Earnings Call: Q2 2018

Aug 2, 2018

Welcome to EPAM Systems Second Quarter 2018 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, David Straube, Head of Investor Relations. Thank you, operator, and good morning, everyone. By now, you should have received your copy of the earnings release for the company's Q2 2018 results. If you have not, a copy is available at epam.com in the Investors section. With me today are Coddy Dobkin, CEO and President and Jason Peterson, Chief Financial Officer. Before we begin, I'd like to remind you that there are some of the comments made on today's call may contain forward looking statements. These statements are subject to risks and uncertainties as described in the company's earnings release and SEC filings. Additionally, all references to reported results that are non GAAP measures have been reconciled to GAAP are available on our Q2 earnings material located in the Investors section of our website. With that said, I will now turn the call over to Ark. Thank you, David, and good morning, everyone. Thanks for joining us. Let me begin with a few financial highlights. We delivered a strong 2nd quarter with revenues of $445,600,000 reflecting 27.7 percent year over year growth or 27.1% in constant currency terms. Our revenue growth was broad based both geographically and across all of our industry verticals. In addition, we delivered strong non GAAP earnings per share of $1.01 which represents 26% growth from Q2 of 2017. Let me provide you with a brief update across the key dimensions of our business. Looking at our capabilities and offerings. Last quarter, we talked about enriching our offerings across digital transformation programs and connected digital platforms, which continues to be our key areas of focus with accelerated development of capabilities in intelligent automation, RPA, machine learning and IoT. Additionally, we also talked about expanding our horizons with new offerings around physical product innovation with close connectivity into software controlled ecosystems as well as strengthening our design thinking and business consultancy skills. Finally, we talked about our aspiration to integrate at different levels EPAM consulting capabilities across business, experience and technology disciplines into our mainstream delivery offerings. And as a result to significantly elevate the overall value of the solutions we build for our clients. In Q2, we continued to focus on those areas and are starting to see some results triggered by our new cross functional initiatives in a number of potentially large engagements, as well as the numerous wins of new types of deals because of broad adoption of such of approach. Couple relevant highlights to illustrate. While we were involved for some time in many proof of concept type efforts based on RPA technologies, some of those projects have evolved into much more complex and sizable intelligent automation engagements across several industries. As in the case of any organization, understanding the potential benefits of intelligent automation, realities of implementation in specific corporate environments, maturity and actual functionality of emerging platforms and setting achievable goals within a given time frame is critical and can mean the key difference between reaching the desired outcome or complete failure. This is where we started to bring new value by offering a very practical approach, built in close coordination between our consulting and engineering teams working together to minimize risk and to better predict results. An example of this is the work we are doing for 1 of the world's largest insurance companies. As in many other cases, we started with engineering engagement where we demonstrated our traditional strength. However, this time, we were able to bring our consulting capabilities very early on and expand into a comprehensive business assessment of what the client actually needed to accomplish. We demonstrated at that engagement that we could deliver value through entire end to end automation effort efficiently in a well integrated and practical fashion. As a result, we are currently developing similar solutions in several new much larger areas and helping the client to improve productivity and reduce costs with much higher probability of success. In another case, for 1 of the largest consumer packaged goods brands, an engagement which we started in the data area to build an analytical solution serving revenue and pricing, supply chain, brand management and customer teams. We're starting into the initiative where our engineers and data scientists become part of multiple innovation efforts, utilizing machine learning, natural language and image recognition techniques to bring efficiency via automation to a very new level while improving customer experience based on optimal planogram execution. These types of engagements and many in other areas demonstrate the value we can bring in our ability to help our customers achieve their business goals through real integrated and coordinated efforts of multidisciplinary teams of engineers, designers and consultants. So while well designed and built software is a very critical and major component of the services we deliver, we now bring much more than just that. Moving to our people engagement and capability development. We ended the quarter with over 24,300 delivery professionals, a 19% increase year over year and a net addition of more than 600 production professionals during Q2. Our total headcount ended at more than 27,400 employees. As one of the relevant highlights for the quarter, I would like to share that in June, we expanded our presence in Hyderabad with the opening of our new digital engineering center. This state of the art development facility is designed to enable advanced technical training, R and D and full cycle customer programs, ranging from commercial product development to digital platforms and innovative experimentation. The center is a good example of our continued investment in our people and capabilities and our goal of building a strong network of high quality delivery centers around the globe. As we continue to grow, we are also investing in existing and new locations within the European Union, across Central and Eastern Europe and across other regions of APAC. I would also like to share that is more of what we do for clients is done at or near their locations, this requires us to attract, retain and develop employees in different markets than we used to do before. In some instances, our ability to respond to demand may take longer as we continue to loan and to balance what appears to be a strong year against the investments we need to make to bring the right talent to EPAM. Despite to that, we remain very confident that with the right level of effort in key areas, we will be able to meet these demands. Turning to market and client updates. Rounding out my comments on the Q2 results, we had broad based growth across our industry verticals in the Q2. The drivers of growth remain very consistent in the industries we serve, which include, as shared already today, the themes of digital transformation, an increased focus on customer engagement, product development and driving efficiencies and deeper insights through artificial intelligence, machine learning and analytics. In Financial Services, our largest vertical, we finished the quarter with 30% growth year over year. Travel and consumer grew 30%. Software and high-tech grew approximately 22%. Business Information and Media posted 23% growth. Life Science and Healthcare grew 33%. And lastly, our emerging verticals delivered 32% growth, driven primarily by clients from industrial engineering, energy and automotive sectors. We continue to diversify across our client portfolio by industry, geography and types of engagements. In the Q2, growth in our top 20 clients was approximately 23% and growth outside our top 20 clients was approximately 32% compared to the same quarter last year. While we continue to bring new significant logos to our client list, it's worthwhile to remind that close to 50% of our top 200 clients today are amongst the Forbes Global 2,000 and provide to us a great opportunity to grow significantly within our existing customer portfolio as well. With that, let me turn it over to Jason for detailed financial update. Thank you, Ark, and good morning, everyone. I'll start with some financial highlights, then talk about profitability, cash flow and on guidance for fiscal 2018 in Q3. In the Q2, we delivered very strong top line performance, exceeded our profitability expectations and grew earnings per share. Here are a few key highlights from the quarter. Revenue closed at $445,600,000 reflecting a 27.7% year over year growth rate or 27.1% growth in constant currency terms. In the quarter, revenue reflected a foreign exchange benefit of less than 1%, lower than the approximately 2% favorable currency impact we expected when we set our Q2 guidance in May. Applying the same foreign exchange rates to non USD revenues as those used in our Q2 guidance, reported revenue would have been approximately $2,000,000 higher this quarter. From a geographic perspective, North America, our largest region, representing 59.3% of our Q2 revenues, grew 28% year over year in constant currency. Europe, representing 33.6% of our Q2 revenues, grew 23.6% year over year or 21.3% in constant currency. CIS, representing 4.4% of our Q2 revenues, grew 31.4% year over year or 42.5% in constant currency. And finally, APAC grew 66.5% in constant currency and now represents 2.7% of our revenues. If we move down the income statement, our GAAP gross margin for the quarter was 35.1% compared to 36.9% in Q2 of last year. Non GAAP gross margin for the quarter was 36.7% compared to 38.1% for the same quarter last year. The decline in gross margin was driven primarily by the impact of lower utilization and a higher level of accrued variable compensation compared to Q2 of last year. GAAP SG and A was 20.6% of revenue compared to 23% in Q2 of last year and non GAAP SG and A came in at 18.8% of revenue compared to 20.4% in the same period last year. We are pleased with the efficiency we have achieved in our SG and A spend and we'll continue to manage SG and A closely in both dollar terms and as a percentage of revenues. GAAP income from operations was $54,200,000 or 12.2 percent of revenue in the quarter compared to $40,700,000 or 11.7 percent of revenue in Q2 last year. Non GAAP income from operations was $72,300,000 or 16.2 percent of revenue in the quarter compared to $55,800,000 or 16% of revenue in Q2 of last year. Our GAAP effective tax rate in the quarter came in at 12%, which includes the impact of a $5,400,000 excess tax benefit related to stock option exercises investing in restricted stock units. Our non GAAP effective tax rate, which excludes the excess benefit and other adjustments, was approximately 22%. Diluted earnings per share on a GAAP basis was $0.89 and non GAAP EPS was $1.01 reflecting a 30.9% 26 0.3% increase respectively over the same quarter in fiscal 2017. In Q2, there were approximately 56 point 6,000,000 diluted shares outstanding. Utilization was 78% compared to 79.6% in the same quarter last year and 77.6% in Q1. Turning to our cash flow and balance sheet. Cash flow from operations for Q2 was $59,500,000 compared to $30,200,000 in the same quarter last year. Free cash flow was $50,900,000 compared to $24,500,000 in the same quarter last year. DSO was flat compared to 83 days at the end of Q1 fiscal 2018 82 days in the same quarter last year. We continue to focus on managing our DSO performance in the low 80s. Turning now to guidance. Starting with fiscal 2018, with the strength of the U. S. Dollar, revenue growth is now expected to be at least 26% reported when factoring in an updated foreign exchange impact of positive 1%. Revenue growth on a constant currency basis continues to be at least 25%. As a reminder, our full year revenue outlook reflects approximately a 2% contribution from inorganic revenues. We expect GAAP income from operations to continue to be in the range of 12% to 13% and non GAAP income from operations to continue to be in the range of 16% to 17%. We expect our GAAP effective tax rate to now be approximately 5%, which reflects our tax planning efforts in response to the U. S. Tax reform legislation. We expect our non GAAP effective tax rate to continue to be approximately 22%. For earnings per share, we now expect GAAP diluted EPS to be at least $3.80 for the full year, and non GAAP diluted EPS will continue to be at least $4.11 for the full year. We now expect weighted average share count of 56,700,000 fully diluted shares outstanding. For Q3 of FY 2018, revenues will be at least $466,000,000 reflecting a growth rate of approximately 23% reported and approximately 24% in constant currency after factoring in a 1% estimated unfavorable foreign exchange impact. For the Q3, we expect GAAP income from operations to be in the range of 12% to 13% and non GAAP income from operations to be in the range of 16% to 17%. We expect our GAAP effective tax rate to be approximately 17% and non GAAP effective tax rate to be approximately 22%. For earnings per share, we expect GAAP diluted EPS will be at least $0.85 for the quarter and non GAAP EPS will be at least $1.04 for the quarter. We expect a weighted average share count of 56,900,000 fully diluted shares outstanding. Finally, a few key assumptions which support our GAAP to non GAAP measurements. Stock compensation expense is now expected to be approximately $15,300,000 in Q3 $15,200,000 in Q4. Amortization of intangibles is now expected to be approximately $2,200,000 in each remaining quarter for the fiscal year. The impact of foreign exchange is expected to be approximately a $500,000 loss in each remaining quarter. The tax effect of non GAAP adjustments is now expected to be around $3,800,000 in each remaining quarter. Lastly, we expect excess tax benefits to now $3,000,000 in Q3 $3,300,000 in Q4. In summary, we are pleased with our 2nd quarter and first half twenty eighteen results, which reflects strong broad based growth across our verticals and geographies. Our unique positioning in the market, combined with our solid fundamentals, positions us well for continued growth in fiscal 2018. With that, let's open the call up for questions. Thank you. At this time, we'll be conducting a question and answer session. Our first question is from Maggie Nolan with William Blair. Please proceed. Good morning. I was hoping you could talk a little bit more about how you're pricing some of these intelligent automation solutions, especially the ones that are a little more horizontal in nature. And then should we expect to see changes in your contract type mix over time as a result of more of these solutions? This is still pretty new area for everybody and it's a mixed pricing between fixed cost and time and material, specifically on engineering part. But at the same time, when we involve these consultants, we're trying to assess what would be potential return and project the value to the client. So it's as I said, it's a mixed approach right now. And I think both vendors and clients are learning at this point still. But the hope actually on headcount, clear headcount cost reduction. Okay, great. And then did you say you're looking to some new markets for labor? And if so, what geographies are you hoping to develop or expand? And then when you do enter new labor markets, what steps are you taking to gain traction there? Thank you. So we're not looking new markets in the kind of big meaning of this work because we do believe that we're already in the markets in our traditional Eastern Europe locations. We are in India. We are in China. But we expanded within these markets. And some of this, as you know, market is pretty large, and we'll always open for new locations, which we open in an organic way as well. Our next question is from Avishai Kantor with Cowen and Company. Please proceed. Hi, good morning. From the consulting practice perspective, are you considering joint ventures or partnerships with standalone consultants for front end strategic opportunities? Or you think it's critical for you to maintain those skills in house? On specific project opportunities, we clearly open for any type of partnership and with other firms. At the same time, we do believe that it's critically important to have these capabilities inside of EPAM because to achieve the level of integration and the benefits of starting to sync for the total solution versus specific consulting design or engineering parts of this, it is important to build this capability inside of the company. And then on M and A opportunities going forward, what are your thoughts on adding digital transformation skills versus domain or vertical expertise? So we were adding digital transformation skills during the last 5, 6 years. And we're still open to add this in an organic way where it's important in specific locations. And we're, again, looking for such additions. The same like in other areas which you mentioned. I think we still have enough gaps to fill through specific M and As, the same like we're growing this very aggressively organically too. Great. Thank you so much. Our next question is from David Grossman with Stifel. Please proceed. Thanks. Good morning. Just one clarification, I missed the utilization number, Jason. Could you give that to me again, please? Yes. The utilization number is 78% in the quarter. Okay. So flat sequentially? A little bit of an improvement from Q1 to Q2, and that's in part what drove the improvement in the gross margin from Q1 to Q2. Okay. So just since you brought up the gross margin, can you I know you mentioned a couple of items that impacted the margin on a year over year basis. And I think it is lower utilization. I think you were close to 80 last year and higher accrued comp, but it was down in the March quarter as well. And I'm just curious, at these higher utilization rates, I know they're maybe you're down year over year, but you're still at relatively high levels. Is there some other dynamic going on within the gross margin that can maybe driving it down? Yes. No, I think it's pretty much on the surface, the utilization numbers and the accrued compensation that we talked about. And Q2 of last year was an extremely high level of utilization at 79.6%. And so there is a pretty significant decline between Q2 of 2017 and Q2 of 2018. And then we've got the variable comp piece, which we've talked about. We did improve gross margin between Q1 and Q2 of this year. And what we expect to see is a continued improvement in gross margin in the second half of twenty eighteen. So I think you'll continue to see gross margin improvement. And I'm sure as you've noted, profitability from an adjusted IFO standpoint is actually up if you look at the first half of twenty eighteen versus the first half of twenty seventeen. And so, we feel like we're still very much able to manage within the 16% to 17%. And I think what you'll see is improvement in gross margin throughout the remainder of the year. And what drives the higher gross margin in the back half of the year? Yes. So in Q3, you'll have sort of 2 effects. One will be that you've got a seasonal lower utilization level in Q3 just due to vacations and summer And so that's something that you see every year for us. You do have more bill days though. So the net impact to that is still up the positive improvement in or an improvement in gross margin. And then what you'll see us do is continue to work on utilization in Q4. At the same time, I think we've talked about the pricing environment in the past is that on average across the broad range of customers, we are seeing average rates increase. And then as we've talked about, there's a significant number of customers who are actually getting annual rate increases. Right. And I think Ark mentioned that there's an increased demand and requirement in the market to be delivering services locally. Is that pressing the margin at all? Yes. There hasn't been a significant shift in the on-site offshore ratio. So it's just a very modest shift. And so now at this time that wouldn't be any sort of driver. What you're really seeing is just a delta between the high level utilization we ran last year and kind of where we are right now. And that was intentional. We talked about taking utilization down to allow us the opportunity to continue to grow rapidly. Right. And I guess in the past, you've given us a number that characterizes how much growth is coming from the existing base versus new clients. Do you happen to have that number? Yes, we've got that. And so it's consistent with that fortysixty percent that we've talked about with 40% of it coming from what we call new revenues, which are customers that began generating revenue in the last 12 months and 60% from the I just wanted to follow-up with David's not to test your patience here, Jason. But so the utilization is down a bit year over year, but the headcount is growing slower than the revenue. I see the fixed price is up a bit. I'm just trying to get basically my question is, it looks like pricing is rising. Is that too blunt conclusion? Yes. There's probably the answer would be yes. And there probably if we sort of peel it back a layer, so there probably be 2 factors inside that. So as we discussed with David in the last set of questions is that there's a slight shift towards On-site. And then at the same time, we are seeing an increase in our rates on average across our customer base. A lot of the rate increases do come in, in the first half. And so you've got the combination of actual kind of rate increases and then a subtle shift towards on-site, which would also sort of push up the revenue per employee. Got it. Okay. And then there is a slight increase in fixed price. I know the first question was about how you're pricing some of the new offerings. Is this that or is it something else? It's not a I'm just looking at the fact sheet, it's not a huge difference, but about 100 basis points. But is there anything to read into that? No, you're not seeing a significant shift in fixed price versus T and M. I do think over time, it's something that we'll continue to explore. But at this time, we're still substantially in the time and materials business from a pricing standpoint. Got it. Thank you very much. Our next question is from Arvind Ramnani with KeyBanc. Please proceed. Hi, guys. Thanks for taking my question. I just wanted to ask about the demand environment. How would you characterize the demand environment today versus kind of what expectations were at the beginning of the year? And how do you also characterize the competitive environment? Probably traditional answer. We're still seeing very stable and strong demand across all our because we're relatively small in comparison to our large competitors. But in our area, it's a very similar demand towards what's in the past. There are some changes structurally. That's why we were talking about intelligent automation and RPA, specifically on kind of proof of concept, the first engagements, and we're seeing that it potentially might grow faster than other parts. So there are probably some other smaller aspects of this change. But in general, again, it's pretty consistent with the past. And from competition, I would say the same things. I don't we don't see any significant changes in compared to Oceania. Great. And on these emerging technologies, you touched upon automation, but if you kind of look at automation, AI or like even some of the things such as blockchain, is there like kind of increased appetite or when you look at maybe it may not be impacting your revenue, but when you look at your R and D spend or amount of kind of investments going in the back end to develop your capabilities, Is how is that what are you expecting for these emerging technologies over the next 12 to 18 months? As we mentioned before, we're doing this investment pretty consistently in the past. We were talking about our internal garage where we're experimenting. But we also do believe we have some advantage because part of our business, almost 20% of our business, it's software services and for technology and software companies. And in many of these cases, we have opportunity to be exposed to new trends and new technologies, including automation and RPAs and artificial intelligent type of applications. And we're doing this as part of our delivery engagements. And then in many cases, we actually have an opportunity to go together with our clients to their clients for building specific solutions. So we tried to explain it before that we have this type of advantage, and I think it's helping us right now, and we hope we'll help in the future because we strategically continue to serve this part of the market. Okay. Thank you and good luck for the remainder of the year. Thank you. Our next question is from Jason Kupferberg with Bank of America Merrill Lynch. Please proceed. Hi, this is Brent Navan on for Jason. Thanks for taking the question. Just wanted to get a sense of how financial services was relative to your expectations in the quarter? Is there anything notable to call out? And maybe talk more broadly about what you're seeing in terms of spending at the larger banks? So, we continue to see very strong growth in our financial services practice. So, you see we're over 30%. We did get a little bit of benefit from our acquisition. So, if we were to strip that out, we're still sort of approaching 30% in the very high 20s. We continue to drive revenues from more kind of the digital transformation and our experience in wealth management and other platform technologies has really been beneficial to us. I don't know, Ark, do you have anything else you want to say about the financial services space? I don't think there is again any specific changes. We're working with established vendors, but we will established clients in financial space, but we're working on more digital transformation of digital type of platforms. This is probably allow us to continue growing. At the same time, we're involved in some specific Fintech applications with the smaller clients. So it's giving us opportunity to continuously grow as well. Yes. So I don't know if the demand has changed, but we continue to see quite significant demand in this space. Great. That's really helpful. And just as a follow-up, obviously, FX is going to be a headwind now in the back half and you called that out from a revenue perspective. Just curious how big has the recent FX headwinds will that be on EPS in 3Q and 4Q? Yes. That's a good question. So, we're actually pretty well hedged. And so we've got we've always had kind of a natural hedge in the Ukraine and in Belarus. Actually, the salaries are notionally in U. S. Dollars and so we don't see volatility there. We've got currencies in Europe, which are primarily sort of expense currencies, the Polish, sloti, the Hungarian foreign. We've got revenues driven between in the euro and the pound. And what you find is there's some degree of correlation between those. So when the U. S. Dollar strengthens, you may see less revenue from a euro perspective, but you also generally see a decline in costs in some of our Central European delivery centers. And then we've also hedged the ruble. And so what you see is that we're in a position right now where even as the dollar strengthens, what it tends to do is have an impact on reported revenue and reported revenue growth rate, again a negative impact, but it only has a very modest or slight impact on EPS. Great. Thanks for the color. Sure. Our next question is from Frank Atkins with SunTrust. Please proceed. Thanks for taking my question. I wanted to ask first about the life science and healthcare vertical. What's driving some of the strength there? Yes. We mentioned before that it's one of the smallest verticals for us still. And 1 or 2 clients kind of changes might impact specific quarter. I think we're coming back to norms there. And it's practically in line with the company growth right now versus before we have some slowdown in 1 or 2 clients. So we hope it would be growing more in line with overall growth of EPAM. Okay. That's helpful. And then can you talk a little bit about the talent environment, what you're doing to attract and retain talent and were there any changes in attrition on a quarter over quarter basis? Attrition, I think, in line with last year right now. It's sequentially up a little bit. In general, again, and this is our probably consistent permanent answer to this question. Environment for hiring talent and keeping talent is very difficult, and it was last quarter and last year and 3, 4 years ago as well. So basically, we don't feel that it's ever going to be easier. At the same time, we're continuously investing in trainings, education, looking for better opportunities inside of the company for people who grow in. And I don't think there is any magic here. So that's a continuous effort, which we really committed to do. Our next question is from Vladimir Bespalov with VTB Capital. Please proceed. Hello. Thank you for taking my question. My first question is on your geographic breakdown of revenues. There is some slowdown in Europe in the Q2 compared to the Q1. Is it FX driven or like there is anything else behind this? And the second question I have on your Hyderabad office. From what I saw in the capacity of this office, I saw I think the numbers were from 1,000 people to 1600 people. So but it's not reflected in your hiring as far as I could see. Maybe you could elaborate a little bit, are you going to hire more people or this is built up on your current presence in India following the acquisition of Allianz Global Services? And how this fits your strategy to develop the pack region, which is still small but growing pretty good? Thank you. Okay. Let me start from different order like from Hyderabad. We moved to very well built new location, And we're operating in India for the 3rd year. And it's clearly was a new experience for us, and we learn a lot. And we are bringing engineering culture, which we have in EPAM to our locations in India. And it was, again, a lot of learning during these several years. The decision to move, it's actually attributed to our belief that we would be able to grow because for last years, we maintained practically a flat headcount in the region. Now we're much more comfortable that we would be able to benefit from our investments. So we have already significant clients move to the regions. We have very good review on the quality of the services, which we started to deliver from there. And this location would allow us to grow within next several years. So on Europe, yes, I'll pass it to Jason. No, I think we're still very pleased with the demand environment in Europe and also pleased with the growth. I think largely what you did see with the strengthening of the U. S. Dollar that does have a negative impact on the growth rates in Europe. And so, right now, the environment there tends to have continued strong demand. And so, I don't think there's anything to take away from the somewhat slower growth rate there. Thank Our next question is from Joseph Foresi with Cantor Fitzgerald. Please proceed. Hi, this is Mike Reed on for Joe. Just wondering what the impact to the quarter was from Continuum and then maybe a little detail on the integration and how that's going? Yes. And so, probably two points, I'll answer a question that you didn't ask. So, we only had about 2 weeks of revenue of Continuum revenue in our Q1 results. And so, you do get a bump sort of in sequential growth because of having 13 weeks at Continuum. And Continuum is about 2% of the growth is coming from Continuum and that's consistent for the full fiscal year. I don't know, Ark, you want to talk a little bit about integration and just kind of how things are going with the Continuum acquisition? Sure. Like clearly, we just a little bit over 4 months in this, and it's probably too early to do any conclusions. It's usually early even after 1st 12 months. But we do see a number of very interesting opportunities, which we started to go after together. We have already exposure of Continuum Services to EPAM client base and opposite a client capabilities presenting and even starting some smaller projects to clients, which were originally came from Continuum. From this point of view, we think we're on pretty good growth right now. Okay, great. And then are you partnering with providers in the automation implementation? And if so, have you named who you're working with? In what implementations? Automation, RPA or any of that. We basically like in any other engagements, we're working with some other vendors on the same implementations like on e commerce or big data. It could be some other vendors. It's exactly the same story in RPA. But we don't partner with anybody specifically with exception of providers of the specific platforms like Automation Anywhere or Blue Prism or WorkFusion. Okay, great. Thanks guys. Sure. Thank you. Our next question is from Avishai Kantor with Cowen and Company. Please proceed. Yes. Hi. I have a quick follow-up. I may have missed it, but can you talk about trends within the top 5 clients? If I'm not mistaken, year over year revenue growth really has been accelerated significantly this quarter. Is it from one specific client? Is it a couple of clients? I mean, I think what you see is that from a concentration standpoint, we continue to improve. But certainly, we've had our top clients many of our clients continue to grow quite rapidly. And at the same time, kind of the same story I think we've told you in the past, which is that we're getting a lot of growth from our new customers as well. But certainly, we see some nice growth from our large established customers in addition to the growth that we're getting from New Logos. Ladies and gentlemen, we have reached Thank you. And thank you everybody for participating. We do believe it was strong quarter despite of some FX influences on results. And we do believe that we will be continue growing within the promises which we made before. So thank you very much and see you next quarter. Thank you. This concludes today's conference. You may disconnect your lines at this time and thank you for your participation.