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spk00: Good morning and welcome everyone to the Information Services Group third quarter conference call. This call is being recorded and a replay will be available on ISG's website within 24 hours. Now I'd like to turn the call over to Mr. Barry Holt for his opening remarks and introductions. Mr. Holt, please go ahead.
spk02: Thank you, Operator. 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 third quarter conference call. I'm joined today by Michael Connors, Chairman and Chief Executive Officer, and Michael Sherrick, Executive Vice President and Chief Financial Officer. Before we begin, I'd like to read a forward-looking statement. It's 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 in our Form 8K that was furnished last night to the SEC and the risk factor section in ISG's Form 10K covering full-year results. You should also read ISG's annual report on Form 10K and any other relevant documents, including any amendments or supplements to these documents filed with the SEC. You will be able to obtain free copies of any of the 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 ISG 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 should not be considered in isolation or as a substitute for financial results in preparation in accordance with GAAP. For the reconciliation of all non-GAAP measures, presented to the most closely applicable gap 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 Michael Sherk. Mike? Well, thank you, Barry, and good morning, everyone.
spk08: Today we will focus on four areas. First, our record third quarter revenues, including our fast-growing recurring revenue streams. Second, our acquisition of Ventana Research, Third are gen AI engagements and a view of this emerging market. And fourth, an update on the demand environment. ISG delivered its best top-line performance ever in a third quarter with revenues of $72 million. Through the first nine months of the year, we generated a record $225 million in revenue, up nearly 7% on an operating basis. Performance in the third quarter was driven by strong double-digit growth in Europe, and in our recurring revenue streams. Clients are increasingly focused on leveraging technology to improve customer experience and reduce operating costs, a traditional sweet spot for ISG. And this is reflected in our strong pipeline. With that said, client decision-making right now is slower than usual, and spending is being stretched over longer periods of time as clients weigh the impacts of the macro environment and rising geopolitical concerns. We expect the pace of spending on large-scale transformations to pick up again in the new year, when demand is likely to increase. In the meantime, clients are focused on cost optimization and making targeted digital investments that will help them prepare for the next wave of growth. During the third quarter, our ISG Next operating model and disciplined approach to operating efficiency allowed us to improve our firm-wide EBITDA margins by 120 basis points, quarter over quarter. Our team execution remains stellar. We also achieved 19% growth in our recurring revenue streams in the third quarter, driven by an increase in our multi-year contracts and our investments in proprietary platforms and research. For the first nine months, recurring revenues were up 22% to $95 million and accounted for 42% of our firm-wide total. Our focus in this area continues to pay off and will help drive our margin expansion plans over the next two years. ISG is already well-known and highly valued for our industry-leading data on sourcing transactions. our comprehensive market research on the managed services sector, and our market-making influence with buyers of technology and business services. Now we are expanding the reach of our research business with our acquisition of Ventana Research announced yesterday. Ventana is a well-respected technology research firm specializing in coverage of the $800 billion software industry. The firm tracks more than 2,000 software vendors and provides detailed coverage on more than 250 of them. In addition to expanding our ISG research coverage, this move gives us the unique ability to guide our clients' decision-making with proprietary research that now spans the entire software and services ecosystem. Software is an important sector for ISG and our clients. It now represents more than half of global technology spend and growing. Ventana gives us unparalleled coverage of this market, adding to our market-leading coverage of the technology and business services industry. The client list of Ventana Research reads like a who's who of the software industry. ADP, ServiceNow, Salesforce, SAP, and Workday, to name a few. Ventana brings more than 40 unique new clients to ISG and the opportunity to cross-sell our broad array of ISG products and services to them. Beyond adding to our recurring revenue streams, Ventana research is a valuable complement to our existing software advisory business. On the buy side, we have a long history of advising our enterprise clients on software selection and implementation price and feature optimization. Indeed, more than 80% of our advisors are involved in sourcing transactions where software plays a big role. That's particularly noteworthy considering we are the market leader in sourcing advisory. On the sell side, Ventana Research gives us a new growth platform for advising software vendors. We can help them identify client needs in areas such as cost optimization, governance, and tech modernization, and help them hone their go-to-market approaches. We are excited to add Ventana Research's capabilities to our portfolio and welcome Ventana founder and CEO Mark Smith and his nearly two dozen experienced industry analysts to our firms. Now a brief look at the active role ISG is playing in the hot new area of generative AI. Our clients are increasingly exploring and testing concepts to utilize generative AI in their businesses. ISG is involved in a number of these initiatives, including we are advising a large US metal resources firm on using generative AI to forecast the demand and price of minerals on a monthly basis. We're advising a state auditor on creating Gen AI foundational models to identify fraud, and advising another client on creating guidelines and frameworks to control Gen AI for ethics, bias, and data poisoning. And we are formulating an ethics and compliance management system for two large U.S.-based insurance firms that will provide guardrails for their Gen AI experiments and proofs of concept. In September, ISG released our global research study on the state of applied generative AI from an enterprise perspective. Among many insights, our research shows the first adopters of Gen AI on the commercial side are banking, financial services, insurance, healthcare, travel, and hospitality. It's still early days, but GenAI is starting to gain some traction with the promise of much more ahead as we support our clients in this emerging area over the next few years. Now moving to shareholder returns. Our commitment to shareholders is demonstrated by our discipline management approach that allows us to continue returning cash to our investors. During the quarter, we paid a quarterly dividend for the ninth quarter in a row since we instituted the cash dividend in 2021 and raised it last year by 12.5%. In fact, we have returned $62 million to our shareholders since the start of 2021. As we move through the next few quarters, we will continue to deploy capital in a disciplined way for our shareholders, including accelerating our share buybacks. Our goals remain, by 2025, as part of phase two of ISG Next, We are aiming to expand our adjusted EBITDA margin of further 200 basis points from the end of 2022 to approximately 17 percent. We feel we are tracking to achieve this goal as our product and service mix continues to change. And we will accelerate the growth of our recurring revenues to $150 million after surpassing our previous target of $100 million last year. Now, turning to our regions. The Americas delivered $42 million of revenue up 1% versus the prior year. Year-to-date, revenues in the Americas are up more than 8% on the strength of our digital solutions and cost optimization services. During the quarter, we saw double-digit growth in our consumer, banking, manufacturing, and public sector industry verticals. Key client engagements included Corning, Centene, Carnival, and McDonald's. During the quarter, ISG continued to expand its relationship with a major U.S. utility. This is a multimillion-dollar engagement to support a divestiture and right-size the provider ecosystem for this reorganized company. We also had several significant million-dollar wins in the banking and financial services sector. We won an infrastructure strategy and sourcing engagement with a leading fintech company, and we won new business with a leading pension fund to support the client's selection of technology, operations, and client service providers. In the healthcare sector, we want a large multimillion-dollar technology engagement with a regional healthcare provider to support the client's adoption of an electronic health record system. Turning to Europe, our Q3 revenues of $22 million were up 14% over last year, and through the first nine months, Europe is up 5%. For the quarter, Europe delivered double-digit revenue growth in our health sciences, energy, utilities, banking, and public sector industry verticals and in our research business. Key client engagements in Europe in the third quarter included Excite, New Day, Wintershaw, British Red Cross, and Shell. Following the merger of two high-speed rail operators in Europe, ISG was awarded a significant agreement to rationalize the client's post-merger technology environment, including infrastructure, apps, security, and customer experience. We also expanded our work in the energy sector, securing new business with a major global energy company to provide a range of tech strategy and sourcing-related services for all divisions of this company. And we expanded our work with a European oil and gas company adding $1 million of revenue to support a large SAP S4 HANA project and business transformation. Now, turning to Asia Pacific, our Q3 revenues of $7 million were down $100,000 on a reported basis and up 3% on an operating basis. FX remains a headwind in Asia Pacific. Key clients in the quarter included several departments of the Australian government, as well as such commercial clients as IAG, Australia broadband provider NBN, and the Reserve Bank of Australia. During the quarter, we won a new million-dollar engagement with an Australian lottery company following its spinoff from a gaming company. We are supplying sourcing advisory and benchmarking services to this client and have also signed a contract with its former parent company. Now, let me take a moment on the demand environment in terms of guidance. Cost optimization and our recurring revenue businesses remain ongoing pillars of strength for ISG. Our digital transformation and tech modernization pipeline is healthy, but client consulting projects and spending are being stretched out. We expect the speed of those engagements to reignite in the first half of 2024 as tech spending and market sentiment pick up based on our forecasts. This underscores the importance of technology as a competitive advantage for enterprises. As ever, we remain confident in our future and optimistic about our long-term prospects. Balancing our strong pipeline and the economic factors that could impact the timing of client decision-making and the pace of our execution, for the fourth quarter, we are targeting revenues of between 68 and 71 million dollars and adjusted EBITDA between 9 and 10.5 million dollars. As you know, Michael Sherrick joined our firm this summer as our new CFO. Many of you have already spoken with Michael, but since this is his maiden voyage on our quarterly investor call, I want to officially welcome him to ISG. So let me turn it now over to Michael, who will summarize our financial results. Michael?
spk03: Thank you, Mike, and good morning, everyone. As Mike mentioned, ISG delivered record third quarter revenues. Revenues for the third quarter were 71.8 million, up 4% compared with the third quarter of last year. In the Americas, reported revenues were 42.5 million, up 1% versus the prior year. In Europe, revenues were 22.1 million, up 14% versus the prior year. And in Asia Pacific, revenues were 7.2 million, down $100,000 versus the prior year. Third quarter adjusted EBITDA was $10.6 million, down modestly from the prior year period, resulting in an EBITDA margin of 14.8%, up 120 basis points quarter-on-quarter, and down 80 basis points compared with the prior year's third quarter. Third quarter operating income was $6.2 million, compared with $7.4 million in the prior year. Our net income for the quarter was $3.2 million, or $0.06 per fully diluted share, as compared with net income of $5.6 million, or $0.11 per fully diluted share in the prior year. On an adjusted basis, third quarter net income was $5.7 million, or $0.11 per fully diluted share, compared with adjusted net income of $7.2 million, or $0.14 per fully diluted share in the prior year's third quarter. As of September 30th, headcount was 1,550, down 47 professionals versus the prior quarter. Our consulting utilization continued to increase, coming in at 73% for the third quarter, up nearly 100 basis points year on year. Our balance sheet remains solid and continues to have the strength and flexibility to support our business over the long term. For the quarter, net cash generated from operations was 3.2 million, or a positive swing of 3.5 million from a year ago. We ended the quarter with 18.7 million of cash, down modestly from 19.6 million at the end of the second quarter. We ended the third quarter with total debt of $79.2 million, unchanged from Q2. Importantly, we are comfortable with our debt-to-EBITDA ratio, which remains at 1.8 times. Our average borrowing rate for the quarter was 6.8%, up from 3.6% last year, and we ended the quarter with 48.8 million shares outstanding. During the third quarter, ISG paid dividends totaling $2.3 million and repurchased nearly $1 million of shares. Our next quarterly dividend will be payable on December 20th to shareholders of record on December 5th. And with that, I will turn it back to Mike to share some concluding remarks before we go to Q&A. Mike? Great.
spk08: Thank you, Michael, and welcome again to our team. To summarize, despite a slower spending environment, ISG delivered its best revenue performance in a third quarter with revenues of $72 million. We delivered 19% growth in recurring revenues and 14% growth in Europe. We just expanded our recurring revenue growth engine with the acquisition of Ventana Research, a move that will accelerate the growth of our ISG research business, and we believe generate additional advisory opportunities in the robust software segment. Looking ahead, our pipeline remains strong, and we will navigate the slower pace of client spending over the next several months. But it is clear, cost optimization and all things digital, including generative AI, are top of mind for clients and in the sweet spot for ISG. Our longer-term objectives remain. Deliver $150 million in recurring revenues and increase our EBITDA margin to 17% by the end of 2025. 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 the operator for your questions.
spk00: Thank you. Today's question and answer session will be conducted electronically. If you'd like to ask a question, you can do so by pressing star and 1 on your telephone keypad. If you find that your question has been answered and you would like to remove yourself from the queue, you may do so by pressing the star 1 key again. And again, if you would like to ask a question, you can do so by pressing the star key followed by 1 on your touchtone keypad. We'll pause here for a moment. And we'll go first to Dave Storms at Stonegate Capital Markets.
spk06: Good morning. Good morning, Dave. Congrats on the quarter and, you know, top line revenue. Everything looks great. I just want to start with Ventana. Hopefully it gives us a little more color on what that integration process and, you know, the timeline to get them up to speed looks like. And additionally, if there's any already, if there's any overlap that's already seen between us, your customer base matters.
spk08: Great. Okay. Thanks very much. Well, look, Ventana Research was sole sourced by ISG. We have known about them for some time, and sometimes timing works out great. We were looking for an asset that had great reputation in the software industry and had a team of analysts that people respected, and Ventana Research met that criteria for us. We have over 40 clients, all of which are all brand new to ISG. Our client base tends to be on the managed services side and not on the software vendor side. And this opens up all new incremental opportunities for ISG, including recurring revenues. The other thing that this does is that we have a software advisory business today. That business... is a consulting group that goes into enterprises, assesses what they currently have in terms of software, think about it as Salesforce as an example or ServiceNow, and we look at their spending, we look at the benchmarks, and we help them identify opportunities to either get more efficient, more effective, and make sure that their usage matches up to the cost. This allows us to also now look on the vendor software side and opens up new opportunities for us, not only to sell in research to the software vendors, but we believe opens up new consulting opportunities. So this was white space for us. There's very little overlap. I think literally only four or five clients were revenue-producing clients of ours versus Ventana. And just one point, you know, I think we have a great track record on the research side. We acquired a company a few years back called Experton that was based in Germany. That business was small. It was a couple of million dollars. And we used that engine over in Germany to build it out into a global business that is now considered our ISG provider lens business, IPLs. and the size of that business is six or seven times the size of the asset that we bought. We think Ventano research over time can be like that for us. Hopefully that answers that, Dave.
spk06: Understood. No, that's very helpful. Thank you. And then to turn into cost optimization, it looks like that's really starting to take hold. Can you just kind of walk us through, you know, how much of that may be temporary in response to the macro environment and how much of that that you expect to be dirty going forward?
spk08: So, good question. So, cost optimization, I would call it in a normalized environment, will represent about 30% of our pipeline, 25-30%. Today, that pipeline is more like 45%. And the reason, of course, is I think the macro environment, we're now seeing more intense pressure over in Europe with some of the geopolitical things happening in that environment, which It gets CIOs and others to think about things a little more cautiously. So the cost optimization is everything from modernizing applications and taking costs out to either drop it to earnings per share or still in many cases to use it to help with some of their growth initiatives, whether that's around the user experience or in other areas. So cost optimization, you know, think about it in the kind of 40% plus now in our pipeline and normalize maybe 25%. So it gives you an idea of the magnitude of the interest in the market on the optimization side.
spk06: Understood. Thank you for taking my questions, and good luck in the fourth quarter.
spk08: Thank you, David.
spk00: We'll move next to Mark Riddick at Sedoti.
spk07: Hey, good morning. Hey, good morning, Mark. So I wanted to touch, and congratulations on the acquisition. I was wondering if you could touch a little bit on sort of maybe what this does for your acquisition appetite going forward, and maybe if you could sort of bring us up to speed on maybe what you're seeing out there as to availability and valuations and the like.
spk08: So good question. So from our standpoint, you know, our pipeline, we are focused – on everything around the digital arena or recurring revenues. That's kind of where we are focusing our M&A efforts. We have a terrific track record of being able to bring assets into the firm and scale them using the channels that we have. So, you know, look, I think the overall market is a little more, I'll call it realistic, to balance between buyer and seller in terms of values. But like all of our deals, most of ours are sole source, so ours are relationship-driven. And when you have relationship-driven assets, they take a bit longer to go from beginning to end. But our appetite still remains the same in those areas to complement our overall business. So we think that's in pretty good shape. I think the second part of your question, I think, was around the demand environment. Was that the second question, Mark?
spk04: Right, right, right.
spk08: So on the demand environment, I think there's two things here. Very interesting for us. Our pipeline is as strong today as it was in January. It's very strong, and it's strong around optimization and digital work. The difference we see right now is the timing and the pace that clients are willing to move. So what might have taken us three or four months to complete, clients are stretching those things out to six or seven months. Sometimes when clients would say, let's get started on November 1, they said, you know what, we're gonna wait, we'll start in January. So there's a little bit of a pace that has slowed down and I think it has to deal with everybody kind of weighing how this economy is going to impact their particular business. So the appetite on transformation remains, the pace in which to execute is a bit slower. That's how we would describe it. And I would describe it that way globally.
spk07: Okay, that's very helpful. And then the last thing for me, I was wondering, are you seeing much in the way of differentiated behavior by client industry verticals or is this pretty much across the board? Thanks.
spk08: Yeah, no, good question on the different industry segments. We do see it a bit differently. You know, some are a little more distressed or are planning for a little more distress. Some of them, I would call it in the mid-market to lower market consumer type spending. Luxury side seems to still be moving at a pretty good clip. And so when you look at kind of the different, we kind of do a quadrant study of the industries each quarter for ourselves. And it kind of varies between what certain industry segments need to do to specialize. So using the retail side, kind of mid-market and under, they are looking to rip out costs quickly. And then you have kind of the other side on the banking side, financial institutions are still in transformational stage, and so they are looking to do a lot of that work. We're also seeing a slowdown a little bit on the health sciences area, and because of that, then cost optimization becomes a bit more important for them. Manufacturing has picked up. I mean, it grew for us 9% that vertical during the quarter. So they are picking it up on the transformation side. But I would say the consumer side of things and energy, for that matter, are both in the optimization stage. So it varies a little bit by industry. Very helpful. Thank you, Michael. Congratulations. Yep. Thanks, Mark.
spk00: We'll go next to Michael Matheson at Singular Research.
spk05: Good morning, you guys. Congratulations on the quarter, especially in light of this macro environment.
spk08: Thanks, Michael.
spk05: Good. I noted that you dropped 47% professionals versus the prior quarter. I wonder if you could fill us in on your utilization rate for your consultants in Q3 and how Q4 looks.
spk08: Yeah. Michael, you want to take that one?
spk03: Yeah, I'll take that. So our utilization, as I think we highlighted in Q3, it was 72.5%. So we were up about 80 bps, you know, year on year. As we look at the fourth quarter, I wouldn't expect to see a big change there, even with some of the seasonality we're looking to hold at those levels. And, you know, I think, again, we have room for upside as we head into 2024, assuming we start to see some of the macro rebound as we get into the, you know, the first part of the year.
spk05: Terrific. Thank you for that. My second question, and then I'll leave it at two, is a little bit more theoretical and forward-looking just around your dividend policy going forward. You're paying a much higher dividend than the rest of the market, and now cash is much more expensive. Your cost of financing went up about 300 bps. Going forward, have you thought of slowing down the dividend increases and paying down some of the debt?
spk08: Michael, good question. I think I would not look at kind of the yield with today's stock price too much, if I were you, because clearly our stock is down as a lot of small caps are. But, you know, we will be back to you in the second quarter on our views of what the next dividend will be. But, you know, it likely is not going to be at the same percentage rate because it's, you know, small numbers. But our intention is to grow our dividend each year. But we'll be back to you in the second quarter on that, Michael.
spk05: Okay, great. Well, thank you again.
spk08: Thank you.
spk00: We'll take our next question from Vincent Colicchio at Barrington Research.
spk01: Yeah, good morning, Mike. Good morning, Vince. So I'm curious, what gives you confidence that sales cycles will improve going into 2024?
spk08: Based on our discussions with our clients and the pipeline that we have, we put the two together, and we feel like this is simply for us anyway. This is a pacing of our clients primarily around the digital and the digital transformation side. The cost optimization continues at a good clip, but the transformation is being paced at a kind of longer period than normal. But based on our discussions, I think they're wanting to get through the year. They want to see how the turn of the year is. But all indications for us is that as we get into the new year, whether that's in month one or month three, it'll look a little bit different based on what we can see in our pipeline.
spk01: And the Ventana acquisition, what has been the historical growth? Has it been fairly healthy?
spk08: Yes. I mean, think about our – Recurring revenue growth has been double digits now for some time. Ventana also the same way. But importantly, you know, what we think it does is it opens up a whole new set of client base, 40 new clients that we do not have in the ISG franchise today. And what we can do with those 40 clients over the next year or two we think is very quite healthy. So there's a lot of reasons why we were interested. And importantly, Mark Smith, the CEO, very well respected in the industry, and he has a team of a couple of dozen analysts that we are very strong on.
spk01: Based on my first question, it seems like you can have some organic growth, maybe low, but organic growth next year. Just curious if you could help what Ventana could add to that in percentage terms.
spk08: Well, I think, you know, I think about it, you know, you should think about it in kind of the, you know, 150, 100 to 150 basis points.
spk01: Okay. That's very helpful. And the – your pipeline, you said, is as strong as it was in January. So – That's a very good sign, obviously. Wondering if there's been, in the pipeline, any cancellations or it's just purely delays?
spk08: Ours are delays. We haven't had anybody stop us, but we have had, stretched this out, we've had some things move to start kind of phase two into January versus November. So that's what we are seeing. So that's why we're pretty confident on 2024. We'll see how the pace moves, but with the demand environment and our pipeline the way it is, we feel good about 2024.
spk01: And then one last question. Are you seeing any changes in pricing pressures or better term negotiations right now given the environment?
spk08: That's a good question. I think pricing is a little stronger, not stronger in terms of price, but stronger in terms of negotiation. Again, in this environment, I think everybody wants to get a deal. And so I would say pricing is not, we don't have the premium pricing capacity at the moment that we might have had before this macro took hold, Vince.
spk01: Thanks, Mike.
spk08: Yeah, thank you. Good to talk to you.
spk01: Yes, agreed.
spk00: And next, we'll move to John Gomes at Noble Capital Markets.
spk04: Hey, good morning, guys. This is Joshua with Noble Filament for Joe Gomes. Hey, Josh. Hey, I just want to say congrats on the Ventata acquisition. I just kind of wanted to talk about that real quick, obviously. I just wanted to see if you guys can provide any color just on the terms of the acquisition and if you guys have been talking to any clients just regarding Any crossover services you guys mentioned in the call?
spk08: Yeah, so look, like we do in all of our acquisitions, we paid a little bit of cash up front and then earn out over time with a little bit of stock. The cash up front, think about it, was not large. Think about it in the million-dollar range. But the crossover is what is very exciting for us. As I mentioned earlier, they bring over 40 brand-new clients to ISG. We had zero revenue with. These are all big names in the software industry. So not only will we be able to inform them with a broader array of research products and services, but we're able to bring the whole portfolio of ISG products and services to these large companies because there's relationships there. You know, as I mentioned earlier, I think over the next couple of years, this could benefit us tremendously with these new client assets.
spk04: Okay, great. And just kind of looking at revenue and operating income and net income, obviously revenue came down a little bit lower than guidance, and operating income and net income are kind of down year over year. Can you guys just kind of provide a little bit of color on this? how that came to be.
spk03: Yeah, I mean, to your point, you know, we saw a squeeze as we went down to operating income. I mean, the biggest piece is the shift in the direct costs, as you see, which were, I think, up about $3 million on a year-on-year basis. We also had some severance in that number, in the operating income number, of about $700,000 that wasn't there last year, which is one of the bigger impacts. Those are really the two biggest things to get you down to the operating income level.
spk04: Okay, great. And then lastly, just looking at the Asia-Pacific segment, you know, we were talking about these double-digit growth here earlier in the year, but now it's down this quarter and it's kind of flat in the second quarter. Can you just kind of provide a little more detail about, you know, what's kind of happening in that market?
spk08: Yeah, look, I think our Asia-Pacific market is a great market for us, and I've said this I think over the last few years, at times, there'll be a little peaks and valleys. And it's driven primarily by government spending and its pace. I mean, we just won a very large contract with the Australian Taxation Office. They call it ATO. And great example that those things can start to accelerate or delay. And this one is delayed by a few months. So, you know, they were up 3% on an operating basis. We do have some FX contracts. FX headwind in that market, and we expect that to still have a headwind during the fourth quarter. But that overall market for us is normally kind of a double-digit, you know, driver of growth over time, and we see no reason that can't continue in 24 and beyond.
spk04: Okay, that's it from me, though. Congrats, guys.
spk08: Thanks, Josh.
spk00: And I'm showing no further questions. I'll turn the call back to Mike Connors for his closing remarks.
spk08: Well, look, let me close by saying thank you to all of our professionals worldwide for their dedication to our clients and for working together as a global team to deliver our record third quarter revenues. I also want to extend a warm welcome to Mark Smith and all of our new colleagues from Ventano Research. Our people have a passion for delivering the best advice and support to our clients as they continue their digital journeys, and I cannot be more 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.
spk00: This does conclude today's teleconference. You may disconnect at any time.
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