Information Services Group, Inc.

Hello and good morning. My name is Barry Holt. I'm a Senior Communications Executive at ISG. I'd like to welcome everyone to ISG's fourth quarter conference call. I'm joined today by Michael Connors, Chairman and Chief Executive Officer, and Bert Alfonso, Executive Vice President and Chief Financial Officer. Before we begin, I'd like to read a forward-looking statement. It is important to note that this communication may contain forward-looking statements which represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects. These statements are not guarantees of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. For a more detailed listing of the risks and other factors that could affect future results, please refer to the forward-looking statement contained on our Form 8K that was furnished last night to the SEC and the risk factors section in ISG's Form 10K covering full-year results. You should also read ISG's annual report on Form 10-K and any other relevant documents, including any amendments or supplements to these documents filed with the SEC. You'll be able to obtain free copies of any of ISG's SEC filings on either ISG's website at www.isg-1.com or the SEC's website at www.sec.gov. ISG undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances. During this call, we will discuss certain non-GAAP financial measures which ISD believes improves the comparability of the company's financial results between periods and provides for greater transparency of key measures used to evaluate the company's performance. The non-GAAP measures which we will touch on today include adjusted EBITDA, adjusted net earnings, and the presentation of selected financial data on a constant currency basis. Non-GAAP measures are provided as additional information and could not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the reconciliation of all non-GAAP measures presented to the most closely applicable GAAP measure, please refer to our current report on Form 8K, which was filed last night with the SEC. And now, I'd like to turn the call over to Michael Connors, who will be followed by Bert Alfonso. Mike?

Michael Connors Thank you, Barry, and good morning, everyone. Today, we will review our record results for the fourth quarter and full year. our continued recurring revenue growth, our new enhanced amended credit facility, and our outlook for the first quarter. ISG delivered our best quarterly and full-year performance in our 17-year history. For the quarter, ISG delivered record revenues of $74 million, up 11% in constant currency, record net income of $4.3 million, up 20%, Record earnings per share of $0.09. Record adjusted earnings per share of $0.13. And record adjusted EBITDA of $11 million, up 9%. Our key metrics were equally impressive for the full year, with record revenues of $286 million, up 8% in constant currency. Record operating income of $29 million, up 17%. record net income of $20 million, up 27 percent, record adjusted net income of $27 million, up 18 percent, record earnings per share of 39 cents, record adjusted earnings per share of 53 cents, and record adjusted EBITDA of $43 million, up 11 percent. Our record four-quarter and four-year results were accomplished despite an uncertain macro environment and fewer working days in Q4, normally a seasonally lower quarter for ISG. But our diverse and valued suite of products and services, from cost optimization to business transformation, is making a difference in our performance. Looking at the fourth quarter, our top-line growth was driven by double-digit operating growth in both the Americas and Europe. as client demand for efficiency and optimization services escalates. We also saw strong growth for our subscription services in research and governance, and in network and software advisory services during the quarter. Our recurring revenues in Q4 reached $30 million, up 26% over the prior year, and represented 40 percent of our firm-wide revenues. For the year, we achieved $108 million in recurring revenue, surpassing the $100 million goal we set for ourselves back in 2020. Not surprisingly, FX continues to chip away at our reported results. For the quarter, the impact of revenue was 447 basis points, or $3.2 million. and $13 million for the full year. Overall, our more profitable mix of products and services, combined with the operating efficiencies we derived from our ISG Next operating model, resulted in the highest full-year EBITDA margin in our firm's history at 15 percent. From a client perspective, we served 556 clients in Q4, up 6 percent, and surpassed 900 clients for the year, a new high for our firm. Today, nearly every one of our clients is a digital business. Each is using digital technology to redefine how they operate, how they engage with customers, employees, and business partners, and how they create new revenue streams through connected products and services. Even in uncertain times, our clients remain committed to continuous digital transformation. Markets and technology are changing fast. There's really no time to hit pause. Every business needs to keep moving forward or be left behind. With intense market pressure to invest in cloud, analytics, customer experience and AI, Our clients are turning to ISG to help them optimize their costs, not only to get lean, but to free up resources to fund their digital ambitions. To meet this need, ISG introduced a wide-ranging cost transformation service that builds upon our longstanding expertise in this area. very successful today, focuses on the four key levers to optimize cost. The supplier ecosystem, technology investments, software asset management, and business operations. This approach delivers both short and long-term efficiencies and reduces the peaks and valleys of traditional linear spin models. As I mentioned, these continuous savings can be reinvested in our clients' business, particularly for ongoing digital transformation. This is another example of how our 17-year history of being the largest sourcing advisor in the world is paying off. Revenues from our cost optimization services are growing by double digits. Among our major engagements, we are helping a global healthcare solutions company reduce its $40 million of technology costs by 25%, and an automotive supplier reduce its $140 million spend by 20%. There are many more such opportunities in progress and in our pipeline. Turning to our regions, the Americas delivered $44 million of revenue in the quarter, up 12% versus the prior year on the strength of our digital and cost optimization offerings. During the quarter, we saw double-digit growth in our media, health sciences, energy, and utilities industries. And among our services, network and software advisory, research, and GovernX were also up double digits. Key client engagements during the fourth quarter included McKesson, Stryker, Exelon, and Fiserv. As I mentioned, demand for GovernX, our SaaS-based vendor compliance and risk management platform, is soaring as clients seek to get the most value out of their supplier ecosystems. During the quarter, a global hospitality giant renewed its annual million-dollar-plus ISG GovernX subscription at a higher rate for 2023. This client is one of our longest standing GovernX clients, generating more than $25 million in recurring revenue over the last 10 years. We also extended our ISG GovernX contract with one of the top three global tech giants in the world for a further four years with a significant increase in annual contract value. ISG also won a new multi-million dollar ISG GovernX engagement with a major U.S. healthcare company to provide our unique vendor management office as a service capability. Additionally, ISG Research has signed a large deal worth more than $1.5 million with a leading services tech provider for a range of go-to-market projects and ISG solutions including a multi-year ISG pro benchmark contract. Now, turning to Europe, our Q4 revenues of $24 million were up 12% in constant currency over last year. For the quarter, Europe delivered double-digit revenue growth in our media, public sector, consumer services, and manufacturing industry verticals. and in our GovernX and network and software advisory businesses. Key client engagements in Europe in the fourth quarter included Volkswagen, Deutsche Bahn, Allianz, and Nestle. During the quarter, a leading transportation company in Germany extended the digital labor and automation engagement it awarded ISG in late 2020 for an additional two years. ISG will continue as the client's strategic automation advisor, delivering platform-as-a-service maintenance and licensing services. We also secured a major deal with a global chemicals and industrial solutions manufacturer in Germany to provide network advisory services. Additionally, ISG has been awarded a significant million-dollar-plus engagement with the Swiss Federal Office of Information Technology, Systems, and Telecommunications. We are helping this client optimize their technology portfolio, restructure their underlying cost models, and redefine their organizational structure to ensure lasting improvement. Now, turning to Asia Pacific, our Q4 revenues of $7 million were up 5% in constant currency from last year. with double-digit growth in our network and software advisory business. Asia Pacific has been a strong performer this year, with full-year revenues up 16% in constant currency. In the latest quarter, we saw double-digit growth in our consumer and media industry verticals. Key clients in the quarter included the Australian Taxation Office, High Grieve, and the insurance company Bupa. Turning now to another very positive development for ISG, we recently announced that we were able to successfully amend our $140 million credit agreement at more favorable terms. This was made possible by our strong financial position and operating results. The new agreement converts the previous term and revolving loan into an all-revolving credit facility. It eliminates $4.3 million of mandatory annual principal payments under the former agreement and extends the maturity date by three years to February 2028. This is clearly an excellent outcome, especially during a time of increasing interest rates and a volatile debt market. Now, let me turn to guidance. Continuous digital transformation remains a business imperative, and ISG is ideally positioned to meet that need. In addition, we see continuing strong demand for our services as we help our clients optimize their technology and business environments, design their future operating state, and leverage the technology and services that will help them realize their objectives. Looking ahead to 2023, our demand pipeline remains strong. Indeed, we hired additional employees in Q4 to meet future demand. We are also mindful of the economic factors that could impact the timing of client decision-making, including inflation, the possibility of recession, geopolitical concerns, and talent shortages. In consideration of all of this, for the first quarter, we are targeting revenues of between 73 and $75 million, including a negative FX impact of approximately 200 basis points in this range, and adjusted EBITDA between $10 and $11 million. So, with that, let me turn the call over to Bert, who will summarize our financial results. Bert?

Well, thank you, Mike, and good morning, everyone. As Mike mentioned, ISG continues to have momentum in the market. leading to a record-breaking quarter and year. Revenues for the fourth quarter were $74.2 million, up 7% on a reported basis, and up 11% on a constant currency basis, compared with the fourth quarter last year. Currency negatively impacted reported revenues by $3.2 million versus the prior year. The Americas reported revenues for $43.6 million, up 12% versus the prior year. In Europe, revenues were $23.9 million, up 1% on a reported basis, and up 12% in constant currency. In Asia Pacific, revenues were $6.7 million, down 4% reported, and up 5% in constant currency. Fourth quarter adjusted EBITDA was $11.1 million, up 9% from last year, resulting in an EBITDA margin of 15%, up 33 basis points compared with the prior year's fourth quarter. In constant currency, adjusted EBITDA was up 17% for the full year. Fourth quarter operating income increased slightly to $7.2 million compared with $7.1 million in the prior year. Net income for the quarter was $4.3 million or $0.09 per fully diluted share, up 20% over net income of $3.6 million or $0.07 per fully diluted share in the prior year. Fourth quarter adjusted net income was 6.5 million, or 13 cents, per fully diluted share on a fully diluted basis, up 27% from adjusted net income of 5.1 million, or 10 cents, per fully diluted share in the prior year's fourth quarter. Headcount as of December 31st was 1,599, up 61 professionals, or 4%, from Q3. As Mike mentioned earlier, we added resources to gear up for future growth. Consulting utilization for the fourth quarter was 67%, impacted by our additional hiring. Our full year utilization was 73%. Our balance sheet continues to have the strength and flexibility to support our business over the long term. For the quarter, net cash provided by operations was 6.6 million and 11.1 million for the full year. We ended the quarter with 30.6 million of cash, up from 19.7 million at the end of the third quarter. During the fourth quarter, ISG paid dividends totaling $2 million. Our next quarterly dividend will be payable on March 31st to shareholders of record on March 20th. In addition, we paid 2.5 million related to the C4G acquisition, borrowing 9 million from our revolver to fund the acquisition and business operations. We also paid down 1.1 million of debt. And with our debt balance of 79.2 million, our debt to EBITDA ratio is 1.8 times a record low for year end. Our average borrowing rate for the quarter was 5.1%, up from 1.9% last year. And we entered the quarter with 48.3 million shares outstanding. Mike will now share some concluding remarks before we go to the Q&A. Back to you, Mike.

Thank you, Bert. To summarize, our portfolio of cost optimization, sourcing, and digital transformation services is in the sweet spot for enterprises in today's environment. As a result, ISG delivered our best quarter and full year ever with record-breaking revenues and profits in each period. Our Q4 recurring revenues were up double digits, enabling us to exceed our $100 million full-year target set back in 2020. Recurring revenues were 40% of our firm-wide total in Q4. We navigated FX headwinds and other market uncertainties in the fourth quarter to deliver double-digit operating growth in Europe and the Americas, and Asia Pacific had an outstanding year. Our strong financial position and operating performance allowed us to successfully amend our $140 million credit agreement giving us more flexibility to invest in the continued growth of our firm. And we see our momentum continuing with the potential of another record-setting first quarter. As always, we are focused on creating shareholder value for the long term, and we are steadfast in our mission to deliver operational excellence to our clients. So thank you very much for calling in this morning, and now let me turn the session over to our operator for your questions.

Thank you. If you'd like to ask your question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. When asking your question, please ensure you're unmuted locally. Please limit yourself to two questions. If you only follow up, please rejoin the queue. As a reminder, that's star followed by one on your telephone keypad now. Our first question comes from Vincent Colicchio of Barrington Research. Vincent, your line is open. Please go ahead.

Yeah, thanks. Nice quarter, Mike. Good morning, Vince. Good morning. So it sounds like the strength in the quarter was somewhat similar to last quarter, you know, cost optimization, GovernX, research. I think network advisory was sort of a new area of strength. Does that latter area have legs? And are there any other areas I'm not mentioning that were new source of strength this quarter versus last? And do they have legs as well?

Yeah, good point. So cost optimization and on the digital transformation front continues. And definitely our network and software advisory business reminding us you that the software advisory or all the software that enterprises purchase, whether that's a Salesforce or an Oracle or a ServiceNow, et cetera, we help them navigate the number of licenses, the value, the pricing, et cetera. Clearly, that fits right into cost optimization. And then network, which is a large spend, sometimes the third largest tech spend in a lot of the large enterprises around the network around 5G, around data, voice, et cetera, does have legs. We had an outstanding fourth quarter in network and in software, and we see both of those fitting right in to the current environment, both in Europe and in the U.S., so we see a lot of legs there. And our recurring revenue streams with our platform business like GX and our research, we see continued strength there as well. You couple that together with, I think, a pretty strong demand environment for the services and the suite of services that we currently have is kind of pushing us to where we are in the early part of 23.

And what were the major margin improvement drivers? Was it the mix? And if so, will that mix also benefit you in 23?

Well, I would say the first thing is, you know, our recurring revenues were $30 million. We've never been at that level. And Vince, you've followed us for a while. You'll go back maybe four or five years. We might not have had $30 million of recurring revenues. So having in the quarter number one that our recurring revenues are, you know, are a clearly higher margin. So as that continues to expand, it's you know, 100 million of our business now, and that will continue to definitely grow. So I think that and the mix that we have with our, you know, kind of digital transformation, which we can still sell at good premium, you know, levels, I think our margins, you know, should continue to be healthy as we move forward.

Okay. Okay. And then lastly, what are your thoughts on acquisitions currently and does pricing come in to make it a more attractive area to focus on capital this year?

Yep. So we, as you know, we did two last year with agreement and change for growth. We are on the hunt. primarily around, you know, recurring revenue streams and around digital. And we are in the market. And if we find something that, you know, is a win-win for us as well as the target, then we will execute on that during 2023. So we see the market, you know, most of ours are sole sourced. And so it's a bit of a dance, and it's both an economic, you know, as well as kind of an emotional sale because all these teams tend to be owner-operated, the ones we are interested in. But we think the market is in pretty good shape out there, and we have our sights set.

Okay, thank you. I'll go back in the queue. Nice job.

Thanks a lot, Vince.

Thank you. Our next question comes from Mark Riddick of Sidoti. Mark, your line is open. Please go ahead.

Hey, good morning.

Hey, Mark. Good morning, Mark.

So I wanted to touch on a couple of things, and thank you for all the detail, and congratulations on getting the agreement done, which is certainly encouraging and certainly in these times. I was wondering if you could talk a little bit about with those agreements, you know, those activities of clients looking for cost savings solutions and the like. I was wondering if you could talk a little bit about sort of how you're seeing that shift play out and, you know, whether or not there are any particular industries that have been maybe more at the forefront of that process than others or sort of how you're sort of seeing it. I mean, you're active in all industries and all geographies, so I was kind of wondering if some were sort of leading the charge more so than others. Yeah.

Yeah, no, good. Thanks, Mark. Good question. Let me give you a couple of examples, and then I'll talk specifically about the industry. So I'll give you two. One, CIO, very large top five insurance company globally called, and they asked us that, look, they have $225 million of application expense Do we think that that's the right number? And if so, if not, do we think that we could take out at least 20% or 40 million plus out of that? And so we said, look, let's come in. We'll do a quick assessment for you. We'll benchmark it against our data and we'll see what we can do in terms of our recommendations on application kind of rationalization. That's very typical. That'll be 20, 25 weeks worth of work. And based on our assessment, we think we'll take $50 million of cost out. He, in this particular example, wants to take that money and move it over into digitizing a number of their processes in this particular insurance company. So that's one example. There's another example, a large bank. A large bank does a lot of training on regulatory and on compliance. We have a new service we launched last year called Training as a Service, TAS. And we're taking one of the top four banks in the world, and we are basically going to operate their training as a service on a fixed-fee multiyear contract. Why? Because of the number of people, the turnover, the cost associated with it, and we could do it more efficiently for them. So there's another flip of that. So if you look at the industries from a, you know, which ones I would say are the hottest at the moment, health science is very hot. So think about healthcare and pharma, that area very hot. I would say call it 20% plus growth. Manufacturing back. Why? Because of efficiency and optimization. You see some of the large major automobile companies doing some reductions or doing some buyouts. Why is that? They're trying to get more efficient. That's up 20%. Media and the tech industry out west here. up almost 40%, again, on a cost optimization. I mentioned in my remarks one of the top tech three companies in the world has moved higher into our GovernX compliance regulatory governance areas. The private equity channel is also very hot for us where we help them do two things, on their targets and also on their exits or sprucing up their current portfolios so they can prepare for an exit. It may be a year away based on the market. And finally, I would say the public sector market. The public sector globally is in pretty strong shape. It varies sometimes by quarter because of the timing of their RFPs, but the public sector is also an area that we are seeing a lot of kind of automation, digitization, sourcing efficiencies being done now. So those would be the highlighted kind of industry segments I think I would mention, Mark.

That's really, really helpful. Thank you. And then I was wondering as far as your comments on the sort of hiring that took place during the fourth quarter, that clearly gives an indication of the demand that you see in front of you or you expect to see. Did that continue into the new year, or is there a little bit of a pause after that, or how should we be thinking about additional hiring applications? And then I'll get back to you. Thanks.

Yeah. So we hired about 60 people in the fourth quarter. We hired about 50 in the third quarter. We did hire January, February. We now think that at the levels we are, roughly, I'll call it. After the January, February hiring that we did, we think we have kind of the portfolio we currently have. Well, I'm sure we'll do some surgical things. We're bidding on a piece of business at $4 million. That's going to require some incremental talent if we win it. So those kinds of things we would add. But I think kind of the you know, we're in the 1600 employee level, probably 1650 or so. But we think kind of in that range for the next few quarters is probably the right range, unless we do win some of the large bids that we have out there that they may change that a little bit. So we kind of, we hired, I think I mentioned this before, a little unusual for us because we normally try to hire right at moment, but we made the decision based on talent availability in the market and what other firms were doing. We took advantage of it. We brought in talent maybe slightly ahead where it would have some, you know, did have a little bit of productivity downside for the quarter, but we overcame all of that clearly. But that's kind of where we would see it at the moment, Mark.

Excellent. Thank you very much.

Yep.

Thank you. Our next question comes from David Storms of Stonegate Securities. David, your line is open. Please go ahead.

Thank you. Morning. Appreciate you taking my call and congrats on the really strong quarter. Just wanted to start with the recurring revenue side of things. What are some of the key variables that are driving that number higher and how are you thinking about continuing to grow that number now that you've hit that $100 million goal?

Yeah, so good question, David. So first of all, what are the drivers behind? Just to remind you, the key components is our platform business around GovernX, around ProBenchmark, which is a pricing SaaS platform, and certainly our research, which is a subscription and kind of our multi-year agreements. What is driving that, first of all, in the GovernX standpoint is all around regulatory, it's around compliance, and it's around governing the ecosystem, which has become much more complex kind of post-pandemic as companies have broadened out their supplier community. The ecosystem gets bigger, it gets broader, gets a little more challenging to manage and to govern and comply. and using our SaaS software plus our services that we have in Bangalore, India, one or two people on the ground at the client sites, that combination is driving the growth around that particular platform. Our pro benchmark, which is a pricing platform, is hot because a lot of the tech providers, think of Accenture, think of Capgemini, think of some of the large telecom providers, They all want to understand what the pricing capabilities are out in the market. So if I'm one of the big tech providers and I want to go bid on a large automotive company's piece of work, they want to understand what the pricing capabilities and flexibilities are when they're doing their pursuit. So those are some of the things that are driving as part of our platform growth areas on recurring. On research, Clearly, the need to understand and be informed regarding the emerging technologies, where are the key players around cloud and cyber, workforce collaboration, the tools that are out there. It's more complex. There's more of them. How do they rank? How do they stack? What is our perspective and views on it? We call it the ISG provider lens, IPLs. are all very hot and in demand, and that is driving some of that recurring revenue. So our sense is that we have a portfolio between our research and our platform business that we think we will be able to continue our recurring revenue streams. And we've been working through this just as we did in 2020. Our plan is in May, when we do our first quarter report, We will give you some guidance on kind of what we see the multi-year recurring revenue will be, and we'll probably set another goal for ourselves at that point in time and fill you in then, David.

That's very helpful. Thank you. One more, if I could. You had mentioned that you've assigned a number of GovernX clients. Obviously, you're still bidding on new contracts across your suite. Given the current macro environment, are you seeing any requests for terms in those contracts that might be reflective of companies trying to stay nimble? I'm thinking like short contract lines, maybe not asking for a full suite of services, anything like that?

Not in our GovernX. I would say that there might be a little bit of an elongated process to get it closed. And that's usually driven that when this environment happens, usually it takes a few more layers of approvals that maybe it didn't happen before. So the sales cycle can be a little bit longer, David. But I would not say that the term of our agreements would be less. But certainly we would see and can see a little bit of a longer sales cycle. And we see approval levels kind of requiring a little more extra layers than we maybe not have if you don't have the macro environment at the moment.

That's excellent. Thank you. I'll jump back into you.

Thank you, David.

Thank you. Our next question comes from Joe Gomez of Noble Capital Markets. Joe, your line is open. Please go ahead. Hey, good morning.

This is Joshua Zoltel to fill in for Joe Gomez. I want to congratulate you guys on the quarter as well as the year.

Thanks very much.

So I just wanted to start off with, I know your revenues kind of came in slightly higher than you guys expected last quarter. Was this just kind of like a lower FX headwind or was there kind of something a little bit more to that, maybe more recurring revenues?

Yeah, I mean, I think it's twofold. Number one, I think the mix of our cost optimization Services are in increasing demand, number one. Our platform services are fitting into kind of the sweet spot, if you think about it from an optimization standpoint. If you're dealing with an ecosystem of suppliers and you're a large multinational, multibillion-dollar enterprise and your ecosystem is larger and broader, You want to have a good understanding of the capabilities and what they're delivering. Are they delivering what they said they were going to deliver? Can I spruce that up or streamline that a bit? So those are the things that are kind of driving, you know, I would say are driving that area. That's probably how I would answer that question.

Okay, yeah, perfect. Thank you. And, you know, we're looking through the press release. I didn't notice anything just regarding share purchases in the quarter. Is this kind of due to that change for growth acquisition? Like kind of what are you guys' plans for share purchases going into this new year?

Yeah, I think you've had it exactly the way we thought about it. We were very focused on the acquisition during the quarter. We concluded that at the end of October. And we, you know, we chose to, you know, use our cash proceeds from cash flow on that one. We also think that in this environment, holding a little bit more cash probably serves us well. And, you know, our thinking around buyback isn't any different. You know, our strategy over time is to avoid dilution from stock comp, and we don't do that quarter by quarter, but, you know, that's our long-term objective as part of our capital allocation. You know, it's exactly the way you're thinking about it.

Okay, perfect. Yeah, thank you. And just lastly, if I may, I know you guys kind of briefly kind of hinted at something like a pretty, like a large, like enterprise and UK operations change or growth last quarter. Is that something that you're still looking into maybe this year?

I'm sorry, you broke up just a minute. Just say that one more time.

Oh, sure. So I know you guys briefly mentioned something regarding just UK operations for the change for growth. I know you guys were wanting to create something more like a large enterprise or something along those lines. Is that something you guys are kind of looking at going into the year still?

No, not in operations per se. You know, the change for growth business was a U.S. domestic business. We do have organizational change management across both the U.S. and Europe. Obviously, it's bigger in the U.S., and so we see this acquisition as a way with more resources and more capabilities to expand further in the U.K. and media market in general, but not necessarily setting up anything other than what we have today, which is we have resources on the ground. We just see it as a way to expand further. that business more globally than what we have today.

Okay, perfect. Yeah, that clears everything up. Thank you guys so much. Congrats again.

Thank you.

Thank you. As a reminder, if you do have any follow-ups, please press star followed by one to rejoin the queue. Our next question is from Michael Matheson of Singular Research. Michael, your line is open. Please go ahead.

Congratulations on those numbers, gentlemen. Great quarter, great year. Regarding some of the longer sales cycle that you described yourself beginning to see, are there any particular industry verticals where you see more of that than others?

No, good question. I think the answer is no, and I only commented on it based on the question that was there. I would say it's not prevalent on the elongated sales cycle. There is a little more multiple layers of approval, so it does take it a little bit longer. But I don't think there's any one industry that is longer than the other. I just think it takes a little bit longer. But having said that, you can see through our results, none of that really stopped our demand environment and delivering what we are delivering. Now, it might change something being sold in a March versus an April or something like that, but it's not going to stop at sale, if you will, because right now the suite of services that we have are right in the sweet spot of what people are looking to do. I gave a couple of examples with the insurance company and the others. So there's a lot of movement to trying to take costs out but to take it out and move it into something that they can help try to drive growth on the top line, the digitization, the customer experience areas, analytics to help them better understand, modernizing technology, as I mentioned to you earlier, the example with the applications. So no industry-specific, I would say, on that, Michael.

Okay, great. Thank you. One last question. You mentioned a new service, training as a service. I just respond, it's a great idea. I wonder if it's something that you can leverage to other banks or potentially other industries like brokerage.

Yeah, look, it's a very good question, and it's emerging, and we think this is beyond just financial services. We are... in the process of concluding and signing another large financial services firm. But I would also say we have moved this now into the health sciences area. As you know, there's a lot of kind of compliance around drugs, et cetera, and we are beginning to get traction in that area. So we think that this is a multiple industry solution. It's emerging, but we think this could be a fast-growing segment for us over the next two to three years. So I think you're on the right track there, but I think it's not only financial services. We're seeing it now in health sciences, and we think there's a few others that will take us up on this as the year progresses. And I'll keep everyone posted on this.

Good luck with that. Again, it's a great idea. Thank you for taking my questions.

Yep. Thanks, Michael.

Thank you, Michael. As a reminder, if you wish to submit a follow-up question, please press star followed by one on your telephone keypad now. I see we have a follow-up from David Storms of Sterngate Securities. David, your line is open. Please go ahead.

Hi, yeah, just one follow-up. Do you guys have any thoughts on, from a CapEx perspective, if there's anything unusual we should be keeping an eye out for in 2023?

No, David, I would say, you know, overall, we're very lean on capital. We have very little real estate, and our capital tends to fluctuate between 2 and 3 million. It was a little bit higher in 22. You know, we upgraded some of our accounting and HR systems, but it's been fairly consistent. It's a low capital requirement business, which helps us in terms of cash flow. So I would say nothing extraordinary, and that's the range that we generally budget for, and it's been very consistent over the last couple of years.

That's very helpful. Thank you, and congrats again on a great year.

Thank you.

Thanks, David.

Thank you, David. At this stage, we currently have no further questions, so I'll hand back over to the management team for any closing remarks.

Well, thank you, and let me just close by saying thank you to all our professionals worldwide for their dedication to our clients and for working together as a global team to achieve our record fourth quarter and full year results. Our people have a passion for delivering the best advice and support to our clients as they continue their digital journeys, and I could not be prouder of them. And thanks to all of you on the call today for your continued support and confidence in our firm. Have a great rest of the day.