Grid Dynamics Holdings, Inc.

Good afternoon, everyone. Welcome to Grid Dynamics' second quarter, 2024 earnings conference call. I'm Kari Savas, Director of Branding and Communications. At this time, our participants are in listen-only mode. Joining us on the call today are CEO Leonard Lifshitz and CFO Anil Dharadla. Following their prepared remarks, we will open the call to your questions. Please note that today's conference is being recorded. Before we begin, I would like to remind everyone that today's discussion will contain forward-looking statements. This includes our business in a financial outlook and the answers to some of your questions. Such statements are subject to the risks and uncertainty, as described in the company's earnings release and other filings with the SEC. During this call, we will discuss certain non-GAAP measures of our performance. GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in the earnings press release and the 8K filed with the SEC. You can find all the information I just described in the investor relations section of our website. I now turn the call over to Leonard, our CEO.

Thank you, Kari. Good afternoon, everyone, and thank you for joining us today. GridDynamics' second quarter results were above our guidance range and exceeded Wall Street expectations, both in revenue and non-GAAP EBITDA. We achieved important milestones in the quarter. I'm happy to report that our second quarter revenue was the highest in the company's history, and all of it was in organic nature. We also exited the second quarter with the highest number of billable engineers in the company's history. The strong results were due to the strengths from both existing and new customers and are commendable given the recent backdrop of economic cycles. It is a clear testament that GridDynamics' efforts to stay the course and maintain laser focus in delivering value to our customers is paying off. Our stated goals around the company's growth, profitability, and becoming a billion-dollar revenue company remain unchanged. In many ways, our second quarter revenue growth of 4% on a sequential basis reflects the company's differentiation. Last quarter, I highlighted the key factors influencing our growth and discussed how we are uniquely positioned across the IT industry. These were, first, our revenue represents a small proportion of our customers' overall spend, and therefore the opportunities for growth are significant. Second, the new deals that we are winning are tied up to our customer key area of focus and in many cases are mission critical. Third, across the majority of our customers, we are seeing their spending level either being maintained at the current level or increasing. And finally, fourth, the headwind we were facing last year were driven by drops of the handful of customers. This trend has reversed and many of those customers have reverted to growth. There are many exciting trends that are shaping our business, some of which I will share with you today. More importantly, I believe these trends will persist in shaping the company, both in the second half of 2024 and leading into the 2025 to a big year. Now, coming to the demand environment. Similar to the first quarter, we witnessed improving demand across the majority of our customers. Incrementally, last quarter, when customers were more focused on sharing their outlook and forecast plans, this quarter they were more willing to release their budgets to implement those plans. We benefited from the trend in this quarter and expect such trend to continue as the year progresses. Now, coming to the third quarter. Trends that I highlighted regarding the second quarter extend into the next quarter as well. We have already seen that in March of July, our customer activity and GMB headcount AI activities continue to be robust. We believe this formulate the basis for our continued positive outlook as we look at the third quarter and remaining of 2024. We are in what I call the post-vendor consolidation environment. As we highlighted over the last two to three quarters, customers have been scaling back on the number of IT vendors they work with. As an example, in one of the global brands, they plan to reduce the number of IT providers, but more than two thirds. With Grid Dynamics being one of the remaining strategic partners. With this customer and many more in similar situations, there is a heightened interest in partnering with IT vendors that are strong in technology and catalyst for them to achieving the business goals, both on revenue and cost side. Time and again, our technological and operational excellence has risen to the top. I also am thrilled to announce that in the second quarter, Grid Dynamics won four industry awards across a range of the categories, including most innovative project and best composable e-commerce project, among others. This widespread industry recognition reinforces our company as a benchmark of engineering excellence in digital transformation. And empowering businesses to navigate the complexities of the modern technology landscape with agility and innovation. We expanded our AI capabilities considerably and now have approximately 30 solutions and service offering targeting Fortune 500 companies across various industries. These solutions focus on enhancing revenue and reducing costs for enterprises. On the revenue side, our solutions focus on innovative customer experiences and enhance marketing, pricing and product decisions. And on the cost side, the focus is centered on efficiency improvements and better regulatory compliance. Our broad offering position as well to positively impact the business results of our clients. We're witnessing a significant pickup in customers wanting to engage us on the NDPs and pilot programs beyond the initial pro concepts. Our sales pipeline continues to show robust growth with dozens active AI opportunities in the progress. Enterprises are increasingly seeking to incorporate AI in their business process, as well as services and platform. It's worth noting that we continue to adopt and develop AI tools and best practices to improve the productivity of our own engineers. This goes beyond just coding copilots, extending to tools specifically designed for legacy modernization, test automation and quick product timing. These internal investments not just boosting our efficiency, but also enhance our ability to deliver cutting edge AI solutions to our clients. Let me highlight a few node-worshage AI projects for the second quarter. At the top workforce solution company, we're developing a comprehensive AI ops and data platform. This platform will host numerous AI applications for job seekers, recruiters and business owners, significantly enhancing the efficiency and effectiveness of the workforce management products. At one of the largest US auto part provider, we're using Gen.AI to harmonize and enrich large commerce catalogs. This streamlines the product onboarding process and additionally, at analyzing product attributes, create consistent product titles and descriptions that resonate with brand value. This leads to enhanced customer experience and higher sales through all channels. Additionally, for a leading European regulatory compliance firm, we're developing an AI enabled solution which streamlines the product certification process. This project showcases how AI can significantly enhance efficiency in complex regulatory environments. With our city organization, during the quarter there was significant activity both in AI and non-AI areas. This included the completion of eight programs across AI, data, machine learning engineering, commerce solutions and search. Some of the projects completed, including intelligent document processing tailored for the financial industry, conversation powered interior design assistance. And like previous quarters, our architects and CTO team were instrumental in opening new accounts. In the quarter, there were several trends I would like to share some of the notable ones with you. Logo momentum. In the second quarter, we signed new six logos, many of them been very large enterprises. Of these customers, we signed in a quarter one is a leading North America supply of home improvement, one is a large American consumer goods focus on personal and household products. One of the largest lifestyle global company and a European based large department store chains. Partnerships are at an all time high at 17% of revenue contribution in the first half of 2024. The quality and quantity of our partnership leads are changing. There are three not worth it trends that are shaping our partnership business. First, our commitments to technology innovation and engineer excellence has resulted in greater appreciation by global enterprise customers. This has resulted in great dynamics been chosen at many of our partners tier one customers. Second, our relationship with our partners are evolving. We're now more engaged in strategic discussion with senior management of our key partners. Third, at an operational level, we have enhanced level of collaboration between the sales and marketing and great dynamics as well as our partners. All these translated into more opportunities that include gen AI initiatives and our entry into the global projects and program across industry verticals. Delivery location support. During the quarter, we made progress across multiple areas with our global strategic delivery organizations. As we highlighted in the past, our follow the sun strategy provides the framework of scaling our global location. With Bangalore up operationalized, we now have three fully functional locations in India. India is now in our top two countries by headcount and supports multiple accounts with over a dozen of them being key accounts. Our focus on acquiring high quality talent out of universities and our activities with internships hackathons dynamic talks continue during the quarter. In Europe, Poland continued to be the anchor point and in Mexico, we continue to support our customers seeking near shore capabilities. European business with roughly meetings of our revenue, you're continuing to be strategic to our growth. Our AI heritage and gen and expertise continue to attract enterprise customers who are serious about adapting gen and I to enable business. Pros efficiencies and improve customer experiences. And one of our client, a leader in food and pharma testing, we started development of a base search solution. In addition to our AI wins, we provide a platform modernization roadmap to a major UK based retailer customer that supports their expansion. And we were able to migrate their existing homegrown encounters platform to the cloud. When the existing global auto part company were launching a composable commerce B2C solution orchestrated using Mac technologies. We expect this effort will continue in Q3 to enable the client to consolidate their technology landscapes and scale the business. During the quarter, grid dynamics delivered some notable projects. At a leading global technology company, we modernized their data analytics platform, including data governance and data pipeline throughput. This ensured compliance with strict data privacy and security regulations. Our efforts led to reduce infrastructure costs and improved overall performance. For a leading home improvement retailer, we modernized the legacy monolithic customer's commerce platform. Which opened the path to implement AI enabled services such as search on the Azure platform. For a major CPG brand, we implemented a wholesale order platform for its North American business, significantly reducing manual labor associated with processing, validating orders. This platform integrates order flow data in a client's next generation ARP system, streamlining operations and enhancing efficiency. For a leading automotive part supplier, we migrated product data to automotive industry standards and consolidating B2B as well as B2C search capabilities on a common platform. This will improve overall customer experience and enhance product sales. It's also the first step for the company rolling out a conversational AI shopping assistance. For a global footwear brand, we launched 40 country specific sites in under six months, providing localized features for in-country personalization, shipping and fulfillment. This achievement was made possible by leveraging the underlying Mac architecture we developed, further extending our long-term relationship with the brand. With that, let me turn the call over to Anil who will discuss future results in more detail. Anil?

Thanks, Leonard. Good afternoon, everyone. Our second quarter results were solid as we exceeded our expectations, both on revenue and non-GAAP EBITDA. Our second quarter revenue of $83 million was ahead of our guidance range of $80 million to $82 million, and our non-GAAP EBITDA of $11.7 million was ahead of our guidance range of $10.5 million and $11.5 million. The strong results were driven from a wide range of customers across industry verticals. During the second quarter, our retail and TMT were the two largest verticals at .2% and 28% of our revenues respectively. Our retail vertical grew .7% and .9% on a sequential and -over-year basis respectively. On a sequential basis, we witnessed growth from multiple customers in the specialty retail and home improvement space. TMT decreased by .3% and .6% on a sequential and -over-year basis respectively. On a sequential basis, the decline largely came from a couple of factors that included decline in revenue from a technology startup in the security space. Coming to our largest customer in our TMT vertical, it grew both on a sequential and -over-year basis. Here are the details of the revenue mix of other verticals. Our CPG and manufacturing represented .9% of our revenue in the second quarter, an increase of 3% on a sequential basis, and a drop of .5% on a -over-year basis. Revenues from the top three customers in our CPG and manufacturing vertical grew on a sequential basis. Our finance vertical was the strongest both on a sequential and -over-year basis, similar to last quarter, the growth from customers across the fintech and insurance space. Our newly disaggregated healthcare and pharma represented .8% of our revenues and showed a 5% increase on a sequential basis and .8% decrease on a -over-year basis. And finally, the other vertical represented 9% of our second quarter revenue and was down .6% on a sequential basis and up .7% on a -over-year basis. We ended the second quarter with a total headcount of 3,961, up from 3,892 employees in the first quarter of 2024 and up from 3,862 in the second quarter of 2023. At the end of the second quarter of 2024, our total US headcount was 347, or .8% of the company's total headcount versus .2% in the year-ago quarter. Our non-US headcount located in Europe, Americas, and India was 3,614, or 91.2%. In the second quarter, revenues from our top 5 and top 10 customers were .5% and 57% respectively versus .6% and .6% in the same period a year ago respectively. During the second quarter, we had a total of 208 customers down from 210 in the first quarter of 2024 and 216 in the year-ago quarter. During the quarter, we added several customers, some of which Leonard referred to in his prepared remarks. The -over-year decline in the number of customers was primarily driven by our continued efforts to rationalize our portfolio of non-strategic customers. Moving to the income statement, our gap gross profit during the quarter was 29.6 million, or 35.6%, compared to 27.7 million, or .7% in the first quarter of 2024, and 28.3 million, or .6% in the year-ago quarter. On a non-gap basis, our gross profit was 30.1 million, or 36.2%, up from 28.1 million, or .3% in the first quarter of 2024, and up from 28.8 million, or .3% in the year-ago quarter. The increase in gross profit, both in dollar and as a percentage on a sequential basis, was mainly driven by a combination of higher levels of revenue and better utilization of engineering resources. Our non-gap EVITA during the second quarter that excluded stock-based compensation, depreciation and amortization, restructuring and expenses related to geographic reorganization, transaction and other related costs was 11.7 million, or .1% of sales, up from 10.3 million, or .9% of sales in the first quarter of 2024, and down from 12 million, or .5% in the year-ago quarter. The increase on a sequential basis was largely due to higher revenues, partially offset by increase in operating expenses. Our gap net loss in the second quarter was 0.8 million, or a loss of 1 cent, based on basic share count of 76.6 million shares, compared to the first quarter loss of 3.9 million, or a loss of 5 cents, based on a basic share count of 76.2 million, and an income of 2.6 million, or 3 cents per share, based on 75.1 million basic shares in the year-ago quarter. Our sequential decrease in gap net loss was largely from higher gross profit, lower levels of stock-based compensation, and this was partially offset by provision for income taxes. On a non-gap basis, in the second quarter, our non-gap net income was 6 million, or 8 cents per share, based on 77.9 million diluted shares, compared to the first quarter non-gap net income of 5.2 million, or 7 cents per share, based on 78.4 million diluted shares, and 7 million, or 9 cents per share, based on 76.9 million diluted shares in the year-ago quarter. On June 30, 2024, our cash and cash equivalent totaled 256 million, up from 249.4 million in the first quarter of 2024. Coming to the third quarter guidance, we expect revenues to be in the range of 84 million to 86 million. We expect non-gap EBITDA in the third quarter to be in the range of 12.3 million to 13.3 million. For Q3 2024, we expect our basic share count to be in the range of 77 to 78 million, and our diluted share count to be in the range of 79 to 80 million. That concludes my prepared remarks. We are now ready to take questions.

Thank you, Anil. As we go into the Q&A session of this call, I will first announce your name. At that point, please unmute yourself and turn on your camera. The first question will come from Maggie Nolan of William Blair. Hi,

how are you?

Good.

Thanks, Maggie. So, I wanted to ask about the talent landscape for you all. So, you're back to hiring. Some time has passed since you kind of reorganized the footprint of the business, since you started talking about Follow the Sun, as well as the pod structure that you rolled out. So, I'm curious how you're thinking about managing margins from here on kind of an -by-account basis, now that you have all these different pieces in place, and how we might start to see that manifest in the P&L.

Well, you just answered the question, right? So, managing the margins -by-account for the key accounts is what really it comes down to right now. As you can see from the hiring perspective, we continue to hire across all the regions where we execute Follow the Sun program. There is definitely emphasis on India. India continues to expand. We still put a lot of effort in Europe, but we are doing a little bit more, I would say, smart hiring because we're again adding more interns for the program which we bring junior engineers, we promote within. And as the projects have stabilized and grow with a pod solution offering, we're able to expand on the breadth of the teams. And when you have deeper projects, you can actually manage your cost efficiency within the teams as well. But the short answer is yes, the key is to manage profitability per key client.

Thank you. And then you also talked about maybe an increased willingness of customers to either maintain or even increase their spend. I'm wondering if there is a notable change in the scope of projects, type of projects, duration of projects as you see that resurgence of willingness to spend. And any thoughts you might have on why this is slightly different from some of your competitors in this space?

Well, the. There was some noise there, sorry. So I think that fundamentally, when we talk about our differentiation, it's always been the marquee for Green Dynamics to be focused on technology projects. And when we do technology projects, the scope is around solutions which greatly impact the sales. So there is, if you notice, a big part of my conversation was about AI. It's not about just being fashionable, but it's also we have a possibility to implement the number of the internal solutions which we continue to. Roll out, which I also noted from the just the pro concept state point to the implementation of the broader base. So, yes, technology still stays the core focus. We are quite broadened the number of platforms which we use for innovative AI projects, starting from the, you know, open source products, the specialized solutions. To the private models, building the co-pilots together with the clients. And also, as we expand our partnerships, there is a deeper breadth of again implementation of those projects with the clients. So just to summarize technology focus, breadth of AI moving from the conceptual stage to broad implementation. And certainly reputation which comes with that over years of Green Dynamics managing various data aspects of our clients.

Great. Thanks, Leonard and now congrats again.

Thank you. Thank you so much.

Can we go to the next question?

Hello. The next question goes to Gates Schwartzman. From city, please go ahead Gates. Gates, are you there?

Okay, we'll come back to him. Carrie, why don't we go to the next one?

The next question comes from Brian Bergen of TD Cohen. Brian, please go ahead.

Hi, guys. Thanks. Good to see you. I wanted to start on the guidance here. So nice to see the sequential performance in the 2Q and then what's implied in the 3Q, the continued momentum there. As you develop the 3Q plan and consider kind of the balance of the year into 4Q, can you kind of just share some perspective on whether there was thought to reinstating that full year outlook? I'm asking just curious as a signal around overall business visibility. Okay.

So Brian, this is a very good question because this is a constant discussion. I think, let me leave a couple of thoughts here. Number one is that things are improving. So the likelihood of me installing a full year guidance is higher than what it was maybe a month ago, two months ago, or three months ago. So we're moving in that right direction. Look, we tend to be conservative, right? When we're ready for it, we will put it out. But the bias internally is for a full year guidance. Leonard's inclination is to try to give as much visibility as we can for the streets. So that's what we're working on. So at the right time, we will go out and put it, but definitely we have more of a bias to get to that point.

Okay. Okay. That makes sense. And then just on the new logos, can you speak to some of the pace of scaling of these larger enterprise logos? You've had good momentum in each quarter here, signing several. For those that are ramping faster too, can you maybe speak to some of the trends in those new relationships that may be common?

Well, the story is not any different from the years of growth, Brian. When you engage with a client on a rapid scale, and I'm talking about rapid scale, usually there is a familiarity with green dynamics from the past. So when you sign a logo where you come from the, I would say new relationship or partnerships, typically the projects start relatively small. So it's still land and expand, right? Usually it's from highly technical field. Basically the big enterprise approach green dynamics on referrals to become their technology partners. In a couple of instances, these thought that help from very large and reputable firms, perhaps they didn't find that reflection of the specific needs or maybe focused, I would say, attention. And we rapidly picked it up. And we're kind of shifting our relationship with the clients also to understand their business models. So it helps to be a technical institute, but also a bit more business savvy. But a couple of instances where we had the leadership of the clients kind of known us for a long time. And those kinds of best of thrusts, because you don't need to prove yourself anymore. You basically get to the point that you're giving business based on your past performance, but you have to rapidly adapt and deliver. And there are a couple of instances of that has happened. As we grow, we've been around for 18 years. Those instances are more So three cases, the new relationships, as well as the partnerships, they grow from technology up. The existing relationship, rapid scale in terms of the major implementation across multiple fields. Okay, that's

helpful. Thank you very much.

Thanks,

Brian.

Thank you, Brian. The next question comes from Mayank Tandem at Needham. Mayank, please unmute yourself and you can start your video.

Do we just lose, Mike? I just saw you. Can you guys hear me? Okay. There you go. Yes, Mike, we can hear you. I'm trying to restart my video, but let's see. There you are. Here I am. All right. Great. Thank you for taking my question. Good evening, Leonard and Anil. Congrats on the quarter. I wanted to ask you on the revenue growth for the third quarter. And as you look ahead, could you unpack the growth in terms of headcount additions, utilization? How much more room do you have to expand it? And also pricing, you know, is there more leverage on the upside or is pricing basically running flattish at this time?

Well, unpacking is the privilege of Anil. Obviously, if you will unpack such way, you will never understand what he does unpack. But let me try to focus on the key areas because it's a very fundamental question, right? So I don't see a rapid increase of the pricing per client. There are some instances they do, but it's not about increasing the pricing. It's about fair value for the solutions. So when you go T&M, it's seldom. But when you go into the project base, when you offer a customer a complete proposals, that does happen to some of the impact because, again, that's ROI. And then at the end of the day, its total amount of dollars looked at how business, how competitive, how clients did. So the unpacking part is there's no miracle there. Nobody, the demand is still to the point we have to be smart about pricing. But we see some of those improvements definitely. The other thing is balancing the teams, as I mentioned with Meghia as the question, bringing this broader vertically integrated organizations created a higher, I would say, utilization of the broader base people. When you are starting projects and Brian asked us how you and who grows and how that impacts, you typically start with very experienced people. And that is not the best margin solution unless you build the broader capabilities with all the clients. And we see those broader capabilities coming into play. So if I summarize unpacking of the growth, demand is definitely present to great dynamics. When we purely focus on one area, then maybe there's no big change of the financial performance. But we're expanding now into multiple areas. We see the efficiencies and the efficiency comes with a pyramid of talent, which is, even during the most dairiest downturns, we did not slow down on the internship program, the training program, on the internal university program. So those kind of things picked up. And of course, the investment in R&D, when we build more than 30 solutions, they're not just 30 solutions. Some of them, it's almost like auction. When people say, I did 100, I did 200, 5,000, we're more concerned. When we talk about solutions, it's a fundamental, actionable set of rules, which drive immediate customer implementation. And when you talk about Fortune 500, that brings that kind of implementation to both performance and financial efficiency. I hope I gave you a little bit of flavor enough,

but I tried. Sure, that's very helpful. As a quick follow up, Leonard and Anil, I wanted to also dive into the clients where you have top five, top 10. Where do you see them in terms of penetration? Is there more headroom to grow within these clients? Or do you think the growth is going to really come from your non-top 10, as you look beyond 2024 to 2025 and further?

Well, let me start. We just went through our internal executive reviews, because it's good on a semiannual basis, kind of assess where you are. So we just finished it. Our strategy comes threefold. The top clients, the second most potential clients, meaning the large companies where our footprint is still smaller, and the new innovative clients coming either through their hunting or the partnerships. And as you look at breakdown, no matter what we do, there is still concentration. And this is a different form of shape, not the same as it was some years ago. We're more diverse on an industry basis, but still, we have heavy hitters. And with those heavy hitters, you need to make sure you live with them 24-7, because your and our success and their success so tightly coupled. And when some of them went down in the past quarters, it hurt them, it hurt us. We carefully selecting the companies together with the client, which not only kind of inspired to grow and have funds to grow, but the market they're naming for their own markets help them. So that's from the top tier. From the second tier, we have growth with every common potential. Because if you only have some million of dollars, and those are large clients, then it's our responsibility to offer them competitively, something which makes their business more successful. And this is where we double down on technology penetration. So the first group is 24-7, the second one, very selective. And we have those green shoots already start to fruition, which means some of them take off, some of them don't, and then we need to understand why not. And the third group, we are spending disproportionately a lot of attention to the partnerships, because those logos are amazing, but the scope of projects are limited. So we have enough trust with our partners, then we can work with them on their own implementations, but also look in parallel to something completely unrelated, incompatible with their mission, but help us and direct clients to grow together. So together, that's kind of focus. It's a one, two, three.

Perfect. Thank you so much, Leonard. Thank you.

Thank you.

Thank you, Mayank. Appreciate your questions. The next question comes from Punit Jain of JP Morgan. Go ahead, Punit.

You're on mute. Punit, I think you're on mute.

Punit, go ahead, sir. Can't hear you. Your audio is not connected,

sir. All right. Let's see. All right. Let's try. There you go.

All right. I just asked all my questions, but thanks for them. Anyway, so Great Quarter, so last couple of years, you have added like around 50, 60 enterprise customers. Some of them, for example, the one in financial services have done really well, but give us like the state of union on rest of those enterprise clients that you added. Or some of them, like the specifically the ones that might still be somewhat understale, like what's keeping them from ramping up and what the potential is that those clients. All

right. You're basically expanding on the previous question of Mayank about the second group, not the top one. Everybody boasts about successes. What happened with the quiet group, right? The silent majority. Okay. Well, that's why we had this very deep account by account review. And because again, there are not a huge number of them. There are maybe 25 to 30 of those clients who kind of stuck in this position of, you know, kind of transitioning from two, five, 10 to five, 10, 20, but still more between five and 10 instead of 10 and 20. This is exactly where the, I would say the thrust is because once you pass certain level of capacity relationship, you suddenly become a preferred supplier. And in the age of the consolidation, which we also mentioned, you know, staying relevant, you have to be useful, not just to one team, but to many. So from that perspective, we selected about half of those clients as you can run after everyone, right? Which they're from different industries, but they have a couple of major, I would say, factors. First of all, we have an alignment on technology roadmap, you know, with all the greatness of technology, technology by itself, even AI makes zero value unless it's fully supported and expended and, you know, kind of planned for with the clients, right? They need to have mindset, they need to have capability, they need to have willingness, business cases, and patience, right? You know, it's very easy to do a probe of concept. And then they kind of report to the top management saying, okay, we've done it. It's not business. So with about half of those clients, I would say, dozen and a half or something like that, we want to go much deeper to actually engage into the more business case studies and answering ourselves. And then the question is, why not? We're not changing our business. We're not doing like, DPO's or any kind of low end services. So for us expansion, it means how to proliferate the data business, the cloud business, assessment of cyber securities, learning from the horrible lessons of the, you know, IT challenges, which happened on the clouds, how to create mission critical solutions with all the predictable models, but still relevant to them. So that group, which we're going to continue to focus, and that's where the, I would say, short term growth comes from.

Now that's very helpful. And then you have like about 250 million in cash on balance sheet. And in the press release, I noticed like you talked about that most of the growth or all the growth is organic now, meaning that it's been more than a year since you last did an acquisition. So talk to us about your use of cash priorities over the near term. And what are you looking for in potential M&A target?

Yes. So the person you don't see in the room, because he's kind of behind the scene, is our head of M&A group, right? So I'm not going to put him on the stage and tell you what to do, because he may tell you way too much that we want to tell you. But I think that the level of engagement is tremendous right now. I think there are a couple of reasons for that. First of all, remember the geographic. We talk about technology with clients and geography. I think the star's kind of aligned. We have all the geography we're looking for, all of them right now. And technology is pretty decent. I would not say we're going to make a breakthrough. If everybody can make a breakthrough, then why would companies exit, right? They need to help. Strangely enough, Colby and Big Brother, we're still a modest size company, but from technology perspective, we're quite formidable. And they're passionate about to continue the journey as a part of the bigger teams. Now, I can't tell you when the day is going to come. What did you say about us going for an annual report? You're more inclined to do now than before. Than a month ago. It sounds like we're all waiting for FEDS to change the rates. So I'm also inclined to be very positive in the next couple of weeks and months, but you have to be very patient. And the reason we're very bullish on it, because I think we found the rhythm. That was very important, because we look at the past four acquisitions. We look at the value we need to bring in 2025 and on. And I think the company, when it goes through this period of the slowdown, it matures. You know, like an old saying, if you can't find a job, go ahead, extend your education, right? So it's kind of worked for the last 12 months. I believe we're on a very good path now.

That's good to know. Thank you.

Thank you, Panit. Thank you.

Ladies and gentlemen, this concludes the Q&A session of our call today. I will now turn it over to Leonard for closing comments.

Thank you, everybody, for joining us on the call today. Our message today is consistent with the commentary over the past couple of quarters, steady improvement in great dynamics business. This ability is getting better. Customers are more willing to put their plans into spend. And more importantly, customers are laser focused on evaluating the technological competencies of their IT partners. I'm excited about these opportunities in the second half of 2024, as well as the coming 2025. Looking forward to giving you all updates in the next earnings call. Thank you.