to the cloud as possible. I would say pre-COVID, workloads to the cloud on average with the enterprises and the Global 1,000 were probably sitting somewhere in the 20s -- 20% range.

Everyone is trying to accelerate that to 40% to 50% of their workloads to move to the cloud. Again, some moved faster before COVID. Now everyone's trying to move as fast as possible. That requires time, energy and dollars to do so. There is a great ROI on it. But those that are not as distressed are moving at a rapid pace of cloud adoption.

Those that are not are not moving quite nearly as fast, if you will..

We also have the workforce of the future. If you think about with everybody working at home, it's put extreme pressure on networks. I mean in some cases, we would put networks at 95%-plus capacity, difficult to keep up with the demands in a lot of enterprises.

So how do we help our clients manage through the kind of the workplace of the future being here and now? And what does that mean from a technology standpoint? And how can we help them work through that in terms of our network expertise, which, as we said earlier, was doing quite well in the quarter, and we expect it to do quite well as we move into 2021..

digital, cloud adoption, asset monetization, workplace of the future. .

I'm currently showing no further questions at this time. I will now turn the call back over for closing remarks. .

Okay. Well, let me close by saying thank you to all of our professionals worldwide for stepping up to the challenges presented by this health and economic crisis around the world. But even working remotely, there has been no letup in our passion for delivering the best advice, support and products and services to our clients.

And thanks to all of you on our call this morning for your continued support and confidence in our firm. Stay well, everyone. Thanks very much. .

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect..