Good afternoon, ladies and gentlemen, and welcome to the Rimini Street's Earnings Conference Call. [Operator Instructions]. I will now turn the call over to Dean Pohl, Vice President, Investor Relations. Mr. Pohl, you may begin..

Thank you, operator. I'd like to welcome everyone to Rimini Street's second quarter 2022 earnings conference call. On the call with me today is Seth Ravin, our CEO; and Michael Perica, our CFO. Today, we issued our earnings press release for the second quarter ended June 30, 2022, a copy of which can be found on our website under Investor Relations.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the table following the financial statements in the press release. An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading about non-GAAP financial measures and certain key metrics.

As a reminder, today's discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today.

We encourage you to review our most recent SEC filings, including our Form 10-Q filed today for a discussion of risks that may affect our future results or stock price. Now before taking questions, we'll begin with prepared remarks. With that, I'd like to turn the call over to Seth..

Thank you, Dean, and thank you, everyone, for joining us today. Q2 2022 results.

For the second quarter, we had many positive financial and operational achievements, including strong subscription renewals and extensions, increased cross-sales of our expanded solution portfolio to existing clients and we maintained our excellent industry-leading client satisfaction rating of more than 4.9 out of 5.0 per cases in onboarding.

We achieved record revenue of $101.2 million, up 10.5% year-over-year and above the high end of our guidance range. We also achieved a record revenue retention rate of 95% on subscription revenue and increased gross margin to 63.1%, up from 62.2% year-over-year.

We continued to see sales growth in our newer application management services, professional services, interoperability, monitoring and security services and we believe our unique client experience, a very high client satisfaction rating will drive increased loyalty, improved retention rates and higher cross-sales to existing clients over time.

However, in line with other companies, we faced global macro environment and currency exchange rate headwinds that impacted quarter results.

We believe that the macro environment will ultimately benefit our business after organizations complete a replanning adjustment cycle and we're addressing it and other opportunities with changes that include my return to oversee global revenue operations to reaccelerate growth.

Since Rimini Street's inception in 2005, we've signed over 4,800 clients, including over 180 Fortune 500 and Fortune Global 100 companies and estimate that we have saved our clients more than $6 billion that they were able to reinvest in their businesses. We ended the second quarter with 2,905 active clients, a year-over-year increase of 9.8%.

In addition, despite the labor challenges affecting many organizations globally, we were successful in expanding our global workforce by 17.9% year-over-year, ending the quarter with over 1,834 employees. Demand and sales execution. We continue to see strong and growing demand for our expanded portfolio of services.

Globally, companies facing impact to profits caused by continuing post-pandemic supply chain challenges, global macro challenges, including war, sanctions, trade disputes, deglobalization, inflation, rising interest rates and currency exchange rate movements.

These macro shocks were originally believed to be short-term impacts but are now being viewed as likely multi-year headwinds that are forcing organizations to replan their businesses, including their IT investment plans. The replanning phase has frozen many investment decisions.

Frozen IT decisions impacted the market as a whole during the second quarter as reflected in extended and delayed IT sales cycles for many companies, including Rimini Street.

However, as previously noted, we believe that once organizations complete their replanning process, Rimini Street is well positioned to ultimately benefit from this macro environment with growth in new client acquisitions.

Rimini Street's portfolio of IT solutions provides the services many organizations need around their enterprise software systems and provides industry-leading value, ROI and proven engineering capability.

Our existing clients' renewed subscription is at a strong pace as they leverage Rimini Street as their trusted vendor to support, run, secure and drive more value out of their existing stable systems.

Rimini Street is also helping them overcome labor challenges and focus their limited resources on strategic investments and key initiatives or to preserve cash.

Accordingly, with both new client acquisitions and existing client cross sales, we continue to see a strong opportunity to expand our portfolio of enterprise software solutions and continue building and maturing our go-to-market capability to launch, sell and deliver our full solutions portfolio to new and existing clients globally.

To achieve our goals, I am now dedicating a majority of my time to maturing our service offerings, delivering innovative new marketing and improving global sales execution. I was recently meeting with prospects and clients across North America and traveled to Japan, Malaysia, Singapore, the U.K. and France.

We have seen positive responses to our new television ads and seeing better-than-expected attendance at our Street Smart Client events around the world. In Japan, for example, we were very pleased to see nearly 150 executives attend our thought leadership event in person, demonstrating the value of the discussions, content and our service offerings.

Client case studies. To highlight how clients are leveraging Rimini Street services globally to achieve their strategic goals across different industries, I'd like to share 2 case studies from the second quarter. First, the State Library of Victoria, Australia's oldest library.

They trusted Rimini Street for support of their Oracle E-business and Oracle database software. Rimini Street is also providing the library with its advanced database security and advanced application with our security solutions; 2 solutions and its Rimini Protect suite of security products.

These solutions provide an innovative approach to security that can block vulnerabilities before an attack or close an attack vector within hours, unlike traditional and old vendor software patch models that can take days, weeks, months or years to receive a patch and require significant testing time and cost to implement.

Rimini Street's cybersecurity solutions provides the library with peace of mind that digital threats are being addressed. Chief Financial Officer, Bradley Vice noted that his finance team are very happy with the support and security that Rimini Street provides, which keeps their assets and their customers secure and their finance services running.

He further noted that Rimini Street worked with his team to identify and provide solutions for the risks they face and that the team enjoys the services they are receiving. Pleased with Rimini Street's responsiveness and the security capability we provide.

Next is Labeyrie Fine Foods based in France, who is a leading fine foods retailer with facilities in 48 countries. Labeyrie switched its Oracle JD Edwards and Oracle Database Support to Rimini Street. With 80 application modules connected to the Oracle ecosystem, Labeyrie processes more than 500,000 batches of orders nightly.

Maintaining the system became challenging after the software vendor ended full support for this mission-critical system. Labeyrie sought a solution to provide the mission-critical support they needed and create more value for the organization while simultaneously reducing costs.

Labeyrie's CIO, Louis Goffaux, stated that in addition to supporting their ERP system, Rimini Street's experts provide guidance on potential changes to how they use the platform. And that the monthly and quarterly meetings with the Rimini Street are extremely worthwhile, exactly the type of close all-around support they were looking for.

He goes on to note that Rimini Street provides an efficient, agile service at half the price they were previously paying the software vendor. Given their digital transformation goals and financial constraints, Labeyrie believes Rimini Street is a perfect fit for their needs. Oracle litigation update.

Rimini Street and Oracle have been in litigation for more than 12 years. While the U.S.

courts have confirmed long ago the third-party support is legal, we presently have 2 active proceedings with Oracle; the injunction compliance dispute and Rimini II proceedings, both of which relate to the manner in which Rimini Street provides support services for certain Oracle product lines.

Rimini Street is not prohibited from providing support or services for any Oracle products. With respect to the injunction compliance dispute, Rimini Street has filed an appeal to the Ninth Circuit of the United States Court of Appeals relating to certain rulings of the U.S. District Court.

We expect the appeals process to take another 9 months to a year to receive a ruling, but a ruling could come earlier or later. With respect to Rimini II, the case Rimini Street filed against Oracle in 2014, the case remains in a 3 trial stage. Currently, the Rimini II trial is scheduled to begin on October 31, 2022 in Las Vegas, Nevada.

Please see our disclosures in the latest 10-Q filing for additional information on Oracle litigation. Summary. We continue focusing on revenue reacceleration, exercising disciplined cash generation and management, driving shareholder value and bringing our litigation with Oracle to a successful conclusion. Now over to you, Michael..

Thank you, Seth, and good afternoon, everyone. Q2 2022 results. Revenue for the second quarter was $101.2 million, a year-over-year increase of 10.5%. Annualized recurring revenue was $396.7 million, a year-over-year increase of 9.6%.

Revenue retention rate for service subscriptions, which makes up 98% of our revenue was 95% with more than 80% of subscription revenue noncancelable for at least 12 months. For the second quarter, clients within the United States represented 53% of total revenue, while international clients contributed 27%.

Second quarter aggregate year-over-year revenue growth in the United States was 8.8%, while growth for international clients was 12.5%. We note that the U.S.

revenue growth has continued to improve over the last 4 quarters, improving from the 2021 second quarter year-over-year growth rate of more than 2% to the current year's second quarter year-over-year growth rate of 8.8%. We also note that our total revenue growth was negatively impacted by FX movements of approximately 1%.

Billings for the second quarter were $101.6 million compared to $107.3 million year-over-year, a decrease of 5.3%. New client invoicing was challenging, as Seth noted. A negative FX movement adjusted down deal size in U.S. dollar terms, but we achieved strong client renewals and cross sales with existing clients.

Gross margin was 63.1% of revenue for the second quarter compared to 62.2% of revenue for the prior year second quarter and 63.7% of revenue on a non-GAAP basis, which excludes stock-based compensation expense compared to non-GAAP gross margin of 62.6% of revenue in the second quarter of last year.

We executed well in our service delivery and continue to methodically expand efficiencies and leverage through technology and process control.

We expect to continue investing in the global service delivery capability and capacity for our new products, services and solutions to ensure we can deliver our best-in-class offerings with unparalleled client satisfaction.

Therefore, for full year 2022, we continue to guide gross margin to be in the range of 62.5% to 63.5% of revenue on a GAAP basis and 63% to 64% of revenue on a non-GAAP basis. Operating expenses. Like other organizations globally, we're experiencing cost pressures due to increased labor costs and inflation.

However, we have been successful at mitigating this challenging part by broadening our hiring practices with an emphasis to recruit more positions in lower-cost geographies and in part by using innovative technology.

We continue to explore all options available to ensure we are able to acquire the talent we need to achieve our profitability and growth targets. Sales and marketing expenses as a percentage of revenue was 35.8% for the second quarter compared to 36.2% for the prior year second quarter.

On a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses as a percentage of revenue was 34.9% during the quarter compared to 35.2% in the year ago period.

We remain focused on making the appropriate investments needed to support our growth initiatives and we continue to expect full year 2022 sales and marketing expenses to be in the range of 34.5% to 35.5% on a GAAP basis and 33.7% to 34.7% on a non-GAAP standpoint.

General and administrative expenses as a percentage of revenue, excluding outside litigation costs, was 18.6% for the second quarter compared to 18% for the prior year second quarter and also declined as expected sequentially from 20.4% in the first quarter of fiscal 2022.

On a non-GAAP basis, which excludes stock-based compensation expense, G&A was 16.9% of revenue versus 16.7% in the year ago period. There were one-time employee-related expenses and software implementation costs and other various items impacting spend during the quarter.

Moreover, we do note that our G&A expenses did decline nearly 6% in the second half of 2021 versus the first half of 2021 and see a similar trend this fiscal year.

Current and expected 2022 spend includes the investment in information systems, costs for additional personnel to support growth, cost as a public company, cost to support our global compliance operation and incremental professional, legal, audit and insurance costs.

Therefore, we now see G&A expenses in the 16.5% to 17.5% range, up from our prior range of 16% to 17% on a GAAP basis and 14.8% to 15.8% on a non-GAAP basis. Net outside litigation expense was $3.1 million for the second quarter compared to $2.8 million for the prior year second quarter.

Our outside litigation spend is not linear and can fluctuate each quarter based on timing and the nature of litigation activities.

As Seth noted, the remaining 2 cases currently scheduled for a jury trial on October 31, 2022, resulting in litigation costs that we had expected to incur during fiscal year 2023 being pulled forward into fiscal year 2022.

Accordingly, we expect outside litigation expense to now exceed $20 million from our prior guidance of $15 million to $20 million for the full year 2022. We are early in our trial preparation and thus should have more clarity to provide during our Q3 call.

For the second quarter, net income attributable to shareholders was $110,000 or $0.00 per diluted share compared to the prior year's second quarter loss attributable to shareholders of $4.8 million or a loss of $0.06 per diluted share.

On a non-GAAP basis, net income was $6.4 million or $0.07 per diluted share versus $8.4 million or $0.09 per diluted share. Adjusted EBITDA was $11 million or 10.9% of revenue for the second quarter.

I'd also like to highlight our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation of 11.8% for the second quarter, underscoring the significant profitability potential and substantial leverage to our operating model.

Accordingly, we remain confident in our ability to achieve our long-term target of operating margins in excess of 20%. Balance sheet. We ended the second quarter with a record cash balance of $160 million compared to $110 million for the prior year second quarter.

On a cash flow basis, for the second quarter, we generated $15 million of operating cash flow and year-to-date, we generated $60.8 million, up from $47.2 million in the prior year first half. Deferred revenue as of June 30, 2022 was approximately $300 million, up 13% from $266 million for the prior year second quarter.

Backlog, which includes the sum of billed deferred revenue and noncancelable future revenue was approximately $551 million as of June 30, 2022 compared to $571 million for the prior year second quarter. Capital market transactions.

During the second quarter, the Board of Directors authorized an increase to our previously announced common stock repurchase program from up to $15 million over 2 years to up to $50 million over the next 4 years. During the second quarter, we repurchased 85,600 common shares with a market value of approximately $508,000.

The repurchase shares were retired. Going forward, we will look for additional strategic opportunities to repurchase common shares, although we reserve full discretion on repurchase decisions and whether to activate or deactivate the plant at any time.

Regarding the term loan, during the second quarter, we prepaid $5 million of principal value with no prepayment penalty and the current term loan principal value is approximately $80.5 million.

With a strong cash position and consistent operating cash flow generation model, we believe the company is able to comfortably fund growth, execute our capital return plan and reduce debt in the interest of our shareholders. Business outlook.

We're currently providing third quarter 2022 revenue guidance to be in the range of $100.5 million to $102.5 million and we are maintaining full year 2022 revenue guidance to be in the range of $402 million to $411 million. This concludes our prepared remarks. Operator, we'll now take questions..

[Operator Instructions]. Our first question comes from Derrick Wood from Cowen and Company. .

It's Andrew. Nice quarter. Seth, would love to hear how the Americas org changes are going so far? What inning do you think we're in there? And kind of what else has lots to do there? And when do you think this can accelerate -- reaccelerate U.S.

growth even faster?.

Yes. Great to talk to you. We're definitely seeing improvement in the maturing of the management structure in all the Americas, which includes North America and the South and Central America. We brought that all under a single umbrella. And I think we're seeing the consistency of execution improving between the regions.

I think we're seeing really, some really good deals that are getting done. But I still think the macro environment is going to cause challenges probably through the third quarter in the Americas as well as globally. And we've seen that the macro challenges really affecting at a global level.

So, I think that's still going to slow everyone down a little bit in the third quarter. But as I mentioned in the prepared remarks, I expect that once these replanning cycles are done, you're going to see us benefit on the other side of that. We're involved in a lot of those discussions.

The teams are involved in a lot of those discussions with many name brand clients. And I think those are all very positive signs..

And you hired the 153 net new employees that looks like a record.

What drove that? And how have retention levels trended and where do you end on sales reps?.

The retention levels are challenging as much as everybody else. The difference is we hit, I think, about 21% churn rate on employees and the industry average is 23%. So, we're trending about 2 points less than the industry, but we were traditionally about 10%. So, it's high for us.

So, I still think that means we're in line with the market or a little bit better in terms of the churn. We put some great programs in place like our fabulous Fridays, which are fully paid Fridays for every Friday in July and August. So people love that.

And I think we're doing a bunch of other programs, which our employees really like and it's energizing them in a post-pandemic world, where it's giving them some time to get their lives back together and reassimilate into society.

We've also been bringing people together from around the world for meetings that they haven't had in 2 to 3 years, so they're reconnecting with teammates. So, I think all those things are going to help us bring down the attrition rate.

I also think because the market is busy in hiring freezes and laying people off, that will cool things down a bit as well since our employees were busy hiring..

And then, Michael, on the guidance, leaving the full year unchanged, maybe just speak to the level of conservatism in that? And anything extra you've kind of, or what have you assumed as far as macro in the second half?.

So Andrew, I think we are certainly, as Seth noted during this interim period with a lot of freezing for decisions that are happening out there. We're feeling confident in our guidance for the full year, but we are reflecting that overall environment as Seth noted..

Were there any -- one last one, were there any big deals that pushed to the second half?.

Definitely, there are deals that pushed.

And I think, again, as you're seeing in so many different company earnings, delayed sales cycles, lengthened sales cycles, we're certainly seeing some of that as well because as these companies and government organizations rejigger their plans in order to prepare for a multi-year potential recession, different type of environment, they are not doing anything because they're not buying anything while they finish those plans.

And I think based on the involvement that we've seen, the kind of work that we're involved with clients and prospects around the world, we feel pretty positive about the fact that we're going to benefit when they finally finish their plans. We intend to be a part of them..

Our next question comes from Brian Kinstlinger from Alliance Global Partners..

The first one may be a little long. The September quarter is, I believe, the most important quarter from a bookings perspective for your company, case in point, last year. SAP and international businesses generally have seasonal maintenance renewals.

And we're early in the third quarter, but maybe I'm curious, have you continued to see better win rates in these opportunities, especially as your business development team is more tenured? However, the second part of my question for that in one of your comments, I thought I heard that you're taking over the overseas international sales.

So, I guess given that timing, I'm curious what precipitated that change if I heard it right?.

Sure, Brian. Great to talk to you again. We -- 2 things. One, we made a change having the COO, where all the GMs reported to the COO. Our COO exited. And I am going to personally oversee all of the general managers. So, think of me as kind of in the acting CRO role as well. I wanted to step back in. I talked to a lot of investors.

I've looked at the business and it was one of those opportunities for the founder and we've seen this story before, to step back in to reaccelerate the business. We were previously a 30% type growth company traditionally. I think the opportunity and the demand is there for us to have that kind of business even on a much bigger number.

And I decided I was going to step back in and take it personally to get us where I believe we need to be and complete the transition to $1 billion revenue scale by the end of this year. I think it's no secret that it's taken us a little bit too long to get through this transition. We should have had it done in a year. It's been 18 months.

And I'm determined to complete the transition by the end of '22 and leave us in a very strong position out of the starting gate for '23..

And the second part of the question, is 3Q tracking much better than last year's 3Q with your more tenured salespeople?.

Well, we are always very back-end loaded in the third quarter. So, we truly are really early. But I can tell you that we closed some good SAP business even in the end of Q2 as well as early in Q3. And those are always good signs when we close deals on SAP that early.

Generally, they're all sort of those last few weeks of the quarter, just the way it's all structured. So, the fact that we're seeing early closes and we've closed several deals in the early parts of the quarter, I take those as positive signs..

One last question, and then I'll get back in the queue. You've talked -- I think you've been clear there are some freezes in decisions that are hurting the third quarter. I guess what I'm trying to understand, your business is set up for essentially a 50% cut to the OEMs in price. So, you're well set to cut cost for uncertainty.

Why is this not the time for -- especially as maintenance renewals come up for those executives to pull the trigger and move to third-party maintenance? And why -- I mean, does that mean we'll wait another year until their maintenance agreements are up for the next -- for the next year?.

Well, it really depends. And I think, Brian, a lot of this is driven, as you know, by this daily global macro drama that unfolds by the day and it's havoc on businesses. I mean, there's no other way to say it.

When you have so many different questions, should I build a factory in China? Am I going to have political issues with that? How do I deal with Eastern Europe? How do I think about energy, if I'm going to build a plant inside of Europe? All these questions are now wreaking havoc to the point of causing internal paralysis for a lot of companies and they're having to step back and rethink.

Now that doesn't mean they don't want to save money. That's why I said, ultimately, I expect to prevail. Now when you mentioned saving money right off the bat, well, that's the maintenance business. Our AMS business is a year-round business. It doesn't have the same exploration data. It could be any date.

Our security products, our professional service, all those things can be sold any time. And so yes, there is a window under which they're going to have to make a decision.

For those who have maintenance renewals in the third quarter, they're going to have to make a call about whether they're going to move forward and take advantage of better service and better savings and do the things that they want to invest in, in the business with that savings now or they could miss the window.

And I think that's -- those are the kinds of things that have left us to keep the current guidance for the annual revenue is because we have really strong visibility on our recurring revenue. It's these new projects like everybody else. There's a little bit of -- we've got to wait and see. The visibility is not nearly as good as it was months ago.

And we're just going to have to ride it out and see how we can move these deals forward through this environment..

Our next question comes from Jeff Van Rhee from Craig-Hallum..

Congrats. Love that free cash flow again. So a few for me, though, if I could. Start with maybe on the revenue front, you've got obviously a pretty wide range, and this is for either of you, but a pretty wide range on the revenues.

To the extent you can talk through that and what would it take to hit the high end, mid and low? I understand there's variability, but we're coming into Q3, that's still a pretty wide range here.

So, how are you thinking about keeping such a wide range? And what gives us high and low end?.

Sure, Jeff. Thanks. I think the range, we always narrow it down, of course, after the third quarter. We'll have a much better sense. And I think the fact that we have a hugely predictable recurring revenue stream now that's a monster at hundreds of millions of dollars gives us a lot of stability and confidence in the range that we have.

When we talk about what would it take to hit the higher end of the range, it's going to require a good Q3. As you know, we can have a great Q4, but it's not going to impact revenue that much on the ratable basis. That will tee-up '23 numbers nicely.

But the real revenue, you set your course in the first half of the year, the third quarter, you have to really have a good quarter to get to the high end of those numbers. I mean that's just the bottom line..

And would you say -- I mean, from a pipe standpoint and then I want to get to the sales transition in a second, but from a pipe standpoint, the pipe is there. So, it's not -- obviously, the pipe has got to be there and already working if you're going to get it done at this quarter. So, you'd say the pipe is there.

It's a matter of close rates and that's still within reasonable to get at the high end based on the pipe you see?.

I think the high end is going to require, like I said, a strong quarter. I think there is a pipeline to get mostly there.

And then you always in the third quarter as in any quarter, we have these bluebirds that can come up traditionally, some very large ones because customers come to the table late with a -- we've only got weeks left and we'd like to do something. That is a pretty traditional occurrence for us.

So we don't have to have visibility to a full pipe that would get us there. There is, of course, there is a coverage model that says there's enough in the pipeline to make those numbers happen.

But the reality is, again, it's that visibility with this constantly changing macro drama and even the exchange rates were pretty brutal on us in terms of so much of our revenue coming from places with reductions against the dollar. So $1 million in Australia becomes $800,000. So, those things certainly working against us, too.

But I think that the pipe exists to make it happen. It will take some really good work and some good luck in the economy and some cooperation with clients to pull it all together to get to the high end of the range..

And just a few other quick ones, if I could. On the expense growth, it looks like you're targeting somewhere in the high single-digits, give or take than on the revenue growth side.

But the decision to keep hammer down on head count, I think you said headcount is up 18% year-over-year, and I know you've been very aggressively adding the last 12, 24 months.

How do you -- what are the puts and takes? I mean, what would it take for you to get off the gas on the employees? And just how do you think about the trade-offs there?.

I think it's really -- we're at a position where you think about the hiring, a lot of it is in the gross margin area. And you've seen we've gone to 63-plus percent, but we also need a lot of headcount for AMS. AMS is a very labor-intensive business. And we're probably behind where we'd like to be.

We'd love to have another 100 heads in the service delivery organization and for professional services. We have major projects that customers want us to do that we physically haven't been able to staff. So there's some challenges there for sure.

And that's why when you think about the hiring, the other thing to be careful of is don't get caught up in the FTE numbers.

I'm always -- I'm actually always a little bit ambivalent about providing the number because while we grew at over 17% year-over-year, those heads could be in India or other countries where there are a fraction of the cost of a U.S. head or a European head or an Asia Pac head.

And so it could be a little bit misleading that you could have increasing numbers, but they may be very, very low-cost employees. So, that number could be, like I said, you just have to take that carefully..

Last for me then, Seth, on one other -- to follow-up on a comment you made about your -- the transition lingering 18 months you want it done by the end of '22.

I know you're working on a lot of things, but what's 1 and 2 on that list? How are you going to know you gotten there, you're done? I mean, what needs to happen by the end of '22?.

Well, the close rates were very good for our sales team. I mean we're heading -- we've been hitting about a 30% close ratio on our opening pipeline numbers, which is a strong close rate. That's not where the issue is. We want to increase the total volume of deals. You've got a maturing sales force.

The #1 issue that I have is making sure that the phone is ringing in marketing and building the pipe even much bigger. We want to see even larger multiples of deals and backup deals.

That's how you reassure yourself in an environment where you have more in your deals for lack of a better term because of macro and whether people can make a decision and timing.

When you get into that kind of environment, you want to double up your number of deals in the pipe so that for every deal that you have, you have not just 1 backup, but you have 2 backups, maybe 3 backups. And that's how you assure that you're going to get to the numbers that you want.

So right now, it's all about building a massive pipe of business, much bigger, much broader than we would normally require because you have to expect we have a higher fall-off rate or a deal gets extended and misses a deadline and a renewal time, that's what you have to do. And that's what we're focused on making happen..

At this time, we have no further questions..

Okay. Well, thank you very much, everybody. Thanks for joining us on our second quarter '22 earnings call. And I also want to thank all of our colleagues for their efforts in the second quarter. It's been very, very helpful. A lot of work went into the quarter, delivering those kinds of amazing clients add numbers as well.

We look forward to having everyone join us on our next earnings call. We'll discuss the third quarter '22 results, and we'll select fourth quarter performance to date commentary as well. Until then, please continue in good health and our thoughts and charitable support for those suffering in harm's way. Thank you very much, everyone. Have a great day..

This concludes today's conference call. Thank you for attending..