Earnings Call: Q2 2021

Aug 4, 2021

Quarterly report

Thank you for standing by, and welcome to the Upland Software First Quarter 2021 Earnings Call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. The conference call will be recorded and simultaneously webcast at investor. Uplandsoftware .com and a replay will be available there for 12 months. By now, everyone should have access to the Q1 2021 earnings release, which was distributed today at 4 pm Eastern Time. If you have not received the release, it's available on Upland's website. I'd now like to turn the call over to Jack McDonald, Chairman and CEO of Upland Software. Please go ahead. Thank you, and welcome to our Q1 2021 earnings call. I'm joined today by Rod Favron, our President and Chief Commercial Officer and Mike Hill, our CFO. I'll summarize our results of recent sales, Following that, Mike will provide some insights on the Q1 numbers and our guidance. Then we'll open the call up for Q and A. But before we get started, Mike will read the Safe Harbor statement. Thank you, Jack. During today's call, we will include statements that are considered forward looking within meanings of securities laws. These statements are subject to risks, assumptions and uncertainties that could cause our actual results to differ materially. A detailed discussion of these risks and uncertainties are contained in our annual report on Form 10 ks as periodically updated in our quarterly reports on Form 10 Q filed with the SEC. The forward looking statements made today are based on our views and assumptions and on information currently available to Upland Management as of today. We do not intend or undertake any duty to release publicly any updates or revisions to any forward looking statement. On this call, Upland will refer to non GAAP financial measures that when used in combination with GAAP results provide Upland Management with additional analytics to understand its operations. Uplent has provided reconciliations of non GAAP measures to the most comparable GAAP measures and our press release announcing our Q1 2021 results, which is available on the Investor Relations section of our website. Please note that we're unable to reconcile Forward looking non GAAP financial measures to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this And with that, I'll turn the call back over to Jack. Thanks, Mike. In the Q1, we restarted our M and A engine. We completed 2 strategic and accretive acquisitions, Second Street and BlueVent. And we did that While posting strong free cash flow of 12.5%, and that's even after acquisition And while there can be no guarantees, our goal is to make 2021 a strong year for acquisitions. Our acquisition pipeline is robust and we are active in the market for additional opportunities. As we've noted before, our acquisition program is now self sustaining as our free cash flow and financial resources mean that we're no longer dependent on the Equity Capital Markets. In the Q1, we had 9% total revenue growth. As expected, adjusted EBITDA came in at 31%, reflecting our go to market investments. Our Q1 Free cash flow was $12,200,000 We had 3% recurring growth in the organic Side, now when you exclude political related revenue from the Q1 of 2020, the comparison period, Our recurring revenue organic growth was 6%. On the sales front in the Q1, we expanded relationships with 283 customers, 45 of which were major expansions. We also welcomed 118 new customers to Upland In our project and IT management products, we delivered product integrations with key partners Salesforce and Sage Intacct. And following the Upland and HP Hewlett Packard joint announcement in the fall, we released new capabilities in our And these apps will provide HP customers the ability to capture And digitize documents from multiple sources, for example, faxes, e mails, scans, electronic content to Track and index key content and then route documents for further action directly from their HP specific devices. Again, on the acquisition front, as I mentioned, Q1 was an active quarter for M and A. We closed BlueVend, which is a leading customer data platform, anchoring Upland's customer experience management suite with a single view of the customer that will drive deeper engagement across email, SMS, mobile applications and online. We also closed the acquisition of Second Street, another nice addition to our CXM suite. Second Street's interactive Content and contest capabilities give our customers more ways to engage their consumers to Drive revenue. As I mentioned, the M and A pipeline is strong. And again, while there could be no guarantees, it's our goal to make 2021 a very strong year Thank you, Jack. I'll cover the financial highlights for the Q1 and our outlook for the Q2 and full year 2021. On the income statement, total revenue for the Q1 was $74,000,000 representing growth of 9%. Recurring revenue from subscription and 22% year over year decline, which was expected due to the COVID-nineteen travel impacts. Overall gross margin was 67% During the Q1 and our product gross margin remained strong at 68% or 72% when adding back depreciation and amortization, which we refer to Cash gross margin. Operating expenses, excluding acquisition related expenses, depreciation, amortization and stock compensation, were $30,400,000 for the Q1 or 41 percent of total revenue, all generally as expected. Also, acquisition related expenses were approximately $9,600,000 in the Q1. And of course, these acquisition related expenses will continue as a result of our renewed acquisition I will note that $1,200,000 of this Q1 expense is related to an office lease exit from last year's Acquisition related expenses are generally 50% to 60% of acquired annual revenue run rate and varies from acquisition to acquisition depending on uncontrollable factors such as geographic location. Generally, for each acquisition, 45% to 50% of These transaction and transformation expenses are incurred within the 1st 3 months and then taper down rapidly until complete By the acquisition's 1st anniversary, our Q1 2021 adjusted EBITDA was $22,800,000 or 31 percent of Total revenue down 7% compared to $24,600,000 or 36% of total revenue for the Q1 of 2020. As expected, adjusted EBITDA was lower due to our increased go to market investments compared to last year. Now on to cash flow. For the Q1 of 2021, GAAP operating cash flow was $12,500,000 and free cash flow was $12,200,000 even with $9,600,000 of acquisition related expenses in Q1. We also had some positive changes in some of the working capital accounts Like collections on accounts receivable, 2021 free cash flow should be over $30,000,000 and possibly over $40,000,000 depending upon the size and timing of future acquisition. So we are focused on generating substantial GAAP operating cash flow and free cash flow even after Acquisition related expenses. So for the balance sheet, this ongoing free cash flow generation is in addition to our existing liquidity of 246 $700,000 comprised of approximately $106,700,000 of cash on our balance sheet as of March 31, 2021 and our $60,000,000 undrawn revolver. This ongoing cash flow generation, available capital and expanding our credit facility while maintaining net debt leverage of up to a maximum of around 4.0x should allow for self sustained growth without dependency on the equity markets. I should note that our net debt leverage is currently at Currently has approximately $356,000,000 of total tax NOL carry forwards and Of these, we estimate that approximately $215,000,000 will be available for utilization prior to expiration. As of March 31, 2021, we had outstanding net debt of approximately $345,200,000 after factoring in the 180 $7,000,000 of cash on our balance sheet. I will note that principal payments on our term debt are 1% per year or about $5,400,000 per year, With the remaining balance in August of 2026, the interest rate on our outstanding term debt is locked at 5.4%, making our annual cash interest payments approximately $30,000,000 at our current debt levels. Additionally, I will point out that our term debt has no financial covenants on current borrowings. Now for guidance. For the quarter ended June 30, 2021, Upland ZEC's reported total revenue to be between $73,000,000 $77,000,000 including subscription and support revenue between 70.2 The $3,200,000 for growth in recurring revenue of 6% at the midpoint over the quarter ended June 30, 2020. 2nd quarter 2021 adjusted EBITDA is expected to be between $22,000,000 $24,000,000 for an adjusted EBITDA margin of 31% at the midpoint, representing a reduction of 3% at the midpoint over the quarter ended June 30, 2020, reflecting our incremental investment in our go to market activities. For the full year ending December 31, 2021, Upland expects reported total revenue to be between $299,000,000 $311,000,000 including subscription and support revenue between $285,300,000 $295,300,000 for growth in recurring revenue of 5% at the midpoint over the year ended December 31, 2020. Full year 2021 adjusted EBITDA is expected to be between $94,400,000 $100,400,000 for an adjusted EBITDA margin of 32% at the midpoint, representing a reduction of 3% at the midpoint over the year ended December 31, 2020, again reflecting our incremental investments in go to market activities. So with that, I'll pass the call back over to Jack. Thanks, Mike. And now we're ready to open the call up for Q and A. Please feel free to direct Questions to Mike, Rod or me. We will now begin the question and answer session. Is from Bhavan Suri of William Blair. Please go ahead. Hi, everyone. This is Jake on for Bhavan. Congrats on the great quarter. Just first off, would love to hear how the Blue Bend and Second Street acquisitions are progressing. I know it's early, but just would love to hear about the initial interest from current customers. Yes, great. Thanks for the question. So very excited about both Blue Van and Second Street acquisitions, Both accretive acquisitions, but also highly strategic. Both of them fit into our CXM product suite and fulfill some key functions there. BlueVAN is a CDP, customer data platform, and it enables us to maintain a centralized On behalf of our customers of their consumers, so that they can create automated marketing campaigns, We state and then execute across multiple digital channels, right. And we've already got those capabilities As part of our product portfolio around SMS and text delivery, in app This adds a very powerful Core platform to our CXM suite. On the Second Street side, a key Challenge for our customers is to continue to build their database of consumers. And so Second Street brings to the table a number of proven technologies and interactive content and And thus increase the effectiveness of our customers' consumer marketing campaign. So Two great acquisitions. The integration is proceeding as planned on both of them. One of the things that we're doing differently today with Rod's leadership is beginning to drive Cross sell campaigns for these products much sooner than we would have before, really Looking at that product fit and how we bring acquired products into our existing sales distribution is now a core part of Our pre closing diligence and we really like to hit the ground running now on that. So let me Pass it over to Rod to give his thoughts on kind of early days of Pushing those products through our channel cross sell and early observations there. Yes. So building on that, Obviously, we started talking Second Street in earlier in the quarter and BlueVend a little bit later in the quarter. And as Jack said, those two products And leverage each other as Second Street being that place to really gather audience data to decorate The database that we got from BlueDance. So the fairly crisply, it's very early in integrating both these companies, but Fairly crisply, we were able to get our CXM, Customer Experience Management salespeople Cross selling those products with the Second Street and BlueVin sales teams. So we part of the We really worked on last year was making that a much more crisp and quick process of getting those in front of our customers. And so we're excited about just sort of how quickly we were able to get that out there. Look, it takes time to sell enterprise software to people and build pipeline. But that got sucked in pretty quickly and the sales cycles have already begun and pipelines getting generated for both of those products into our base. Great. And then just a follow-up on the M and A funnel. Where are you seeing the greatest opportunity? Do you think you'll continue to invest in CXM or is it likely that you'll target a different segment with the next acquisition? So we've got a very strong pipeline right now really across all 4 key product suites and some other use cases in the enterprise because there are at least 6 or 7 use cases or buying So it's a pretty strong pipeline across those. My guess would be the next one will be outside of CXM. And there's a lot that we're looking at on contact center. There are some opportunities in document Workflow as well as in the ITM. So I think you'll see activity And all of those areas as we move through the year. Great. Thanks for taking my questions. Please go ahead. Hi, this is Rob Souda on for Brent Thill. Congrats on the free cash flow number this Maybe the first question is for both Rod and Jack. I guess it's been a little bit over a year since Rod joined the team. And I know you mentioned it's still early, but wanted to ask like If we were to frame this in like baseball terminology, what innings of the cross sell journey are we in? And maybe like when could we see that cross sell motion really taking hold in terms of driving organic revenue growth? Yes. So this is Rod. I'll start and Jack can color or commentate here. So I appreciate you pointing out that I've been here for a year. We have made a lot of progress over the last year in to market infrastructure and the flying formation, just sort of as a refresher, we've added new executive leadership in marketing sales, customer success. Head of Global Accounts, we hired his team of 8 global account managers to manage our top 175 customers vertically. So those teams are now in place and ramping on their knowledge of the customers and building pipeline. And we like what we see there. The other thing we did was retool demand gen bottom up. So you'll see a new Laughlin website we launched in late January, Really designed to drive pipeline, frankly. And then the other thing we did, which we set up late last year, but built out and finished building out in Q1 is The qualifying sales development rep team and SDR team, we now have a team of 15 SDRs centrally located, Really catching and qualifying all of our lead flow that the marketing team is focused on generating. So we've been doing a lot You know, foundational work to get the team in a place to continue to grow. As part of that demand gen machine, if you will, a lot of the proactive Campaigns we're running now are very cross sell specific and the cross sell pipeline is showing good growth. Again, these deals take time to convert. A couple of things I'll point out. While we have made a lot of good progress on go to market, Remember, our net dollar retention rate did decrease about 300 basis points last year due to COVID. And obviously, in recurring revenue business, we have to wait until we fully lap that COVID impact in order to see and appreciate really the improvements in go to market. So I'll just sort of add to that. This is a multi core journey into 'twenty two. And as we say, there are no guarantees on outcomes, but we think this work is Yes. And so The only thing I would add is, I think Rod has really catalyzed a different kind of go to market culture Here at Upland, and he's walked through the key moves he's made on personnel and on process, And now increasingly on product as well as the distribution piece. And we couldn't be more excited about it. Consistent with what he said from the beginning and what Mike and I have said, it is a multi quarter journey and I think you start to see this really beginning to As you move into 'twenty two and as Rod said, there can be no guarantees on outcomes, but we've got a great suite of products here, Tremendous customer base and we think the opportunity is there to really drive Cross sell and new logo acquisition as we go forward. So we're excited about where we can take it. Got it. One quick follow-up, if I may, on the overall demand environment. Obviously, As Rod pointed out last year, you did see some impact, 12% not the whole lot From COVID, but some impact. So as we see the economy open back up with folks coming back to work and stuff like that. Are you seeing overall spend on PAW and would Going into the back half of the year, will that benefit you to a certain extent? Thank you. Yes, I think that's consistent with our outlook. Now we'll see how the year plays out. And you're right, the business proved to be incredibly Resilient last year in the face of COVID. And so the Net dollar retention rate was still mid-90s even given the pandemic, Which is impressive. And I think you're seeing the demand environment begin to move back toward A more normal pre COVID environment. Our gut is that that takes a few more quarters to fully play out. So we're going to maintain a conservative outlook on that. But in terms of trend, it seems to be positive. Got it. Thank you. The next question comes from Scott Berg of Needham. Please go ahead. Hi, everyone. This is John Dodie on for Scott. Thank you for taking my question. As far as the mobile messaging products go and that was being benefited a lot during the last election cycle. What are you seeing as far as use of TradeZero's products today Obviously, they're going to be going down a lot, but not 0. So is there anything you can quantify there as far as you Thanks for the question. So what we wanted to do and we talked about this last year was Share with investors a transparent view of demand With and without the political revenue that we saw last year, obviously, we had a spike in usage related to the presidential election cycle. So that's why we're breaking out that organic growth number. And so that's coming in that organic growth number as politics, mid single digits, 6% this quarter, but Right where we would have expected it. And then there are a lot of applications for messaging beyond politics and obviously we're Focused on growing that business and feel great about CXM as a long term offering For Upland. Great. Thanks, guys. The next question comes from Jeff Van Rhee of Craig Hallum. Please go ahead. Great. Thanks for taking my questions. Several for me. I think, I guess this is also Ron and Jack. If I look at the bookings, I know we don't get a bookings report on the quarter, but quantitative or qualitatively, how did bookings come in for the quarter? Maybe a little more color on just describing them, in line with expectations, particular surprises in strength and maybe challenges as well. And then also Pipeline makeup, I know you referred to some early indicators of the cross sell, but just any other Color around the breadth and depth of pipeline would be helpful. Yes. So thanks, Jeff. Bookings in line, Consistent with our expectations for this year, which I mentioned a moment ago, which is That the recovery will play out through the course of the year. It's not a sort of snapback on Phenomenon, right. So in line with how we had those numbers budgeted. So we feel good about that. In terms of pipeline growth, I want to kick that one to Ron because there's been a lot of great work It's been done in building a lead gen engine at Upland that we really didn't have And again, all in context, this is a multi quarter journey, but there's some exciting stuff going on. Rod speak directly to that. Yes, so happy to. On one of the color point on bookings, we did see a little more new versus expansion in the mix as we I think we'll see. We expect to see that as we kind of come out of COVID here. You talked last year about a little bit more expansion in the mix of bookings and we saw a little bit movement on that where a little more new kind of got into the mix. To Jack's point, the SDR team is kind of our new pipeline engine. We obviously generate multiple ways. Our customer success folks find expansion pipeline. Our sales people find their own pipeline. We have partners we work with Like HP, we talked about a minute ago, we drive pipeline, but kind of that sort of inbound pipeline that we run through our SDRs They had a, frankly, a strong first quarter brand. They literally hit their seats January 4 was a new quota for pipeline creation and our expectations were modest given that the team is new And they got to those with a little bit of upside. The other thing we're the other Dynamics of the pipeline, we saw a couple of anecdotes and we're watching for this, right? As we come out of COVID, we expect more shorter sales There is some pent up demand out there. It's not released yet. We don't know when that will happen. But we saw a few what we call create and close Anecdotally during the quarter where the deal qualified in, in January and closed in March, which you don't usually see. We certainly didn't During quarter during COVID and we only saw the anecdotally in Q1, so don't draw a line to that. But it's just early indicators, I think, that Both the lead gen engine that we put in place is going to start working. And again, our sales cycles are not in weeks, they're mostly in months, so and sometimes quarters. So it's going to take a while to get on the other side of this and see bookings. And I did mention before, we track cross as a percent of our pipeline and that's growing. So we know what we're doing, they're starting to work. Yes, helpful. And maybe one, I guess, Maybe a 2 part question actually, but as I look at, I think the earliest efforts that you made, Rod, coming in We're primarily around renewal, some of the low hanging fruit. I know you put leadership and process in there. Any quantification of the impact of those early changes? And then last one for me, the churn, I know you gave the overall number on an annual basis, but maybe some qualitative commentary on just Kind of how that's ebbing and flowing right now? So I think the customer The success leadership and processes we put in place really sort of segmented the team On major accounts, minor accounts, we have other names internally for them, but our biggest customers and the next biggest customers, you could probably guess at how we segment them. Network is definitely bearing fruit. I think we have more energy on our bigger customers, both with the global account guys And with our customer success team. So that was really the biggest shift in just making sure the product roadmaps are aligned and we're sort of Treating the bigger customers with more energy, right? So I think that from a process perspective, that's working. Sorry, Jack, I think you had a follow-up. Just on the churn question, again, I think from our perspective, it's Sort of consistent with what we're seeing on bookings, in line and consistent with our expectation that The recovery out of COVID is one that plays out through the course of the year. It's not a 1 quarter phenomenon, but that you're going to see that Sort of net ARR improvement as we move through the course of the year. Sounds good. Great. And great to see the cash flow. So thanks for taking my questions. Appreciate it guys. Thank you. The next question comes from DJ Heinz of Canaccord. Please go ahead. Hey, guys. I'll start with one for Rod and then a follow-up for Jack. So Rod, as you build out the sales muscle, how are you thinking about Retaining acquired sales talent versus maybe going outside of the organization and bringing in reps with broader solution selling experience, How do you strike the right balance there? Yes, great question. So look, when we acquire a product, Louvain is a great Sample, that team has been selling that product for years. They know that specific competitive landscape. Ironically, they know our products because we had already integrated with BlueVin, for example, with our Adestra email product, which they were reselling and at some point. And so that's a team where we want to keep the best, right? And so we focus on keeping The best talent on the go to market side of these acquisitions, not unlike, look, Many years ago, I ran a company that IBM acquired and they left us alone for a year to sell our to be the experts on what we do, how we got integrated. We do the same thing. We let these guys bring their expertise. We integrate them into our bigger sales organization. And really, the leverage comes in. If I've got Small Blue Bend team or a small second street team, I can give them access to a much bigger Upland team and that Upland team is introducing them into accounts and those guys are the That's how we think about it. And we want to keep as many of these, the best sellers as we possibly can. So we work to do that. If they have sellers who aren't as productive or maybe they're newer, right, it's not as big a loss if they don't stick around We try and keep the best ones and again we let them focus on what they know how to do really well and we open up doors for them and then their job is to cross train our team. So a year from now, 18 months from now, we have lots of people who can sell that product. Yes, that makes sense. And then, Jack, in response to one of the first questions around M and A, you referenced opportunities in document work Just curious along those lines, if there's any update on what you're seeing with your HP relationship? Well, I mentioned this in the Opening remarks and we highlighted it in the earnings release as well, but Very exciting relationship that has been developing really a long standing HP, but a new initiative around HP WorkPath, which is So consistent with the vision that we've had for a document workflow to create this integrated Hybrid, deploying the cloud, deploy on prem as needed, capability that can ingest So we're very excited. I'm going to let Rod chime in on this because he's Directly involved in building out the relationship. And so let me let Rod give you his views on that. Yes. So obviously, we're excited about this, really the standing up to cloud part of the story with HP. WorkPath It's a big strategic initiative for HP as they said publicly. Obviously, a gigantic hardware vendor trying to bring more solutions to their customer base. We did announce that relationship, the cloud part of the relationship back in the fall. We've now their sales organization Trained, it's in their bag and they're off and running. So and we're meeting regularly, starting to train and build pipeline. So We're excited about this particular relationship. It's actually we've worked with HP for a long time. We haven't worked with them relative to WorkPath and our cloud solutions from a document perspective. So You said to go to market with them and as strategic as I think they believe this is, we're paying close We're investing in it, both product and go to market, and we're excited about what's possible. And the next question comes from Alex Schuler of Raymond James. Please go Great. Thank you. One for Raj, following up on some of the discussion on the cross sell early Line strength. I wanted to ask about some of the changes you've made on the product side in terms of packaging and bundling and targeting some of the verticals in particular. Anything you can share with how that's resonating within the top 200 or major top 200 or so major accounts? And are those packages fairly set at this point or are they constantly required some sweet? Thanks. Yes. So, great question. Yes. I mean, look, we've got a couple of different ways that we cross sell. And obviously, the most successful is adjacencies. You own one of And then we will do things like bundle our SMS and our email or bundle our email and our CDP. We went to market with Second Street just recently bundling it with Our CDP and our email products, because you can imagine a big part of the email mission is to build your database and audience development tools are perfect for that. And so That's really what we try and do is focus on where we can package things together, where it's a common buyer. Jack mentioned earlier, we've really simplified the buyers we're going to market to. You can literally navigate to our website now and there's There's sort of a buyer path where you can see all the products that are relevant for you, and in some cases see a bundle, for example. So, yes, that's how we think about These bundles are going to persist. They're not generally not temporal. We think they're available for when customers are ready to make the move. So And go with them, we really create them and we think we'll support them for a long, long time. Okay, great. Thank you. Jack, on the BlueVent acquisition, I think when we spoke after you first closed on, you suggested it might have been your most strategic to date. And now hearing Rod talk about how it was already integrated with ADESTRO on the product side as well on the go to market side, And then the early synergies in Second Street, those comments make a lot of sense. I'm curious when you look at the pipeline Of opportunities now, how many other ones fit a kind of similar strategic mold or was this really kind of unique opportunity? That's a great question. The strategic bar For our acquisitions has been going up through time, right. This is a process that really started a couple of 3 years ago. And so what we're trying to do is build cohesive suites that serve key buying centers Because that is what's going to create the velocity in part, it's what's going to create the velocity for cross sell. So build those compelling Product suites, core buying centers in the enterprise, and then Build that sales distribution channel. So as I look at the opportunities we've got across other suites, I see Acquisitions of great strategic value. And these are acquisitions that fit within our size and valuation Criteria, and so it's going to be accretive deals as well as deals that build out the pipeline and I I think set the bracket for cross sell as we get the sales distribution up and going. All right. Very helpful color. Thank you. The next question comes from Terry Tillman of Truist. This is Connor on for Terry. Thanks for taking my question. I just had a question around the contact center products. It seems like there's a lot of CX efforts being focused in this area. Just kind of wanted to hear what you guys are seeing in this market? Thank you. I'm sorry, I lost some of that with a static. Can you repeat that? Yes, absolutely. So I just wanted to ask a quick question around the contact center product. So it seems like we're seeing a lot of CX efforts focused in this area. I just kind of wanted to know what you're thinking, what you're kind of seeing in this market? Yes. Let me let Rod offer his thoughts on that. Yes. So that's a really good point. We actually have, for example, one of our acquisitions from a few years back, a company called RanRave, which is a voice Customer value proposition, it actually sits in our CXM suite, but we sell it to contact centers, right? So you just sort of highlighted where the overlap happens Between the buying group, and our customer experience products either are bought by marketers or they're bought by people who are touching customers in contact centers. And so We see the contact center space or what others might call a service cloud area, it's really a rich area for us. We only have a few solutions there now. Obviously, we've got a really strong knowledge management position. We've got some call center telephony that really connects You know, the phone and voice with CRM, a business we bought called, which is a which really connects salesforce.comservicecloud To telephony, I mentioned Ran Ray, which is really more voice of customer, ironically voice of Also input into BlueVin. So if you're actually surveying your customers, it's structured data that we tuck into the CDP And a pen to you as a consumer. So these things all sort of fit together. But the licensee contact center, when we look at M and A opportunities and look at We want to see things in that pipeline in that area because we think it's a we think that's a growing market in general and we certainly have interest in growing our The next question comes from Richard Baldry of ROTH Capital. Please go ahead. Thanks. Could you talk just from High level about how the M and A pipeline has sort of reacted or altered given COVID conditions. Sort of curious if the Willingness to sell has changed on the side of the vendor, the price sensitivity. Maybe there's some desire to sort of normalize operations And then I guess tied to that, does it skew the ability to really evaluate the quality of a target if their Retention also had a challenging 2020, right, as you'd expect. How do you view those through a lens of trying to compensate for the year that they've had. Thanks. Thanks, Richard. The COVID impacts On pipeline, I'd say the first one is that there were folks that were able to transact last year and could not. And so those deals are coming to market now. And so you've got a little bit of 2 years of supply, if you will, coming to market in 1 year. So I think that's good news from a buyer's perspective. I think there are some trends in the market around digital transformation that as we know have been accelerated by COVID. So I think you've got folks that are looking to Team up and see the benefits of becoming part of a larger organization that can bring access to customers, That can bring adjacent product sets, that can bring sales distribution to the table. I think our Fundamental message to sellers around speed and certainty to close, that we've been A dependable buyer that over the course of our career across a couple of platforms Signed maybe 51, 52 letters of intent and closed north of 45 acquisitions. So we take the process seriously And that we represent a great home for customers and for product and for a subset of high performing employees. So I think all of those kind of fundamental factors remain in place. In terms of the kind of final part of your question, It's actually a great lens to look at how these products did through COVID. So obviously, you look at you're going to put a little bit more emphasis into A trailing 2 or trailing 3 year trend, but it's nice to see how Net ARR for these prospective acquisitions held up under COVID. And so it's kind of a great test, Right. It kind of weeds out some of the weaker players and I think leads to That's our overall quality of pipeline. Great. Thanks. This concludes our question and answer session. I would like to turn the conference back over to Jack McDonald for any closing remarks. Well, great. Thank you very much for your time this afternoon, and we look forward to seeing you on the next earnings call.