Good morning and thank you for attending today’s MultiPlan Corporation Second Quarter 2022 Earnings Conference Call. My name is Austin and I will be your moderator for today. [Operator Instructions] I would now like to hand the conference over to your speaker today, Shawna Gasik, AVP of Investor Relations. Thank you and please go ahead..

Thank you, Austin. Good morning and welcome to MultiPlan’s second quarter 2022 earnings call. Joining me today is Dale White, Chief Executive Officer and Jim Head, Chief Financial Officer. The call is being webcast and can be accessed through the Investor Relations section of our website at www.multiplan.com.

During our call, we will refer to the supplemental slide deck that is available on the Investor Relations portion of our website, along with the second quarter 2022 earnings press release issued earlier this morning.

Before we begin, I’d like to remind you that our remarks and responses to questions may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in the risk factors included in our annual report on Form 10-K for the fiscal year ended December 31, 2021, and our quarterly report on Form 10-Q for the quarter ended March 31, 2022 and other documents filed or filed with the SEC.

Any such forward-looking statements represent management’s expectations, beliefs and forecasts based on assumptions and information available as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, please note that we assume no obligation to do so.

Certain financial measures we will discuss on this call are non-GAAP financial measures. We believe that providing these measures help investors gain a better and more complete understanding of our financial results and is consistent with how management views our financial results.

A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures to the extent available without unreasonable effort is available in the earnings press release and in the slides included in the Investor Relations portion of our company’s website.

With that, I would now like to turn the call over to our Chief Executive Officer, Dale White.

Dale?.

a large blue plan expanding use of data eyesight for its ASO customers. Just 5 months in this plan has more than one-third of its ASO lives accessing the program. Continued momentum in building our post-payment and revenue integrity services pipeline.

At the quarter’s end, we had 192 active opportunities that together are estimated to deliver $110 million in annual contract value. The successful launch of a campaign promoting our prepayment itemized bill review service with 9 customers already requesting contracts.

Our product team also has an exciting road map for this service that used advanced analytics to significantly expand the solutions impact. We had strong growth in our property and casualty segment after months of COVID-driven volume lag, aided by the deployment of 1 of 3 new customers in this segment.

We continue to roll out our No Surprises Act to more payers. And in the second quarter, we saw a meaningful ramp in claims processed through our NSA services. At the end of the second quarter, we had 126 implementations completed and 29 implementations for a total of 155, up from a total of 124 as of the end of the first quarter.

Notably, one of our key customers that adopted our end-to-end NSA compliance service is expected to double revenues with us by year-end. NSA-related activity continues to track to our expectations with NSA-related claims volumes approaching what appears to be a full run rate by the end of the quarter.

We are seeing meaningful medical cost reductions when claims are priced using our QPA based pricing service, signifying this objective of the NSA is being achieved. Meanwhile, the federal surprise bill regulatory backdrop remains in flux.

On June 15, the Office of Management and Budget began reviewing the anxiously anticipated final rule from CMS, which is expected to clarify requirements for the independent dispute resolution process.

At issue is the status of earlier language directing IDR entities to treat the qualifying payment amount, or QPA, as the presumed appropriate reimbursement. Ensuing lawsuits challenging this interpretation of the role of the QPA caused CMS to retrench it until it publishes the final rule and the plot continues to thicken.

In late July in a new ruling pertaining specifically to air ambulance services, a federal judge in Texas once again vacated the portions of the NSA interim final rule that had given primacy to the QPA in the IDR process. In addition, other parts of the administration of the IDR process all remain vaguely prescribed or challenging to fulfill.

Compounding the problem, CMS was late in releasing functionality needed for providers and payers to initiate the IDR process. As a consequence and not unexpected, as payers and providers operationalize the IDR process, we are seeing process missteps early – in the early stages of the rollout.

In fact, MultiPlan offers submitted on behalf of our payers have been accepted 80% of the time since the IDR process began early in the quarter and provider missteps, process missteps have contributed significantly to that outcome. It is still early, and we expect providers and payers to gain more familiarity with the process.

So we are reluctant to extrapolate our experience thus far, but I am encouraged that the significant data and data science resources we’ve invested in this part of the service positions us well in supporting our customers. In June 2022, we acquired a minority interest of Abacus Insights for a $15 million cash consideration.

Abacus is a leading data management and interoperability platform that enables health plans and their providers to standardize data across the health care ecosystem. This is a terrific company with unique capabilities and we see interesting commercial opportunities to pursue jointly. Our strengths are very complementary.

Their enterprise data capabilities will help us accelerate our time to market for data offerings, and they find our analytic expertise and strong distribution channel very attractive. As I mentioned at the beginning of the call, we have concluded a multiyear contract renewal with one of our larger customers.

As a policy and in accordance with the terms of our customer agreements, we do not disclose specific terms of our customer contracts. Further, we are not providing 2023 guidance at this time.

However, with the increased visibility this extension provides, we anticipate our 2023 revenue growth will be muted, subject to market conditions and the implementation of our other growth initiatives.

Despite the near-term financial impact, we believe this renewal demonstrates the strength of MultiPlan’s value proposition, the importance of the services we provide to customers and the depth of our long-standing customer relationships.

Additionally, this customer commitment further underpins our confidence in our base business and enhances our ability to execute on our long-term growth strategy. I would like to take a moment to speak to the operating environment and how that is shaping our outlook for the remainder of 2022.

As reported by a number of hospital and health services groups and as evidenced in the lower medical loss ratios at some major health insurers, utilization of health care in the second quarter was sluggish and below expectations as a significant decline in COVID-related patient volume was not offset by higher non-COVID-related patient volumes.

Our recent claim volume, while still strong, reflects some of these sequential designs, all buy it with our typical lag. Additionally, non-COVID health care utilization and non-COVID claim volume remain below 2019 levels. And from where we sit today, it is a bit difficult to foresee whether those will recover in Q3 or come back more slowly.

Despite this uncertainty, we continue to track against our 2022 plan. And at this time, we are maintaining our full year 2022 guidance ranges for revenue of $1.16 billion to $1.20 billion and for adjusted EBITDA of $850 million to $875 million.

That said, if the current utilization trends persist into Q3 and Q4 and accounting for some customer adjustments, full year 2022 results could fall in the lower half of our guidance ranges. In summary, our second quarter results were once again strong.

We are making meaningful progress on our – on multiple fronts of our business with the pace of new business wins and the strength of our pipeline indicating robust demand for our services. We remain on track to achieve our 2022 plan despite the recent subdued rebound in non-COVID volumes.

We continue to expand our No Surprises Act services footprint and activity and help our customers navigate the significant complexities of achieving compliance with the new regulations. We are investing in our business to drive growth and maintain our high levels of customer service.

We now have even more visibility into our base business with the renewal of our contract with one of our larger customers, and we continue to work to bring the external perception of our risks, in line with the realities of the business, an objective that Jim and I have made a priority since assuming leadership of the company.

As I look forward, I remain confident that our unique value proposition to the U.S. health care system, together with the investments we are making in the platform will drive our long-term growth and deepen our industry-leading position with our payer customers.

Before I turn the call over to Jim, I want to extend my gratitude to our more than 2,500 MultiPlan colleagues. The past few years have presented all manner of disruptions and potential distractions and yet you have soldiered on with tireless dedication to our mission to deliver affordability, efficiency and fairness to the U.S.

health care system and an unyielding focus on operational excellence and outstanding customer service. Thank you. With that, I will turn the call over to Jim to discuss our financial results in more detail..

Thank you, Dale and good morning everyone. I am pleased to have the opportunity to discuss our second quarter financial results and update you on the outlook for the remainder of the year.

As Dale noted earlier, we once again delivered another strong quarter of earnings in Q2 ‘22, with revenues and adjusted EBITDA squarely in line with guidance we set for the quarter.

As shown on Page 4 of the supplemental deck, Q2 revenue was $290.1 million, up 5% over Q2 2021, and down 2.7% from a normally strong first quarter, which, as Dale mentioned, benefited from a variety of factors, including strong claims activity related to Q4 dates of service, tightened COVID testing and treatment-related revenues and very little impact related to The No Surprises Act.

Organic revenue growth remained solid in the second quarter, albeit a bit slower than we’ve been experienced over the last few quarters. As shown on Page 5 of the supplemental deck, excluding the net impact of COVID-19 on our results, revenues in Q2 ‘22 were up $9 million or 3.1% over Q1 2021 and down [Technical Difficulty] or 2.4% sequentially.

Turning to our performance by service line. As shown on Page 6 of the supplemental deck, Q2 ‘22 growth over prior year quarter was attributable to 13.2% growth in analytics-based services, while Payment and Revenue Integrity Services was flat and network-based services declined 12%.

Our Payment Integrity results were affected by modest weakness in our legacy prepayment business, driven largely by programmatic changes at our clients and slower to implement customer contracts in our data mining services. This was offset by growth in services acquired with DHP.

Network-based revenues were lower as a result of lower COVID-related volumes some shift of NSA volumes to QPA-based pricing service in our analytics line and some client attrition.

As detailed on Page 7 of the supplemental deck, we estimate the COVID-related revenue impact in Q2 ‘22 was approximately $4 million to $6 million, up from an estimated $3 million to $5 million in Q1 2022 and down from $9 million to $11 million in the prior year quarter.

As noted, we experienced a significant decrease in COVID testing and treatment-related claims from Q1 as Omicron variant cases abated while non-COVID health care utilization has been a bit slow to recover and remain suppressed relative to 2019.

Turning to expenses, second quarter ‘22 adjusted EBITDA expenses were $80.5 million, up from $78.9 million in the prior year quarter and up from $72.6 million in Q1 ‘22 and in line with our guidance.

These increases were consistent with our plan for expenses and driven predominantly by higher personnel costs due to increases in employee headcount and annual merit increases. Adjusted EBITDA was $209.6 million in Q2 ‘22, up 2.1% from $205.3 million in the prior year quarter and down 7.0% from $225.4 million in Q1 ‘22.

The estimated COVID-related impact on adjusted EBITDA in the second quarter was approximately $3 million to $5 million. As shown on Page 5 of the supplemental deck, normalizing for the impact of the COVID-19 pandemic, adjusted EBITDA for Q2 ‘22 was essentially flat versus the prior year quarter and down 6.3% sequentially.

With second quarter revenues and adjusted EBITDA both in line with our expectations, adjusted EBITDA margin came in at 72.3% in Q2 ‘22, down from 74.3% in Q2 ‘21 and down from 75.6% sequentially, reflecting the revenue and adjusted EBITDA expense trends discussed previously.

In the second quarter, net cash provided by operating activities was $40.7 million. As a reminder, our cash flow tends to be lower in the second and fourth quarters given the timing of our debt interest and tax payments.

On the balance sheet, we had a $15.8 million increase in our accounts receivable at the end of the second quarter as compared with the end of the first quarter, which was attributable to timing of a few customer receivables and should correct within the quarter.

Turning to our outlook on Page 11 of the supplemental deck, we are maintaining our guidance ranges for revenue and adjusted EBITDA. As Dale mentioned, the current health care utilization trends persist into Q3 and Q4, accounting for some customer adjustments, full year ‘22 results could fall in the lower half of our guidance ranges.

Regarding the volume environment, multiple data points are currently indicating a listless rebound in utilization and volumes post peak Omicron. However, the ebb and the flow of volumes represent a marginal effect on our revenues, in essence, the last few percent of our revenues in any given quarter.

So even if the prevailing volume environment impacts our growth on the margin in the second half, I want to be clear that our core business remains very much intact.

And in the bigger picture, we are encouraged by the underlying demand for our service – the underlying demand for our services remains very strong, that we are performing against our plan and that our investments in the business will help drive long-term growth.

We expect COVID to continue to be a modest drag on our results, and we are maintaining our estimate of COVID-related revenue impact to approximately $15 million to $20 million for the full year ‘22, which is consistent with our first half estimates. Our guidance implies an adjusted EBITDA margin of 72% to 73% for full year ‘22.

As outlined by the guidance and expense bridges provided in February, we expect margin compression in 2022 to be driven by a combination of structural cost pressures, investments in our platform to customize and enhance our solutions and support our NSA-related solutions and targeted investments in our products and capabilities to support our growth initiatives.

Investments in our platform and growth are largely focused on the second half of this year. Moving to our third quarter guidance as outlined on Page 12 of the supplemental deck. Our forecast is $280 million to $290 million in revenues and $200 million to $210 million in adjusted EBITDA.

These ranges reflect an assumption that there will be some incremental volume softness on the margin in Q3 relative to Q2. Turning to balance sheet and capital. Our total operating leverage ratio net of cash were 5.3% and 3.8x, respectively, effectively unchanged from the prior quarter.

We ended the second quarter with $354 million of cash on the balance sheet. As we look to the second half of ‘22 and beyond, we continue to be encouraged that our strong cash generation will enable us to strike a balance between investing to grow the business and reducing our leverage ratios over time.

As we have discussed previously, we will continue to take an opportunistic but balanced and disciplined approach to deploying our cash. That wraps up my comments. I’d like to turn it over – back over to Dale..

Thanks, Jim.

Operator, would you please kindly open it up for Q&A?.

Thank you. [Operator Instructions] Our first question is with Joshua Raskin from Nephron Research. Joshua, your line is open..

Thanks and good morning. I’ll start with the first question of the growth at about 3% when excluding the COVID impact.

First, should we annualize all the acquisitions or was there some impact from DST in there? And then second, how should we think about sort of that macro trend relative to the history? Obviously, the growth rates this year are now organically showing noticeably lower than where they have been in the past.

And is there something in the environment? I understand slower claims. I understand the impact of the NSA.

But just is there something more we should be thinking about?.

Well, Josh, I think, at this point, we have annualized our acquisitions into the mix. And you’re right to point out that our organic growth in the quarter year-over-year was about 3% when you kind of take out some of the COVID adjustment.

But I would also note that at the beginning of the year, there was a couple of things that were going to be headwinds, the overall NSA impact, which we seem to be navigating quite well, but it doesn’t mean we’re not necessarily avoiding that. And I do think we are seeing a little bit of volume softness.

You’re clearly seeing it in the NCOs and some of the hospitals and providers side of things, which is impacting us on the margin in terms of that last extra 1% or 2% in the quarter.

So you’re right to point out that it’s a little bit slower than our long-term trend, but we haven’t seen any material shifts in kind of the – I’ll call it, the membership kind of client contracts, etcetera, within this year that are demonstrated. It’s a little bit more about volumes in NSA..

Okay. And then if you could just give us a little bit more color. I understand you can’t disclose specifics around individual customers.

But assuming is this your largest customer that you’ve renewed is that sort of the relief? And then as you think about that impact on 2023, maybe help us understand contractual changes, again, not specifics, but just directionally, what would cause sort of a big enough headwind to impact the overall revenues of the company next year?.

Yes, Josh, thank you for the question. As you know, our key contracts have mutual confidentiality provisions, and we have to respect customer confidentiality and we honor those provisions. What we can tell you is that we’ve signed a multiyear contract with one of our larger customers. As we have noted, it will have an impact on our ‘23 – 2023 revenues.

But with that comes increased visibility. For us, I can also tell you that inside the company, it’s business as usual, we’re focused on executing and delivering for our customers. And we – the contract itself is a multiyear contract, typical with our other contracts that we negotiate..

Yes. Dale, I guess, my question is just a headwind.

Is it – did they carve out – are they doing less business with you or is it really just around the pricing and your percentage of savings?.

It’s really business as usual. And we continue to – we expect – as we said, Josh, we expect the – we can’t go into the details of the specific contracts, but we said that the growth would be muted. And what we mean by muted is that it could be pretty limited off of 2022 nominal. But – and in that way, it depends on a number of factors.

It depends on environment at that time, whether it’s all the client puts and takes, impact of COVID, if anything. But at the end, we expect to – at the end of ‘23, we expect to resume normal growth thereafter..

Okay, got it. Thanks..

Our next question is with Daniel Grosslight from Citi. Daniel, your line is open. Daniel, your line is open, you may proceed..

Sorry, I was on mute. Hi, guys. Thanks for taking the questions. I just have a few questions on guidance for 2022. If we just look at the midpoint for both ‘20 3Q guidance and in fiscal year ‘22 guidance, it implies around a 2% sequential decline in 3Q revenue and then almost an 8% sequential increase in 4Q, which would be seasonally odd.

And similarly, it implies around a 30 basis point sequential margin contraction in 3Q and then 50 basis points of expansion in 4Q. I kind of get that volume dynamic.

But I was wondering if you could dig into that variability between 3Q and 4Q for the remainder of the year, what gets you kind of to the midpoint of guidance in terms of your assumptions? And any qualitative guidance you can provide on how we should think about each segment networks, analytics, payment integrity, revenue integrity for the remainder of the year, should we expect analytics to be driving some of this growth and still seeing some attrition in networks and at Payment Integrity?.

Yes. Okay. Thanks, Daniel. Let’s break it into two pieces. First is, I’ll call it the guidance for ‘22 and then what we expect. And it’s a fair observation on Q4, and I think it’s worth a little bit of context. In our guidance at the beginning of the year, we came out with a relatively narrow band on the overall range.

If you think about it, it’s less than 2% on either side of the midpoint. And as we explained last little bit of revenue each quarter is hard to predict on the margin because it’s – it can be COVID revenues, it can be utilization environment. It can be client activity, etcetera. But in the first quarter, it went our way and we outperformed.

We didn’t adjust our guidance for the second quarter, ended up, as we’re saying on track. Third quarter could have a little softness. But at this point, we’re keeping our guidance range intact. I mean you make the point around pressure to achieve that midpoint in Q4. But we’re not talking about a massive swing one way or the other.

So I think from a – I’ll call it a little bit more of a policy perspective, we think it makes sense to maintain our guidance and revisit in Q3.

But I would just say, listen, inside that broader range, I think, just based on what we’re seeing in the outside world and the leading indicators, whether it’s some of the results that we’re seeing in hospitals, etcetera, and their activity, we think it’s prudent to be a little bit more cautious on the second half and, obviously, get sharper in Q3.

So that’s just a little bit on guidance. And then I do think it is fair to say that there is network and payment integrity are not going to drive the growth here.

I would note that some of the softness in network was a substitution effect as we ramp up our NSA-QPA services and some of that volume that was typically done in network shifted over into the analytics side. So I think that is going to be a little bit of an extra driver here.

But you’re right, the network and Payment Integrity are not going to be the big driver. I think the big driver is going to be kind of that incremental volume in the analytics side in Q3, Q4..

Got it. That’s very helpful. And then on the NSA, it seems like the acceptance rates are a little bit challenged just given some process mix steps, at least according to your prepared remarks. I’m wondering if you still expect the NSA to have less than negative 2% impact on revenue this year.

And then if you can speak a little bit about the potential for the final rules to be a little more favorable limiting the primacy of the QPA in arbitration and how that may impact your net products and your business overall?.

Yes, Daniel. Obviously, volumes are tracking as they are in line with projections. It’s still obviously very fluid and evolving, and there have been lots of puts and takes on the margin. But net-net, it has shaped up very much like we anticipated.

In the prior quarters, we shared the color on the loss of a few client programs, some wins of a few new programs and then less visibility as you go down in market and all of that sort of rolled up, as you pointed out up to a 2% headwind that we communicated. Since then, we’ve had some new NSA-related wins.

The savings identified, as I mentioned, with QPA-based pricing have been meaningful, perhaps slightly more than what we were projecting. But on the other hand, the overall volume picture, as we said, has been slightly weaker.

So when you factor in all the original color we provided and how it’s evolved since then, it’s very much tracking to the expectations of that of the 2% headwind.

Relative to the – your question about the final ruling, it’s still much – it’s still very much up in the air, right? The latest addition was the Texas ruling, which was for air ambulance claims and made the QPA no longer the primary factor variable but made it equal put it on equal footing with the other variables.

And so we would expect that we’re anticipating that when the final rule comes out, it will likely mirror what’s there. But if not, we’re prepared either way. I mean, with our data, with our data science, we’re in a great position to support our clients throughout the entire end-to-end process of surprise billing.

From the start in terms of identifying surprise bill, repricing them either at QPA or some other methodology, performing all the analytics, performing the postpaid negotiation and then ultimately, working with them on the IDR process. So no matter which way the rules go, and we think they’ll come out more balanced, we’re ready..

Got it. And last one for me. A little bit of a longer-term question. I guess that the contract renewal is going to lead to some headwinds in 2023.

So a little growth in ‘23 on top line, but what gets you to a mid-single-digit growth rate after 2023? And are there any other large contract renewals coming up within the next year that might weigh on 2024 and beyond?.

Yes. So sure. I think – but let’s talk a little bit about ‘23, the starting point and then kind of resuming growth thereafter because I think that’s a smart question. I guess thinking about ‘23, Dale kind of talked about nominal growth in the year.

And realistically, it’s very early to tell just given 6 months out and a lot of changes in the environment. But could that be nominal growth? Yes. Could it be flattish? Yes.

But I think what’s important to understand here is that we’ve got – we feel like we’ve got a really good ability to start the course of – resume the course of growth, I should say, in 2024 and 2025 off that base. And that is bedded everything about enhance, extend and expand.

Enhancing our offerings, etcetera, we feel like there is always going to be a strong tailwind on volume growth and the – expanding our scope of services, which gives us some confidence. We are working hard to continue to build out the other customer markets that we serve, which will be tailwinds.

And we think that we’ve got a good line of sight for the next couple of years. And Dale, I’ll turn it over to you as to – I don’t know if we’re going to say much about any things down the road. But it is part of our normal course of business that we have these contractual negotiations.

But we’ve navigated that in the past, and we feel like we’re going to be in good shape to do that in the future..

Absolutely. And as Jim said and then Daniel, as you know, we can’t speak to the details of specific customer contracts and when they renew. We have said in the past that our larger contracts typically have a multiyear term. And that in this case, the length of this extension was consistent with what we typically come out on contracts term.

So they automatically – they typically come up every few years. And for us, what’s important, specifically about this extension is it provides a fairly long line of sight. And that visibility for us as it is with all multiyear contracts, it’s very helpful to planning and to resource allocation as we execute on our growth strategy..

Thanks for taking my questions, guys. Really, appreciate it..

Thanks..

Our next question is with Steven Valiquette from Barclays. Steven, your line is open..

Hi, this is Tiffany on for Steve. Just one quick one from me. I was wondering if you can maybe offer a bit more color either quantitatively or qualitatively on the software claims volume observations you cited.

How much would you attribute to softer utilization trends versus the NSA impact? I understand there is a bit of a lag in the cranes, but just any more color you can add there would be helpful. Thanks..

Yes. And I’ll just kind of give you a kind of a big picture view. With our revenues coming down a little bit in the quarter, we’re not talking tens of millions of dollars, we’re talking about 2% to 3% in total. But that’s pretty darn important in terms of dropping to the bottom line.

And so I would say it’s probably an equal measure of volumes in Q2 is a little bit of volume softness. It was a little bit of COVID. We had some excess COVID revenues – COVID testing revenues because of Omicron in Q1. So that was a little bit of a tough compare. And generally speaking, those were kind of two of the big drivers.

I think the challenge here is we’re seeing a little bit of incremental softness on the margin going into June – exiting June and going into July. And so that does explain, I think, the marginal shift a little bit in guidance. So we are dependent on the – that kind of that last little bit to deliver our margins.

But I’ll go back to what I said in the call, very importantly, the core large majority of our revenues are very highly visible, very well spoken for. It’s just that last couple of percent in the quarter that’s always tough to predict..

Okay. Got it, thanks so much..

Our next question is with Cindy Motz from Goldman Sachs. Cindy, your line is open..

Thanks, and thanks for taking my question. Yes, a lot of my questions were answered, but I just – in general, the quarter, you guys pretty much did what you said you were going to do in this quarter, I mean, especially counting the COVID impacts and everything, and I appreciate the caution, obviously, the macro comments.

But overall, I mean, relative to what we see with other companies, when do you think that you are – save people, money, more recession resistant in general, like and – even Jim, what you were seeing next year, I mean, we want to see a shift more to ABS, correct? I mean you were ahead of expectations slightly there.

And that’s what I would say that in Payment Integrity, the higher margin part of the business. So to that end, in terms of, obviously, revenue growth, you’re talking about in ‘23. But how do you see EBITDA margins going in ‘23? Do they – I mean, is there declines? Or do they stay up? Or any color you could give us there would be great. Thanks..

Yes. So I guess I’ll come back to that visibility. It feels like it’s two questions. Number one, there is a high degree of visibility in our business, and we keep chugging along and as Dale commented, we’re kind of an all-weather solution. So we kind of like our chances in terms of being ready for any economic shifts.

But the reality is that incremental revenue, as I stated previously, is really kind of what that state that last $10 million, $20 million over the year, etcetera, is pretty important. So – but turning to 2023, it is fair to say that we have a platform that the costs are largely fixed.

It’s people, it’s the technology, the external technology, etcetera. And we’re not making a dramatic shift in terms of what we see in terms of the demand from clients next year. And so we are going to see some softness as that – as some of that marginal revenue – lack of growth drops down. I don’t think we’re ready to do any predictions yet.

But you should just assume that this is not a highly variable cost base. It just isn’t. And in fact, our clients – we make commitments to our clients that we want to deliver. And so on the margin, we’re the most cost-conscious company I’ve ever encountered. But the reality is, is that we are holding a little bit to that incremental volume..

And so – okay, so I understand. So – but I don’t think – we should expect to see any dramatic shift necessarily there because you are very cost conscious. And overall, it feels like the momentum is still pretty good with the customers even in new areas as well..

Yes. I think we’ve said this before, and I’ve been – coming in from the outside, I have been really pleased. We do have intriguing prospects. We’ve got a really good kind of competitive position in the market, and it doesn’t mean there is no competition, etcetera.

But we’ve got a really privileged position in this marketplace, and we’ve got a right to win. We need to invest in the business. We need to expand our products and services.

And that’s one of the reasons why we think we’ve got an opportunity now that we’ve got a little bit of runway here post-NSA and kind of a new management team in place and getting some of these contract renewals behind us is – gives us some opportunity to kind of go after it and grow..

Great. Thanks for taking my questions..

At this time, there are no further questions. [Operator Instructions] There are no further questions. So I’d like to pass the conference back to the management team for any closing remarks..

Thank you, operator. Listen, we appreciate everyone’s time today. Thank you for your continued support and confidence and enjoy the rest of your summer. Thank you..

That concludes today’s call. Thank you for your participation. You may now disconnect your lines..