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spk01: Good morning and welcome to the Accela Technologies second quarter 2021 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to William Mena, Investor Relations. Please go ahead.
spk06: Thank you, and good morning, everyone, and welcome to the Accela Technologies second quarter 2021 conference call. I'm joined today by Ron Cogburn, Accela's Chief Executive Officer and SRECON Sorter, or Chief Financial Officer. Following prepared remarks made by Ron and SRECON, we'll take your questions. Today's conference call is being broadcast live via webcast. which is available on the Investor Relations page of Accela's website at accelatech.com. A replay of this call will be available through August 17, 2021. Information to access the replay is listed on today's press release, which is also available on the Investor Relations page of Accela's website. During today's call, Accela will make certain statements regarding future events and financial performance that may be categorized as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements reflect management's current beliefs, assumptions, and expectations as of today, August 10th, 2021, and are subject to a number of factors that may cause actual results to differ materially from those forward-looking statements. We undertake no obligation to update any statement that reflects the events that occur after this call, and actual results could differ materially from any forward-looking statements. For more information, please refer to the risk factors discussed in Excel's most recent periodic report on Form 10-K, along with today's press release and the company's other filings with the SEC. Copies are available from the SEC or the investor relations page of Excel's website. During today's call, we will refer to certain non-GAAP financial measures. We believe these non-GAAP financial measures provide additional information on how management views the operating performance of our business. Reconciliations between GAAP and non-GAAP results we discussed on today's call can be found on the investor relations page of our website. Please note the presentation that accompanies this conference call is also available on our website. With all the mandatory regulatory FD disclosures out of the way, I'd like to turn the call over to our CEO, Ron Cogburn. Ron, please go ahead.
spk03: Good morning, and thanks, everyone, for joining us on our second quarter 2021 conference call. I would like to take a moment and thank some folks. On behalf of the Board of Directors and our employees, I want to thank our shareholders, new and existing for the confidence and support that they have shown recently we are inspired to build upon our recent reported performance for a brighter future we are also grateful to our 18 000 employees globally who have been on the front line taking care of business and winning the hearts and minds of our customers today i would like to focus on three key takeaways first Excel is strong position in a large market where we have significant opportunity for growth. This opportunity is enhanced by our recently launched digital solutions for small and medium business segment where we are seeing strong growth and plan to accelerate our strategy in the coming quarters. Second, Excel is improving fundamentals. Our revenue base is stable and our pipeline reflects multiple avenues of growth. In addition, our profitability metrics are improving as we continue to focus on our efficiency plans. This is evident in our strong gross margin and EBITDA margin expansion in Q2. And third, Excel has improved liquidity position and strong financial flexibility. We have delivered on our November 2019 plan, achieving our liquidity target ahead of schedule and reducing our net debt by over $140 million. So with that, let's begin on slide number three with an overview of Accella's investment highlights. We have discussed various iterations of this slide on prior calls because it underscores our strong position. Accella is a leader in business process management solutions globally. We serve a large and growing total addressable market estimated at $207 billion. and we see significant incremental opportunity for an even larger SMB market where we have experienced strong growth since our entrance into the space in late 2020. Our extensive investments in our technology and numerous patents serve as a competitive moat and position us well to win with solutions that drive digital transformation and automation. We serve over 4,000 customers across 14 industry verticals, including 60% of the Fortune 100. So our customer base is not only large and diverse, but we work with some of the largest blue-chip companies in the world where we have long-tenured relationships. And finally, with decades of industry experience, we believe we have the right management team in place to capitalize on significant opportunities that we see ahead. Now let's turn to slide number four. Slide number four underscores our strong market position by highlighting the scale, reach, and the criticality of the services we provide. As you can see from this slide, our solutions help power critical business operations that touch the everyday lives of the majority of the population in the countries that we serve. The facts presented here demonstrate our ability to handle critical business processes at a tremendous scale, which is important This is something that sets us apart from the market. Furthermore, our digital transformation and automation, as well as our BPA solutions, are not only an integral part of our customers' core day-to-day operations, but they also facilitate increased efficiency. This is a powerful value proposition, which helps us drive our long-tenured blue-chip customer relations. Let's turn to slide number five. I would now like to discuss some of the second quarter highlights. Total revenue for the second quarter was in line with our expectations at $293 million, down modestly from Q1. Variations in our revenue mainly reflect continued COVID-19 impact, offset by the increased stabilization achieved after pruning non-strategic contracts. I'm pleased to say that we're seeing good momentum in our business, Our ACV renewal rates improved to 95% in Q2. We have added new statements of work across many of our key customers as well. The public sector is showing potential for solid growth, and the SMB vertical is exceeding all of our expectations. Now, here's an important fact worth noting. We generated adjusted EBITDA of $51 million in Q2. up approximately 10% sequentially and 18% year-over-year, and in line with our pre-pandemic adjusted EBITDA in Q4 of 2019. We find this noteworthy considering the current COVID-19 headwinds and believe it further underscores our continued efforts to increase our profitability. Also, we delivered strong margin improvement in the second quarter, Our Q2 gross margin was 28.6%, an increase of approximately 616 basis points sequentially and 722 basis points year over year. Our adjusted EBITDA margin was 17.4%, an increase of 189 basis points from last quarter and 336 basis points from Q2 of 2020. As we have mentioned in the past, with facility consolidations, we continue to utilize our work from anywhere model, as well as implementing additional automation technologies in our business. As a result, our operating profits increased by $21 million in Q1. Since the beginning of 2021, we have raised total gross proceeds of $224 million through our equity offerings. These transactions, combined with our strategy to reduce cost, increase efficiencies, have enabled us to reach total liquidity of $158 million as of August 6th, achieving our liquidity target range of $125 to $150 million as promised in late 2019. In addition, our efforts provided us with the capital to repurchase a portion of our outstanding debt Our net debt as of August 6 stood at $1.297 billion, $140 million reduction year to date. We ended Q2 with approximately 18,000 employees, and we expect our headcount to increase in the second half to meet the rising demand. Now let's turn to slide number six. I'd like to update you on our progress with the small and medium businesses, or The SMBs. The stats that you see on this slide give us confidence in the success of our current SMB offerings. Since our entrance into this segment in late 2020, we have seen consistent strong growth in the number of new SMB customers in our digital mailroom and new users of our dry sign solution. In the second quarter, our digital mailroom SMB customers grew 99% sequentially. and our dry sign users were up 144% from Q1 of 2021. With the launch of DMR in the United Kingdom in Q2 and launches in France and Germany this month, as well as the recent launch of dry sign in India, we expect our strong momentum will continue. With the success we have achieved in the SMB space so far with our DMR and dry sign solutions, we plan to add additional solutions to the SMB market across the Americas, Europe, and Asia, which we will discuss in the near future. Now let's turn to slide number seven. I'd like to focus on our Q2 segment results. We delivered strong sequential revenue growth in our healthcare solution segment of 10%, reflecting improved volumes due to new statements of work, New customer ads and a larger backlog. Our legal segment also had a nice quarter with 14% growth from Q1 of 2021 and 26% growth over last year. Our ITP segment had lower volumes due to COVID-19, but are slowly coming back as people return to work. And we continue to believe we are well positioned to see volumes and revenue improvement in this segment once the COVID-19 slowdown subsides. Overall, our current revenue base is stable and diversified from a customer, industry, and geographic standpoint. Our backlog is substantial, and our pipeline growth remains strong. This gives us increased confidence in our 2021 outlook, which we reaffirmed today. Now let's move to slide number eight. We have deep and trusted partnerships with over 4,000 customers worldwide. we believe we have only scratched the surface in terms of the potential market opportunity. As I mentioned before, and as shown on this slide, we currently serve a massive $207 billion total addressable market. In addition, we expect to further expand our TAM and growth opportunity by going after the small and medium business market, which I discussed earlier. The SMB market is enormous, representing over 400 million companies globally, and an estimated $676 billion in 2021 IT spend. So in closing, the items that brought us a successful quarter will continue to be our focus by having the right assets, technologies, and team in place to capitalize on our growing global team. We will continue to execute on our efficiency and operational improvement plans, to drive further margin expansion. We will also continue to focus on strengthening our balance sheet and financial flexibility. We remain positive with the global economy recovering and the customer sentiment becoming more optimistic. Our revenue base is stable and our pipeline is strong and we're seeing great results in the SMB market. In the second half of 2021, as the impacts from COVID-19 continue to normalize, We expect our results to also benefit from an improvement in volumes and renewal rates. I'll now turn the call over to our CFO, Sriyakant Soarcher, to run through the numbers and our guidance in more detail. Sriyakant? Sriyakant Soarcher Thank you, Ron.
spk02: Good morning, everybody. Thank you for joining the call this morning. In my prepared remarks, I will take you through our consolidated results and segment revenue. provide an update on our balance sheet and liquidity position, and discuss guidance for the full year. Overall, we are happy to report strong sequential and year-over-year gross profit margin and adjusted EBITDA as well as adjusted EBITDA margin expansion and good execution of our balance sheet improvement plans. As we have done in the past, we are reporting both GAAP and non-GAAP numbers. The reconciliations are in our filings and in the appendix of the presentation. Let's start on slide 10 and review our second quarter 2021 results. Revenue for the second quarter totaled $293 million, a decrease of 2.3% sequentially and 4.8% year over year. Revenue for our ITPS segment was $217.3 million, a decrease of 6.3% from Q1, and 10.6% year over year. This decline is primarily driven by lower transaction volume due to the continued impact of COVID-19 and delayed onsite work that impacted the ITPS segment. Our healthcare solution segment revenue totaled 56.2 million, an increase of 10% sequentially and 14.2% year over year. The increase was primarily driven by new statements of work, client growth, and increased volume from existing clients due to a larger backlog. Lastly, our legal and loss prevention segment revenue was $19.5 million, up 14% from Q1 and 25.8% year-over-year, signaling an improvement and more predictability. Moving on to our profitability metrics, our gross profit increased by approximately $16.5 million, or 24.4% from Q1, to $83.9 million, reflecting our ongoing focus on cost management. This also includes $3.5 million gain from a derecognition of an operating lease liability due to production facility lease termination. Our gross profit margin for the second quarter increased 620 basis points sequentially and 720 basis points year-over-year to 28.6%. SG&A expenses in Q2 totaled $36.4 million, down 13.1% sequentially, representing 12.4% of sales. We delivered lower sequential and year-over-year G&A costs despite higher professional fees and advisory costs, mostly related to our equity offerings, which we expect will decline in the back half of the year. We delivered adjusted EBITDA for the second quarter of $50.9 million, up 9.6% sequentially and 18% year-over-year. Our adjusted EBITDA margin for the second quarter was 17.4%, up 189 basis points from Q1, and 336 basis points from the second quarter of 2020. Our Q2 margin expansion benefited from cost efficiencies, which I just mentioned, including our deployment of work-from-anywhere solutions, which have helped reduce our real estate facility costs as part of our multi-year facilities plan, and cloud deployments, which are benefiting our IT infrastructure expenses. Capital expenditures in Q2 were 2 million, or 0.7% of sales, in line with our expectations finally our liquidity for our credit agreement was 158 million as of august 6 2021 consisting of 136 million of cash 22 million of availability under global credit facilities this does not include the 24 million of as ad backs for fees paid for advisory and professional services through june 30th 2021. Please note our June 30th, 2021 balance sheet cash excludes 160 million of net proceeds from the ATM equity offering due to timing difference for transactions that closed on June 29th and 30th and settled on June 1st and 2nd respectively. A detailed view of our second quarter as well as our year to date June 30 results can be found on slide 13 for your reference. Turning to slide 11, The breadth and diversification of our revenue and industries serve as a significant strength for Excella. Two key points that I'd like to make with this slide. First, we have long tenured and trusted partnerships providing critical solutions to thousands of customers that cut across every major industry vertical. This enables both stability with our existing customers and gives us tremendous points of reference with prospective customers. Second, with low customer concentration and deep vertical expertise in industries that have the strongest projected growth, like banking, financial services, insurance, healthcare, and tech, we are well-positioned for growth, especially as the global economy continues to recover post-pandemic. Our high-margin DAG business represents 8% of the total revenue. Moving to slide 12, I'd like to discuss our recent equity offerings and strategic leveraging in more detail. This slide is a powerful presentation of our successful execution of the previously announced strategic initiatives. We are very pleased to report that the equity capital markets have resonated with our conviction in the company and its growth plans, and our current liquidity of $158 million has exceeded the target of $125 to $150 million announced in Q3 of 2019. We'll continue to be focused on strengthening the balance sheet. As Ron mentioned, Since January 1st of this year, XLA has raised $224 million of aggregate gross proceeds from three equity offerings. On March 18th, we completed a common stock and wardens offering for $26.8 million of gross proceeds. On June 30th, XLA completed the sale of shares of common stock in an at-the-market or ATM offering for a total of $99.2 million in aggregate gross proceeds under the $100 million ATM program. And as of August 9th, 2021, Excella completed the sale of shares of common stock in an ATM offering for 98 million in aggregate gross proceeds under the 150 million ATM program. Excella has approximately 52 million remaining under this previously announced 150 million ATM offering. Utilization proceeds from our equity offering, we completed debt buyback of 59.1 million. We are pleased with the progress they have made this year against our liquidity improvement and debt reduction plan. This strengthened our balance sheet by reducing our debt and increasing our cash and lowered our annual interest expense burden, resulting in increased financial flexibility to pursue growth and value creation opportunities. Moving on to slide 14, I would like to summarize our key business and operational updates. As Ron mentioned, our revenue base is stable and we see several areas of business momentum. We have added new statements of work across many key customers and also added several new customer logos. Our public sector pipeline is indicating the potential for solid growth. A healthcare business is expected to benefit from rising volumes and backlog clearing, and our SMB growth is exceeding internal expectations. With respect to operating leverage improvement, our GAAP operating profits improved by $21 million from the first quarter on Flattish Revenues. We have increased efficiencies through the implementation of automation tools such as neural networks and intelligent document and data processing, and we have expanded our cloud usage. We've also completed the closure of several facilities, leveraging the success of our work-from-anywhere model. Looking ahead, we expect to drive additional operating leverage from higher utilization as our revenue growth improves. Finally, we have strengthened our balance sheet and increased our financial flexibilities. We completed three equity offerings in the first half of 2021 for $224 million of gross proceeds, which enabled us to strategically reduce our net debt, leading to lower annual interest expense and ultimately higher free cash flows. Our liquidity is at a historic high, and we believe we have sufficient capacity to support anticipated growth as we continue to penetrate our TAM and as COVID has been subside. Turning to slide 15, you will see the takeaways from today's presentation. We have discussed everything on this slide at length today, so I'm not going to cover it again. I would say that we want to thank all of XLS' 18,000-plus team members for their hard work and dedication to our customers and our company's success. We also want to thank our shareholders for their continued support. We'll continue to focus on building upon the positive momentum we generated in Q2 and the second half of 2021 and beyond. Finally, I would now like to touch upon our 2021 guidance. As Ron mentioned, we are rearranging our prior guidance ranges, which include full year 21 revenue to be in the range of 1.25 billion to 1.39 billion, gross margin for 2021 to be between 23 and 25%, adjusted EBITDA margin to be between 16 to 17%, capex levels of approximately 1% of revenue. I'd like to thank you all very much for joining us on the call today. With that, Operator, please open the call for questions.
spk01: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then 2. The first question is from Josh Sigler of Cantor Fitzgerald. Please go ahead.
spk05: Yeah. Hi. Good morning. Thanks for taking my call. Can you speak a little bit about the pace of revenue as we move through the back half of the year and which segments or industries you expect to accelerate volume?
spk02: Sure. Thanks for that question, Josh. As you probably noticed, both our healthcare and LLPS, we have seen sequential and year-over-year growth. We expect to see those trends in those segments, particularly with healthcare. Within ITPS, The positive has been the public sector where we are seeing growth in a few other industries, including commercial utilities and professional services. It's been stable revenue. So we expect the back half of the year where hopefully for bills and payments and some of the other industries where volumes are not yet back up to hopefully pick up as the COVID headwinds start to subside from our perspectives.
spk05: Great. That's super helpful. And then shifting gears a little bit to DAG, how's the build-out of the F&B Salesforce going? And are you seeing any increased traction there? And also, you know, looking further out to the future, which DAG product do you expect to be the biggest source of future growth?
spk03: This is Ron. You know, the DAG question in terms of sales is a good question, Josh. And I With the launch of the DMR and DrySign, those were the first two entrants into the market and we're looking for adoption. And we have seen, as you've seen, the number of users or subscriptions has climbed more than we ever expected. We have dedicated sales force pointing at both of those particular solutions and offerings. And as we mentioned, in the coming quarters, now we've launched it in Europe, France and Germany and India. And as we look at this, we have the Salesforce in place to help manage and drive that. And we're very excited to see how these begin to roll out along with some of the other products that we're going to offer in the second half. And we'll probably have a separate call or a separate announcement on those products, but look forward to sharing that with everybody when we launch those.
spk05: Great. Thanks for the color there. Last one for me. Can you provide an update on your strategic alternatives and just kind of give us a ballpark of how you're feeling in terms of issuing more equity or perhaps completing a non-core asset sale in 2021? Just trying to figure out what kind of strategies the company may take through the back half of the year.
spk02: Sure. You know, Josh, again, a great question, right? An important one. given that there are so many initiatives on our focus on executing, more importantly, as you know, we have laid out targets that we have been able to hit. That gives us a lot of comfort that we are headed in the right direction. That said, the simple way of saying this is we are focused on executing and will continue to do things that led us to post such an impressive quarter, be it on an operating front or from a financial front. So then, in terms of what we want to do with equity and debt in the near-term future, it's really making sure shareholder value is taken into account, create value for the shareholders. We have to balance the cost of capital. We have various things to figure out. Rest assured, we'll provide specific updates as and when they arise.
spk04: Great. Thank you very much, Rekha. No problem. Thank you.
spk01: Again, if you have a question, please press star, then 1. The next question is from Jerry Wang of the Carlyle Group. Please go ahead.
spk07: Hey, guys. Thanks for the questions. Good quarter. Hit a lot of the promises that you made, you know, sometime late last year. Wanted to check in on the ITPS business. It is a bit softer versus the other two. given that you reaffirmed your guidance for revenues for 2021, I guess we're expecting growth in third or fourth quarter. Do you expect that to come more in the back, like in the fourth quarter, or do you expect more kind of balanced growth in the third and fourth quarter?
spk02: Josh, Josh, again, thanks for your question. Since you zeroed in on ITPS, let's zero down on that a little bit. Sequentially, 14.6 million are from a year-over-year, it's 25.8 million or so of revenue drops. Sequentially, it's usually the year-end in our unified communication business. It's the year-end. Sorry, I said Josh. Sorry, Jerry misquoted. So it's the year-end statements that drives a certain seasonality which Sequentially, ITPS revenue was down. That's the major driver. Year over year, as I indicated, ITPS serves to a variety of different industries. We are seeing positive momentum or upticks in volumes in public sector and a couple of other areas. Bills and payments, we are not seeing as much as we'd like to. We hope that it starts to pick up in Q3 and Q4. Where there's additional softness is on the onsite business. As people come back to work, we are confident that that industry or that side of the business will start to pick up. That said, there are projects that are in ramp, particularly there's a material project we expect to ramp late Q3, which is driving our confidence that revenues will be higher in the Q3, Q4 timeframe. As you probably saw, we've had a number of SOWs that we have won. Our Q2 renewal rate has been positive. So some of these things gives us the confidence that the second half of the year could pan out to be where we want from a revenue perspective.
spk07: Okay, great. Appreciate all that color. The, uh, call it the 1 47 of transitional revenues that you quoted, you know, sometimes late, uh, sometime last year, um, didn't mention that as much. Are you largely exited by now in the first quarter of 21 or second quarter of 21? That, you know, the transitional revenue kind of outlined back then is that's done. Granted, there might be some stranded cost still, but the transitional stuff that's, that's gone at this point, you know, GPS.
spk02: Yeah, Jerry, it is. So last quarter, I think I kind of mentioned on a trailing 12 months Q1, we were trending at $145 million or so against a target of $150 million. We are in a similar range for trailing 12 months Q2. It's around $145, $177 million of transition revenue. That said, it's the on-site side of the business where There's higher transition revenue. Some of those exits were in Q3 and Q4 of last year. So one of the reasons you see that ITPS is down, apart from volume compression in the onsite and other sites, it's also a tail-off of the transition revenue. A quick, simple answer to your question is we are seeing the run rate of 145 for the last couple of quarters from a trailing 12-month perspective.
spk07: Okay, good to hear. Your employees, I think you mentioned 18,000 or so in employees. I think you're down to 18,400. Are you still in that same context or are you lower now?
spk02: We are in the same context. It's 18,000 employees, so we're in the same context, Jerry.
spk07: Okay, great. And then really last one, I know you bought back $50 million of debt. Are you looking to retire that or what's kind of the views of the buyback?
spk02: We are evaluating all our options and strategies. The important goal for us is to keep the financial flexibility, to make sure we retain liquidity, and lastly, to make sure it's delivering and we get our debt service cost or interest cost low. In terms of specific strategy about retiring, obviously, it's something that we'll probably share when we have more.
spk07: Okay, fair enough. Would you say the same for the stub piece, the $50 million of ATM left? That is correct.
spk04: Okay, fair enough. Great, thank you. Thanks, Jody.
spk01: The next question is from Alexander Graf of Cowan. Please go ahead.
spk00: Thank you and good afternoon. I just had a question regarding liability management and the near-term maturity with the revolving credit facility. How are you guys thinking about addressing this maturity in light of all the fresh capital that's come in? How are you balancing that with buying back more debt potentially at a discount given current trading levels? Thank you.
spk02: Yeah, Alexander, thanks for the question. similar to what I told Jerry, right? We're going to be strategic about it. More importantly, the good thing, when we have the financial flexibility and when we have the liquidity at hand, as I said, one of the key things that we're going to do is to make sure we protect it, put it to good use, and more importantly, also drive that to achieve some of the other operational and financial targets that we have. Improved margins, stronger balance sheets, keep the liquidity and focus on improving cash flows. That said, in the context of the revolver, you know, it gives us the flexibility based on the liquidity that we have right now, right? So how does it unfold over the next few months or quarters is something that we are thinking through.
spk00: Got it. Great. Thank you. And in terms of the $59 million aggregate amount that you bought back, what's kind of the split between bonds purchased and loans purchased?
spk02: That information most likely will be on our subsequent event footnote in the 10Q. Given that we are not disclosed it anywhere else, we will probably pass on that.
spk00: Okay. Fair enough. Yes. I just want to confirm, the cash number of $136 million, that does not include any adjustments per the credit agreement, right? That's a true cash number?
spk02: That is correct.
spk00: Okay, great. And just on gross margin expansion, up to around 29%, as you mentioned, so roughly I think the delta between 2019 and this year is roughly $18 million. Can you maybe help us quantify that? You had talked about your real estate closures, about four facilities, and certainly employee reductions that have helped in the operating leverage of the business. So maybe just some granularity on how to quantify that would be super helpful via your different cost-saving plans.
spk02: Sure, sure. You know, great question there. And, you know, we are extremely pleased with how Q2 performance came out, particularly from a gross margin perspective. That said, one of the things that I highlighted in our prepared remarks is we had a pickup of $3.5 million or so for a derecognition of a facility that we exited. Again, it's linked to the, A, stranded cost that we are exiting, and, B, the risk the real estate footprint that we are rationalizing. That's one example of where you'll probably see more of those come through. Number two, it's really from a cost perspective, the way to look at it is where we have done a fairly decent job in the last few quarters, and particularly in Q2, is we use the existing capacity to deliver one-time or increased volumes. That kind of gives us a more higher project-based revenues coming at higher margins. Second, capacity expansion happens only when we know for certain that there's going to be a long-term recurring revenue. In other words, we are managing our capacity very well, or you can call it demand-driven capacity management, right? So some of these are helping. That apart, Q2, you know, some of the projects were probably through higher margins, and in general, we experience favorable operating leverage in Q2.
spk00: Got it. Thank you very much for the time. Appreciate it. Most welcome.
spk01: Next, we have a follow-up from Josh Sigler of Cantor Fitzgerald. Please go ahead.
spk05: Hi, guys. Thanks for taking my follow-up. I just wanted to touch on Delta. Obviously, you know, it's spreading throughout the globe. Are you seeing any change or any sort of hesitation from some of your clients and any first take on how that may impact volume moving forward?
spk03: This is Ron. I'll take a crack at it. You know, Josh, it's a good question. You know, we have been in sort of this operational mode now for more than a year. around how you manage COVID-19, how you manage it at a facility, how our customers react to it. So we've kind of had that cadence or that discipline, if you will, around how to manage through those types of impacts. And so the Delta variant certainly is out there, but we haven't seen the kind of reaction that we saw initially from the COVID-19 when it really took hold last year second, third quarter. So we remain optimistic that we'll navigate through any changes that might happen because our customers look at us as long-term partners. I didn't mention it today, but you can look some at the previous calls. Our largest customers, our top 15, 20 customers have been with us more than 15 years. So we have navigated through a lot of rough waters and, uh, We have got their confidence. We brought them through a real crisis last year. So we feel pretty good about where things are headed.
spk05: Great. That's great to hear. Also, I believe in your prepared remarks, you mentioned that you have increased confidence in your 2021 outlook. So what events occurred in QQ that bolstered that confidence and made you feel stronger about your outlook?
spk04: Okay, I'll take that.
spk02: Ron, you can add more color. I think I addressed it on one of the earlier questions, Josh. One, we have a particular project that's ramping up in late Q3. That's one thing. It's the statements of work that we have signed recently that will give us a line of sight and hopefully steady revenue over the next few months and a couple of quarters. It's the volumes coming back up. To your point, the earlier question, are they unknowns as it relates to Delta? Are there other headwinds that we could run into? We're not sure, but it's keeping in mind the Q2 renewal rates that we've had, the projects that are ramping up, and some of the SOWs and volumes that's coming back up.
spk03: That was good, Srikanth. Let me just add, Josh, when we talk about how we forecast, how we look at the future, how we look at the operations of the company for at least 18 months. We have looked at maybe 12 months. We've looked at it from a perspective of when will things normalize. And we have seen in the first two quarters of this year more indications of normal, what we'll call the new normal behavior, save the on-site business. And there's a lot of facilities that in the larger cities that have not come back to work as quickly. But overall, we're beginning to see the signs of things that we hoped for and that we planned for. So I think that, as much as anything, the renewal rates is a testimony, 95% in the quarter for the ACV. So that's a clear sign that people have confidence in what we're doing for them, and we see it as a real positive.
spk05: Great. Thank you, Ron and Srikanth. Thanks for taking my follow-up.
spk04: No problem, Josh. Thank you.
spk01: This concludes our question and answer session. I would like to turn the conference back over to Ron Cogburn for closing remarks.
spk03: Thanks, operator. I'd just like to reiterate the thanks that we have for the shareholders, new and existing, and the support that they've given us and the confidence they have in us. Our employees as well. It has been heroic efforts by those 18,000 employees that have brought us where we are today. Stay tuned for more announcements around the SMB business and some of the solutions that we're going to offer in the near future, and we look forward to seeing everybody on the Q3 call. Thank you.
spk01: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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