The Hackett Group, Inc.

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

Good afternoon, everyone, and thank you for joining us to discuss the Hackett Group Third Quarter results. Speaking on the call today, I'm here to answer your questions for Ted Fernandez, Chairman and Chief Executive Officer of the Hackett Group, and myself, Robert Ramirez, Chief Financial Officer. A press announcement was released over the wires at 4.15 p.m. Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We'll also place any additional financial or statistical data discussed on this call that is not contained in the release on the Investor Relations page of our website. Before we begin, I would like to remind you that in the following comments and in the question and answer session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates, and projections and are not a guarantee of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict and which may not be accurate. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors contained in our SEC filings. At this point, I'd like to turn it over to Ted.

Thank you, Rob, and welcome, everyone, to our third quarter earnings call. As we normally do, I will open the call with some overview comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results cash flow, and guidance. We will then review our market and strategy-related comments, after which we will open it up to Q&A. This afternoon, we reported total revenues of $79.8 million and adjusted earnings per share of 43 cents, both of which exceeded our quarterly guidance. Our Oracle and SAP segments continued their strong performance, but what is new is the emergence and increased revenue growth from our Gen AI engagements which grew strongly on a sequential revenue basis in the quarter. This new GenAI consulting revenue, driven by our AI Explorer, capital XPLR platform, was offset by the weakness in our e-procurement group and resulted in our GSBT segment being flat on a year-over-year basis. We are seeing clients quickly moving from awareness and education about its GenAI adoption opportunity to budgeted projects which we expect to further increase in the fourth quarter and continue throughout 2025. We believe GenAI is a generational opportunity which will fundamentally change the way companies operate as well as the way consulting services are sold and delivered. The GenAI platform capability we have developed in AI Explorer and now expanded with the ZBrain platform, which was part of the Leeway Hertz acquisition, are highly differentiating and should allow us to compete strongly for the emerging growth in this important space. Our Oracle segment performance was consistent with the momentum we have experienced since early 2023 when Oracle reestablished its dedicated sales team in its Enterprise Performance Management, or EPM, offerings. Our SAP Solutions segment performed above expectations for the third quarter in a row as it closed several value-added reseller transactions which benefited the quarter. This increase is directly attributable to our decision last year to expand our sales force and more broadly leverage our market-leading life sciences capability. We continue to see the GenAI opportunities emerge. We have conducted hundreds of meetings with global 1,000 organizations since our introduction of AI Explorer earlier this year. These demo meetings and conversations have provided us with valuable client adoption considerations along with their implementation concerns and limitations. These initial meetings are now becoming new meaningful opportunities for us to serve clients strategically and broadly. We use this unique insight to make powerful improvements to our recent release, AI Explorer Version 2. The most important of the enhancements is our ability to simulate an organization's enterprise use case opportunities by leveraging Hackett IP, including our benchmarking, best practice business processes, and software configuration knowledge to identify AI automation opportunities in data source requirements at the work step or activity level. This enables us to identify, design, and evaluate meaningful AI solutions or use cases including AI agent opportunities using our AI Explorers, GenAI assisted capabilities. We believe that our new Explorer version two capabilities and our acquisition of leeway Hertz already favorably impacting our conversion rates and significantly expanding the downstream revenue opportunities with our clients. Given the strategic access and platform expanding capabilities of AI Explorer, it was natural for us to extend our AI implementation capabilities to fully be able to develop and implement GenAI use cases that we were identifying. This resulted in our acquisition of Leeway Herx, a highly recognized provider of advanced GenAI solutions. The acquisition also included a GenAI orchestration solution, ZBrain, which we agreed to contribute into a newly created joint venture with the Leeway Hertz founder. The JV, which will bring together the AI Explorer and Zbrain software platforms and will focus on licensing the platforms and creating a first of its kind Gen-AI ideation through implementation software as a service offering. We believe this JV creates an entirely new value creation opportunity for our shareholders that could result from the growth of annual recurring revenues. It would also allow us to have the opportunity to raise capital and achieve standalone valuations due to its GenAI software focus. Our pre-acquisition collaboration with Leeway Hertz during the third quarter resulted in strong sequential quarterly GenAI revenue growth, which we expect will continue into the fourth quarter and could have consequential impact on our 2025 results. There is no doubt that in just nine months, our aggressive pivot to become the architects of our clients' GenAI journey is being well received and has significant value creation potential for our organization. We have extended and strengthened our capabilities and continue to add GenAI-enabled transformation engagements driven by AI Explorer. Our unique ability to identify meaningful use cases, determine their feasibility leveraging Hackett IP, which now extend to implementation and platform licensing prospects, is highly differentiated. On the executive advisory front, we continue to invest in growing our IP-based programs. We believe our move to fully integrate Gen AI content, which is now being further augmented by the highly recognized Gen AI content, which was infused by the Leeway Hertz acquisition, will be responsive to our clients' strong interest in this area. We expect our fourth quarter sequential growth, and our advisory program sales and renewals to reflect this impact. On the balance sheet side, as we announced today, in the near term, they can expect us to use our strong cash flow from operations to accelerate our stock buyback program rather than pay down our remaining outstanding balance of our credit facility while continuing to invest in our business. Our $20 million stock back Addition to our existing $11.1 million authorization leaves us with $31.1 million as we start the quarter. With that said, let me ask Rob to provide details on our operating results, cash flow, and also comment on outlook as we will make additional comments on strategy and market conditions following Rob's comments. Rob?

Thank you, Ted. As I typically do, I'll cover the following topics during my portion of the call. I'll cover an overview of our 2024 third quarter results, along with an overview of related key operating statistics. I'll cover an overview of our cash flow activities in the quarter, and I will then conclude with a discussion on our financial outlook for the fourth quarter of 2024. For purposes of this call, I will comment separately regarding the revenues of our global SMBT segment, our Oracle Solutions segment, our SAP Solutions segment, and the total company. Our global SAPT segment includes the results of our North America and international GenAI consulting implementation, benchmarking and business transformation offerings, executive advisory and IPaaS programs, and our OneStream and eProcurement implementation offerings. Our Oracle Solutions and our SAP Solutions segments include the results of our Oracle and SAP offerings, respectively. Please note that we will be referencing both total revenue and revenue before reimbursements in our discussion. Reimbursable expenses are primarily project travel-related expenses passed through to our clients and have no associated impact on profitability. During our call today, we will also reference certain non-GAAP financial measures, which we believe provide useful information to investors. We've included reconciliations of GAAP to non-GAAP financial measures in our press release filed earlier today, and we'll post any additional information based on the discussion from this call to the investor relations page of the company's website. For the third quarter of 2024, our total revenues were $79.8 million. Our revenues before reimbursements were $77.9 million, which was above the high end of our quarterly guidance. The third quarter of 2024 reimbursable expense ratio on revenue before reimbursements was 2.3% as compared to 1.6% in the prior quarter and in the same period in the prior year. Total revenues from our global SMBT segment were $44.1 million for the third quarter of 2024. Revenues before reimbursements for our global SMBT segment were $43.3 million for the third quarter of 2024, essentially flat when compared to the same period in the prior year. As Tim mentioned, the revenue from our GenAI consulting and implementation projects in this segment were primarily offset by weakness in our eProcurement implementation offerings. Total revenues from our Oracle Solutions segment were $22.8 million for the third quarter of 2024. Revenues before reimbursements for our Oracle Solutions segment were $21.8 million for the third quarter of 2024, an increase of 7% when compared to the same period in the prior year. These results continue the momentum we've experienced since the second quarter of 2023. Total revenues from our SAP Solutions segment were $13 million for the third quarter of 2024. Revenues before reimbursements for our SAP Solutions segment were $12.9 million for the third quarter, an increase of 17% when compared to the same period in the prior year, primarily driven by strong software-related sales in the quarter. approximately 22% of our total company revenues before reimbursements consist of recurring multi-year and subscription-based revenues, which includes our research advisory, IP as a service, multi-year benchmarks, and application managed services contracts. Total company adjusted cost of sales, which exclude reversible expenses, non-cash stock-based compensation expense, and all acquisition-related cash and non-cash compensation expense, totaled 44.2 million or 56.8% of revenues before reimbursements in the third quarter as compared to 42.9 million or 57.5% of revenues before reimbursements in the prior year. Total company consultant headcount was 1,262 at the end of the third quarter of 2024 as compared to 1,105 in the previous quarter and 1,177 at the end of the third quarter of the prior year. Third quarter ending headcount was primarily driven by increases from our Gen AI acquisition practice. Total company adjusted gross margin on revenues before reimbursements, which excludes reimbursable expenses and non-cash stock-based compensation expense and all acquisition related cash and non-cash compensation was 43.2% in the third quarter as compared to 42.5% in the prior year driven due to the revenue growth for both our Oracle and SAP segments. Adjusted SG&A, which excludes non-cash stock-based compensation expense and all acquisition-related cash and non-cash expenses, was $17 million, or 21.8% of revenues before reimbursements in the third quarter. This is compared to $15.3 million, or 20.5% of revenues before reimbursements in the prior year. The year-over-year absolute dollar increase is primarily due to foreign exchange fluctuations as well as incremental commissions from increased S&P and local second sales. Adjusted EBITDA, which excludes non-cash stock-based compensation expense and all acquisition-related cash and non-cash expenses, was $17.7 million, or 22.7% of revenues before reimbursements in the third quarter as compared to 17.3 million or 23.2% of revenues before reimbursements in the prior year. GAAP net income for the third quarter of 2024 totaled 8.6 million or diluted earnings per share of 31 cents as compared to GAAP net income of 9.4 million or diluted earnings per share of 34 cents in the third quarter of the prior year. GAAP net income for the third quarter includes non-cash stock compensation expense from our recently approved share price appreciation equity program of $602,000 and acquisition-related non-cash compensation expense of $232,000, which in total impacted our gap results by $0.02. Adjusted net income, which excludes non-cash stock-based compensation expense and all acquisition-related cash and non-cash expenses for the third quarter of 2024 totaled 12.1 million were adjusted diluted net income per common share of 43 cents, which is above the top end of our earnings guide range and compares to our prior year adjusted diluted net income per common share of 41 cents. Our adjusted net income for the third quarter of 2024 was favorably impacted by approximately one cent due to a lower GAAP effective tax rate on adjusted earnings than we originally estimated when we provided guidance last quarter. As announced in September 2024, during the third quarter, the company acquired the operations of Leeway Hertz, an India-based AI implementation services firm. Due to the timing of the transaction, this acquisition did not have an impact on our adjusted net income for the third quarter of 2024. Acquisition-related cash and non-cash stock compensation expense relates to a portion of the purchase consideration for the Leeway Hertz acquisition. This consideration contains either performance or service vesting requirements and as such is reflected as compensation expense under GAAP rather than purchase consideration. The company's cash balances were $10 million at the end of the third quarter of 2024 as compared to $19.1 million at the end of the previous quarter. Net cash provided from operating activities in the quarter was $10.6 million. primarily driven by net income adjusted for non-cash activity, partially offset by increases in accounts receivable. Our DSO, or day sales outstanding, was 70 days at the end of the quarter as compared to 68 days at the end of the previous quarter and as compared to 75 days in the prior year. Cash utilized for purchase consideration for the legal inheritance acquisition amounted to $7.6 million in the quarter. This does not include any stock purchase consideration or any contingent compensation that may be earned in the future. During the third quarter of 2024, the company paid down seven million on its credit facility. The balance of the company's total debt outstanding at the end of the third quarter of 2024 was approximately 20 million. Subsequent to the end of the quarter, the company has paid down an additional three million. During the quarter, we repurchased 71,000 shares of the company's stock for an average of $26.66 per share at a total cost of approximately $1.9 million, driven by open market purchases and from employees' dissatisfied income tax withholding triggered by the vesting of restricted shares. Our remaining stock repurchase authorization at the end of the quarter was $11.1 million. At its most recent meeting, subsequent to quarter end, the company's board of directors authorized a $20 million increase in the company's share purchase authorization. Additionally, the board declared a fourth quarterly dividend of 11 cents per share for shareholders of a record of December 20th, 2024 to be paid on January 3rd, 2025. Before I move to guidance for the fourth quarter of 2024, I'd like to remind everyone of the seasonality of our business. Specifically, the increased holiday and vacation time that is historically taken in the fourth quarter would decrease our available billing days by approximately 10% when compared to the third quarter. The company estimates total revenue before reimbursements for the fourth quarter of 2024 to be in the range of 73.5 to 75 million. We expect all subject revenues before reimbursements to be up and the total company will be up three to 5% compared to the prior year. We estimate adjusted diluted net income per common share in the fourth quarter of 2024 to be in the range of 41 to 43 cents, which assumes a gap effective tax rate on adjusted earnings of 27.6%. We expect the adjusted gross margin as percentage of revenues before reimbursements to be approximately 45 to 46%. We expect adjusted SG&A and interest expense for the fourth quarter to be approximately 17.2 million. We expect fourth quarter adjusted EBITDA as a percentage of revenues before reimbursements to be in the range of approximately 23 to 24%. Lastly, we expect cash flow from operations to be up on a sequential basis. At this point, I'll turn it back over to Ted to review our market outlook and strategic priorities for the coming weeks.

As we look forward, let me share our thoughts on the near and long-term demand environment and the growth opportunity it offers our organization. Although demand for digital transformation remains strong in traditional areas, it continues to be somewhat impacted by thoughtful decision-making as organizations assess competing priorities due to economic concerns. As we head into 2025, we expect client program budgets and allocations to increase to the rapidly emerging Gen AI solutions area. While in 2024, Gen AI budgets were primarily focused in developing awareness in AI, a dip in their toe in the water kind of approach, in 2025, we believe you will see an increasing amount of IT budgets specifically allocated to Gen AI initiatives in high feasibility and high impact areas. We also expect to see an increase in investment in data quality and value initiatives which are critical to any Gen AI strategy. The potential of AI will define an entirely new level of Gen AI-enabled world-class performance standards driving all software and services providers to extend the value of their existing offerings. We believe this will result in innovations which all organizations will have to consider This shift is consistent with our aggressive pivot to Gen AI-enabled transformations, which we believe positions a generational value creation opportunity for our organization. Strategically, we continue our focus on recurring high-margin IP-related services, but what is new is the accelerated focus and investment we're making on Gen AI. The most significant investments have been in AI Explorer, as well as training and development of our associates. Our strategic acquisition of Leeway Hertz, a highly recognized GenAI consulting and implementation firm, further expanded and accelerated all of our efforts. We are using the AI Explorer platform as the vehicle to integrate the GenAI capabilities and impact across all of our offerings. We also continue to hire and upgrade our skills in critical data and tech architecture resources to further support our efforts. These efforts are rapidly allowing us to become key architects, advisors, and consultants of our clients' Gen AI journey. We now believe that AI Explore will be our primary strategic entry point to clients that we will use to position our traditional strong benchmarking, digital transformation, as well as our advisory offerings. The halo effect from the halo effect or downstream revenue impact has been around 40% over the last several years, and that refers to our IP-based services. We now believe this will only be expanded by our AI Explorer offering and the enterprise-wide strategic access it provides us. We believe the integration of our other IP platforms with AI Explorer significantly enhances the value of our IP and fully aligns it into the emerging GenAI world-class performance standards we believe it will establish. Another critical investment that we have made is to build our own GenAI-assisted knowledge-based solution called Ask Hackett AI. We expect the integration of our valuable IP and content that leverages Gen AI to significantly enhance the delivery of our insight that we are asked to provide our clients every day, but will now be provided in a more efficient and with more significantly personalized insight. We are ingesting proprietary IP, including benchmarking, best practices, and research IP to support the myriads of queries that we are required to support our executive advisory and consulting clients, as well as support our associates in general. We have also embarked on a new initiative which extends to also address the efficiency and quality of the delivery of our technology implementation-related services. All of these initiatives are harnessing the power of GenAI to improve and accelerate the delivery of our solutions and services with the intent to differentiate our capabilities and result in improved revenue growth and margins. On the talent side, competition for experienced executives, especially with high technology agility, continues. Overall, we saw turnover continue to moderate overall in turnover and expected to remain low during the quarter, and we expect that trend to continue. We also continue to explore strategic partnerships and acquisitions that will allow us to extend our Gen AI capabilities and sell our IP through new channels that will allow us to reach beyond our current global 1,000 focus in an efficient manner. As I have mentioned on previous calls, we are adding videos of our platforms on the investor relations page of our website that investors can utilize to become more familiar with all of our new capabilities. Lastly, even though we believe we have the client base and offerings to grow our business, We continue to look for acquisitions and alliances that strategically leverage our IP and at scope, scale, and capability, which can accelerate our growth. As always, let me close by congratulating our associates on our performance and by thanking them for their tireless efforts and always urge them to stay highly focused on our clients and our people, no matter what challenges we may encounter. Those conclude my comments. Let me turn it over to our operator and let us move into the Q&A section of our call. Operator?

Thank you. At this time, if you would like to ask a question, please ensure that your phone is unmuted. Press star 1 and record your name clearly when prompted. If you would need to withdraw your request, you may press star 2. Again, that is star 1 to ask a question. One moment for the first question. Our first question comes from George Sutton with Craig Hallam. You may go ahead.

thank you uh guys it's impressive to watch how ai has really shifted the opportunity here so um ted i wondered if you could walk through version 2.0 you've mentioned hundreds of meetings you've had with uh clients or potential clients can you just talk about the pipeline that is getting created and you also mentioned a a favorable impact in race i wondered if you could be a little more specific about what you mean there um

Version 2 is very significant. As you know, George, we conducted hundreds of meetings throughout the first, second, and nearly half of the third quarter. We started with a beta version of Version 2 probably halfway through the third quarter. I think it's also important to note that it was probably around that same time where our collaboration with Leeway Hertz, even though it was pre-acquisition, also accelerated. The capability of Version 2 and the inclusion of their Gen AI implementation skills significantly impacted, I'm going to say, the response we were getting from clients. And when we look at those meetings that we have held using Version 2, which include our new Leeway Hertz leaders and associates, those conversion rates are meaningfully higher than anything we were previously experiencing. What makes version 2 so compelling? You know, what's been unique about our approach from the beginning was that we decided to understand how to enable a work step which was the lowest component of, we thought, enablement that we could evaluate given our very strong business process knowledge. And that has turned out to be actually very favorable to us because that was not only a way to be able to simulate or anticipate and design and identify use cases, but it also becomes a very granular way to evaluate the related cost of any of the use cases that we're identifying. What's important about version 2 is that we can now walk into a client and provide a demo by having industry client information and their technology landscape and actually walk them through the use cases that are available throughout their entire enterprise, front, mid, or back office. I know that sounds too good to be true and hard to believe, but that is exactly what we're doing. And it allows us to help clients quickly prioritize the areas that they deem to be important, and it allows us then to, we believe with very strong credibility, speak to why that use case opportunity exists, the benefits related to that use case, And now with the integration of Leeway Hertz, what we call a detailed calculation of costs so that we can provide ROI. So the combination of all of those things, which was happening throughout the third quarter, probably more in the mid to the latter part of that quarter, are the things that we've seen have impacted our close rate and allowed us to either go back or reengage with clients that have been exposed to version one but approached them with a much more compelling, confident, detailed feasibility and impact presentation that we believe has started to accrue in our favor and has led to the success that we expect to continue from Q3 to Q4.

Ted, you talked about 2025 showing increased IT budgets for AI initiatives with 24 being just the toe in the water. I know Rob doesn't want me to get too crazy in terms of how we build that out in our model, but can you just talk about what you mean quantitatively relative to that statement?

We believe just for any software service consideration for clients, all software and service solutions providers that have the ability to engage clients strongly about relative their services, they should all see a marked increase in both the client engagement and the revenues that initially launch, and I would expect then those engagements then to then increase because what's happening is the first step was, they call it awareness and education, and clients depending. Obviously, the highly sophisticated ones jumped out early, built out pretty strong AI centers of excellence with their own capability and tech platforms to do all that. But that wasn't the majority of these large clients. In fact, I would say it was the minority. So what you're now seeing is everyone now evaluating exactly what do they want to have in place, how much do they want to build themselves or outsource, where they should start, and what the return is for any of those initiatives. And in that back opportunity, when it comes to helping someone identify the opportunities across the enterprise and helping them have a pretty well-defined benefit case a feasibility impact ROI assessment, that is where we play. So we believe that that will accrue, that benefit will accrue to us throughout the year. So time will tell just exactly how that impacts our 25 results, but we believe it provides a very meaningful opportunity as we close out the year and we prepare to go into 2025.

Great. Last question for me. 40% historically. I'm not really sure what you're referring to there. I think you mean attachment of IP, proprietary IP opportunities. I just want to make sure I understand what you're referring to there and how that's going to shift in your view.

Well, as you recall historically, our strategic entry point when it came through our IP-led offerings, which are primarily our benchmarking and executive advisory and then subsequently market intelligence program was the way clients would engage us. And then from those, those who relied on our IP and valued it ended up becoming meaningful consulting clients. So our historical results that those entry points were driving approximately 40% of our total revenues over the last several years. The point I wanted to make is that AI Explorer will only add to that because AI Explorer is, I'll call it, IP rich on steroids, and with its capabilities that we would expect more of our halo effect or downstream revenue to come from our traditional entry points, but also through our AI Explorer capability, which by the way also envelopes our benchmarking and best practice insight that our clients value in our executive advisory programs. So that 40% should increase throughout 2025 when we look at IP-based entry points into the delivery of consulting or technology implementation services. That's clear. Okay. Thank you very much.

Thank you. And as a reminder, if you would like to ask a question, please press star 1. Our next question is from Jeff Martin with Roth Capital Partners. You may go ahead.

Thank you. Good afternoon. Ted was curious if you could compare and contrast the types of conversations that you're having now post-acquisition of leeway hurts with client prospects versus when you were going without leeway hurts.

It's significantly different. Some of it driven by our, I'll call it this new additional capability. But we also learned as we started qualifying those demo meetings that we were taking, we started learning what were more educational and awareness related opportunity versus which had higher engagement opportunities. So what happened as we, I think, started Q3, we started becoming much more demanding on who needed to be on the call in order for us to do an AI Explorer demo. And it became only more increasingly demanding as we got closer to releasing version two. So, at the beginning, we were just delighted that a, I'll call it a global 1000 client wanted to learn more about our new capabilities. As we got into Q3, it was clear that we wanted to really qualify the opportunity more and we understood by then that having a strong GenAI implementation partner with us on those calls could significantly influence the impact and credibility of the call. So as we went through Q3, we then became more demanding and said it's got to be a CIO, CTO, or AI leader within that organization along with any of our traditional C-level officers across other functions that we have very strong relationships with. But we realized that we needed to have both strong implementation capability and credibility, which that initial partnering, which you could have called pre-acquisition collaboration, became very helpful, especially as we were completing our acquisition due diligence, but also understanding that at the end of the day, you needed AI leadership or IT leadership to participate in a strategic engagement around the either ideation or evaluation of Gen AI opportunities. So we became just more demanding. And now as we have full simulation capabilities, We're becoming more demanding because we believe we are delivering a lot of value in that initial introductory call by virtue of this simulation capability.

Thank you. On the implementation side, could you talk about what it takes to scale that, what your plans are perhaps? for investing in personnel and anything else you might need in order to really build out further implementation capabilities?

Our plans are to aggressively increase the GEN-AI implementation capabilities that either came with Lee-Wei Hertz, the Lee-Wei Hertz acquisition, or that were part of HACET, part of our development and GEN-AI efforts pre-GEN-AI. Leeway Hertz acquisition. So, I mean, initial goal here is to double those resources as quickly as we can.

And the last one for me is on the market intelligence side. One of your key hires, I believe, had a non-compete inhibitor to being able to really focus on that business. I believe we're near the end of that non-competition term, could you provide us an update there and what the plans are for further build-out of the market intelligence offerings?

The answer is that that individual actually returns to us on the 7th, and he was the the global leader of our executive advisory, and that includes our market intelligence program, so all of our subscription-based products. So we are welcoming him back later this week, and obviously I'm sure he can't wait to get started and try to reengage with that team and try to impact our year-end results and 2025 plan. Thank you.

Thank you. Our next question is from Vincent Colicchio with Barrington Research. You may go ahead.

Yeah, Ted, shifting gears, what should we expect on the eProcurement side? Should we expect this weakness to be extended?

If it just remains flat to where it is right now, that year-over-year impact goes away at the end of Q1, so we will no longer have that. But that negative impact, actually, without that negative impact, GSBT would have been up close to 5% in the quarter.

And... Nice quarter with a nice growth with Oracle and SAP. On a seasonally adjusted basis, should we expect to continue to have strength there?

The answer is that you should consider strength, as Rob just provided in his guidance comments. All three segments will grow, and we expect our guidance rates to indicate 3% to 5%. year-over-year growth. So follow Rob's guidance.

Thank you.

Thank you. And at this time, I show no further questions. I will now turn the call back over to Ted for final remarks.

Thank you, Operator. Let me thank everyone for participating in our third quarter earnings call. We look forward to updating you on the fourth quarter and our annual results when we report our fourth quarter results in the early third quarter of February. Is that correct, Rob? Third week. Third week. I'm sorry. Early third week. Mid-February. Thank you for participating. We'll look forward to catching up soon.

Thank you. That does conclude today's conference. Thank you all for participating. You may disconnect at this time.