Alithya Group Inc. (ALYA) on Q2 2022 Results - Earnings Call Transcript
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Operator: 00:09 Good morning, ladies and gentlemen, welcome to the Alithya’s Second Quarter Fiscal twenty twenty two Results Conference Call. 00:15 I would now like to turn the meeting over to Rachel Andrews, Vice President, Communications & Marketing at Alithya. Please go ahead, Ms. Andrews.
Rachel Andrews: 00:24 Thank you, Julie. Good morning, everyone. And thank you for joining us for Alithya’s second quarter and fiscal 2022 results conference call. The press release and MD&A were issued with complete financial statements earlier today and are posted on our website. The webcast presentation can also be found on our website in the Investors section. 00:43 Presenting this morning are Paul Raymond, Alithya’s President and Chief Executive Officer; and Claude Thibault, Chief Financial Officer; and Claude Rousseau, Chief Operating Officer. 00:53 Before we begin, I would like to specify that this conference call is intended for the financial community. Also, please be advised that this call will contain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Please refer to the cautionary note on our presentation and to the forward-looking statements and risks and uncertainties section of our MD&A available on our website for more details. 01:21 Let me remind you that all figures expressed on today's call are in Canadian dollars, unless otherwise stated, and be aware that we will refer to certain indicators that are non-IFRS measures, please refer to the cautionary note in our presentation, and to the non-IFRS measures section of our MD&A for more details. 01:39 Now, I would like to turn the call over to Paul Raymond.
Paul Raymond: 01:42 Thank you, Rachel, and good morning everyone. Before we begin our call today, I'd like to take a moment to acknowledge that today is Remembrance Day in many countries, Veterans Day in the US. And this is the day where we remember day of nineteen eighteen. And as of veteran myself, I believe it's important to underline and remember the sacrifices of those who fought for freedom. So please make sure to take a pause at 11:00 AM this morning, and thank you for indulging me on this before we start. 02:12 Now on the business side, I'm thrilled to announce another record quarter in terms of organic growth and gross margins for the company. This second quarter for fiscal twenty twenty two performance occurred during what is normally our softer seasonal period or the summer. We are therefore very encouraged by the early indicators of a broad post pandemic recovery in our operations and digital transformation acceleration. 02:37 We continue to focus on our twenty twenty four strategic objectives. So this morning, I'd like to further delve into some items that are senior leaders shared with you during our Investor Day this past September. For those who did not have the chance to attend, I would like to point out that the recordings our Investor Day are available on our website in the Investors section. And I invite you to take a look at the valuable content focusing mainly on our operations. You can also hear some of our clients discussing how we are adding value to their business. 03:08 Now, let's take a look at three key highlights for our second quarter performance on slide two. First and foremost, we experienced another quarter of industry leading organic growth across all our geographies, further confirming our long term strategy and our discipline. We are reporting growth for the fourth consecutive quarter and solid numbers for the second quarter of this fiscal year. To highlight that organic growth Claude Thibault, our CFO will present performance indicators, both including and excluding revenues from our latest acquisition. 03:41 Second, speaking of our last acquisition, we are on track with the integration. R3D is highly complementary operations are seamlessly integrating into Alithya’s current structure, allowing for both short and midterm synergies. Additionally, new transformation projects with long term clients Beneva and Québecor continue to rollout out further contributing to the strength of our overall performance. Claude Rousseau, our COO will give you more color on our operations very shortly. 04:11 And finally, our recruitment efforts are going very well as demonstrated by our strong organic growth. We would not have been able to deliver these record revenue during our normally slowest quarter of the year without the dedication of our existing and hundreds of new professionals who joined us during the past six months. 04:30 On Investor Day, I spoke about the Alithya Leadership Academy geared towards our managers. As well as the other onboarding and continuing education platforms that help us to welcome and train all our team members. Today, I'm pleased to announce the expansion of our associate academy, new graduates joining Alithya in our Microsoft and more recently Oracle practices take part in an extensive onboarding program to launch their careers and prepare them to add value to the company and our clients. 05:01 The Associate Academy is focused on recruiting graduating students from multiple academic backgrounds and once hired to Alithya, the recruits are assigned to one of three technology practice areas, finance and operations, human capital management, and planning, profitability and analysis. We promote these training and recruitment initiatives in colleges and universities throughout North America, and we are setting the stage for our future quarters by attracting the best of the best to join our ranks. 05:29 Now over to Claude Thibault to more details on our financial results. Claude?
Claude Thibault: 5:35 Thank you, Paul, and good morning. I invite you to turn to the third slide of our presentation for certain second quarter fiscal twenty twenty two highlights. Bookings reached ninety point nine million dollars, which translated into a book-to-bill ratio of zero point eight six. As mentioned by Paul, this is very good for our summer quarter which is usually slower from a business development perspective. 06:02 As for the trailing twelve month, bookings are in excess of one billion dollars, that translates into a book-to-bill ratio of two point nine or almost three years of backlog. Our continued superior bookings reflect not only strong demand for our digital transformation services, also the fact that many new customers are turning to Alithya. 06:27 Please turn to slide four. Revenues for the quarter increased fifty four percent or one hundred and five million dollars – sorry, to one hundred and five million dollars. Excluding the impact of the R3D acquisition, revenues increased thirty one point two percent or thirty four point two percent on a constant currency basis. In other words, significant accelerating organic growth. 06:57 With the rare sequential growth from Q1 into Q2, we believe the results we are presenting today are quite positive. In Canada, revenues increased sixty nine point seven percent to sixty six point one million dollars due to organic growth in all areas of our Canadian operations. The increase is also due to the general recovery of activity levels, revenues of fifteen point six million dollars from the R2D acquisition and growth from the two associated long term contracts. 07:34 In the U.S. revenues increased thirty two percent to thirty five point seven million dollars as we experienced strong organic growth in all areas and the general recovery of activity levels. The increase was partially offset by foreign exchange variations. Revenues would have been thirty seven point eight million dollars with a constant U.S. dollar, resulting in a currency neutral organic increase of forty percent. Europe is showing a similar strong performance. 08:10 It should be noted that we have started the gradual migration of R3D’s activities into Alithya’s existing operations in preparation for the full integration planned for the coming quarter. As such, all new projects and all new hiring are no longer occurring in the R3D entity. This somewhat distort the R3D numbers disclosed in our notes to financial statements. But on a combined basis, that does not change our significant organic growth in Quebec. 08:45 Please turn to slide five. Looking at our gross margin, gross margin increased by nine point eight million dollars or fifty two percent to twenty eight point five million dollars for the quarter. As a percentage of revenues, for the second quarter, gross margin was twenty seven percent or twenty nine point one percent when excluding the impact of the recent acquisition of R3D. That is up from twenty point four percent for the same quarter last year. The increase was primarily driven by increased gross margin in the U.S. and Europe due to increased utilization rates. 09:29 The historically lower margins of R3D are explained by a higher proportion of billable stock subcontractors which we are in the process gradually improving. On a sequential basis, from Q1 into Q2, excluding the impact of the recent acquisition, and excluding government subsidies and losses from one large customer project, which had been recorded in the first quarter of this year. Gross margin as a percentage of revenues, increased in all geographies. 10:06 Reported SG&A expenses totaled twenty four point nine million dollars, an increase of four point seven million dollars or twenty three point five percent from twenty point one million dollars during the same period last year. This increase is primarily driven by the R2D acquisition, as well as by increases in employee compensation and recruiting costs. In line with our strong organic growth, partially offset by decreases in share based compensation, and a favorable U.S. dollar exchange rate impact. 10:43 As a percentage of revenues, total SG&A decreased to twenty three point six percent of revenue for the three month ended September thirty twenty twenty one compared to twenty nine point five percent last year. SG&A expenses from R3D are expected to continue to decrease from additional administrative and operational synergies in connection with its ongoing integration. 11:12 On slide six, you can see that overall, our second quarter adjusted EBITDA amounted to five million dollars, an increase of four point two million dollars compared to the same quarter last year. Again, strong organic growth, the contribution from the R3D acquisition, as well as increased gross margins were partially offset by increased SG&A expenses. As in previous quarters, the amount of non-cash depreciation and amortization, totaling four point seven million dollars is significantly greater than the quarter's accounting loss. 11:56 Now turning to our liquidity and financial position on slide seven. Net cash used in operating activities were seven point five million dollars in the second quarter, which is comprised of a three point four million dollars positive inflow from our statement of operations, minus ten point nine million dollars non-cash working capital variation. The negative working capital variations are in part explained by our continued organic growth, but also include a number of timing elements, which aren't subject to declining if not reversing in future quarters. 12:38 With regards to overall debt level variation, in addition to the above, we secured a ten million dollars sub-debt from Quebec, which however came in at the very end of the quarter and did not allow enough time to reduce cash balances, again started revolving credit facility. 13:01 Taking into consideration our twenty six point eight million dollars in cash on hand we ended the quarter with twenty nine point six million dollars of net bank borrowing, while we increased and extended our available revolving facility to seventy million dollars into twenty twenty four, allowing good flexibility for possible future acquisitions. Our normal course issuer bid or NCIB launched on September twenty is progressing as planned. While we view the NCIB at this time as an accretive use of our capital, we remain fully committed to securing future acquisitions to complement our growing market presence and capabilities. 13:47 At this point, Claude Rousseau, our COO will bring down our second quarter successes with respect to our various practices and geographies. Thank you. Claude?
Claude Rousseau: 13:59 Good morning. Please now turn to the next slide of our presentation. Let's begin with our public sector practice in Quebec. During our Investor Day held on September fifteen, we introduced our senior leadership for growing business unit comprised of more than five fifty professionals. We are strongly positioned with major clients through our strategic service offering and recurring business. Thanks to the entire team. We are becoming the reference in digital and business transformation in the public sector as we partner with major departments of the Quebec provincial government. 14:45 As we speak, our win ratio for the public sector in Quebec is excellent. Moving forward, our team is focusing on a landscape mark by winning strategic and higher value added contracts with higher contract value. And of course, with our gross margins, as we focus on higher value projects for our customer, this in turn contributes to the improvements of our overall gross margin. 15:17 On this strength of our professional expertise, Alithya has developed a long track record of successful project realizations with government agencies and other public sector funds. By addressing numerous government agency challenges, our professionals has gained a clear understanding of public sectors sensitivities and constraints. 15:43 As a result, recent announcement regarding new major contract wins, both validate and enhance the company's public sector experience. Moving forward, growth of our public sector practice will be driven by the integration of our latest acquisition and by the continuous professional development of our teams. 16:08 Now we are moving focus on Quebec, but looking at the second quarter performance of our commercial business. The insurance sector was a major contractor. The insurance industry is particularly dynamic and whether it be for major clients such as Beneva or bank, we owe a significant share of the Canadian market through system, modernization project generate significant income with important margins. 16:40 On that note, I would also like to mention that the quarterly revenues provided in our guaranteed long term agreement with Beneva and Québecor are on track. Québecor with its subsidiary is one of three of the largest telecommunication companies in Quebec that we can ask customers. We are also seeing very dynamic activity in that sector. 17:10 Innovations, as always been one of Québecor major competitive advantages. Alithya Digital Solutions center teams contribute to many of Québecor innovation projects, including one strategic projects we have been working on for three years. In September Québecor unveiled a Youtube digital platform which merged all of their news and entertainment content in a single location. 17:41 Tube is differentiated by its vast quantity of multi-sourced multi format content delivered in an easy to navigate environment that promotes content discoverability. We are very proud of the work our teams are doing on this project. Another sector that we have discussed with you and where we see tremendous potential is the Higher Education sector. I would like to remind you that at Alithya our education practice did not exist during the second quarter of previous fiscal year. 18:18 Today, the practice is experiencing incredible growth as our architecture services position us at the top of the value chain. We see tremendous opportunity for developing Oracle and Microsoft solutions in this market. 18:35 Building a panel with optimism and momentum, we proudly announced to pivotal partnership last week that will enable us to implement CRM module, specifically designed for university and colleges. 18:49 Now turning to our activities in Ontario and Western Canada, we are leveraging our operations technology and cybersecurity background in order to deliver digital strategies for new projects. Last week, during the United Nations Climate Change Conference also known as COP26. The issue of renewables energy other than fossil fuels was on everybody's agenda. 19:17 Whether it be Japan or France, government discussed the revival of the nuclear industries. In Canada, the nuclear industry is a key pillar of our energy supply, and Alithya is currently active on more than fifty renewable energy projects to help the country. 19:39 From the control room to the board room, customer can rely on more than forty years of Alithya engineering expertise. In Ontario, where the majority of our operation in the sector are concentrated more than sixty percent of adequacy generated by new clearer power. In fact, in the past decade Ontario has closed down five coal power generating stations. Thanks in part to the increased availability of Nuclear Power from one of our major customers Power, which we started two large nuclear generating units. 20:17 Now let's start -- now let’s take a look, start at the border. In the United States generated organic growth in most areas. Particularly in our record cloud business. We can clearly see a general recovery of activity level as evidenced by our results. On a sequential basis the revenues in the U. S. Increased by fourteen percent. Furthermore, if we look at the first six months of fiscal twenty two. Our revenue reached sixty seven million dollars for the U.S. as opposed to fifty seven million dollars for the same period last year, representing an eighteen percent increase, of which all organic growth and clear intention of both pandemic recovery in the U.S. 21:09 In order for us to continue delivering quality projects, we need to attract and retain professionals everywhere, including in the U.S. where the market is fragmented and very competitive. Alithya continues to innovate its recruitment and retention process in order to position the company as the employer of choice. 21:31 Our European business also continues to grow, highlighted by an outstanding forty seven percent organic increase in revenues in this second quarter. As mentioned during our last quarter call, this is a result of new customers added during the pandemic and pre-pandemic clients regaining momentum. 21:53 We also have new and exciting project in this geography, Alithya France is currently celebrating with the Alithya industry old company engaged in environmental management to optimize waste treatment and improve quality of life. Both artificial intelligence and IoT will be applied to this project, particularly in the manufacture and design of sensors for reducing the emission of gas that are harmful to the environment. 22:28 Now regarding our office in Morocco, our staff recruitment operations are ramping up. Our office is opened, and new employees have already been hired. To learn more about this project, I invite you to watch a video about the Alithya Digital Solutions center, which is available on the investors page of alithya.com. 22:49 Now, I'll turn the floor over to Paul Raymond. Paul, back to you.
Paul Raymond: 22:55 Thank you, Claude. And I will now be pleased to answer any of your question. Julie, we can open the line please.
Operator: 23:25 Thank you.
Unidentified Analyst: 23:25 Yes, good morning. This is on behalf of (ph). First of all congrats in the quarter. Paul, my first question is on the fixed price contract, which you guys were talking about last quarter. How was the progress been there? I believe that contract was based in Canada and was nearing completion when you guys reported your fiscal quarter one?
Paul Raymond: 23:50 Yes, thanks for the question, Amar. Yes, that project as we reported last quarter was the last time we took an adjustment on it. That project is on track and everything is good. There are no adjustments this quarter related to that.
Unidentified Analyst: 24:05 Okay, great. And you did talk a little bit about the higher education practice. It seems like Alithya’s team has some really good initial positive signs there. Any update on how it's fared so far like any traction like how many universities or colleges have been signed up in Canada? Any plans on when the company seeks to expand in the U.S. and the potential revenue opportunity with the partnership with Frequency Foundry.
Paul Raymond: 24:39 So the question is on the progress of university practice, our higher education practice. I'll turn the over to Claude Rousseau. And may be Claude, if you can also talk about the new partnerships we signed in that sector.
Claude Rousseau: 24:52 Yes, thank you very much for the question. First of all, let me cover the geographic aspect. It’s a very important point. Before we'll expand the activities in the U.S. we need to accomplish and continue to learn and put in place everything we need to know for growing. It's not only a question to get new customers, but we need also to leverage the expertise and adding more folks related to that kind of expertise, but all in all, it’s going really well. But before it goes out, we need to continue really to prove our point in Canada. And talking about the Foundry, the second part of the question. 25:31 Foundry are specializing indication. That's the reason why the agreement we signed with them, the relationship we signed with them, that's complementary about the expertise we have in terms of advisor, in terms of supporting our clients creating value and the technology beyond the scene with the Foundry company. And that's the reason that's a good mix for us, we have the technical expertise to implement CRM, as you know in the higher education CRM is absolutely critical in their operations. 26:04 And with the expertise we have to now bring and complete the toll aspect and offering end to end solution to our customers. That's the reason the Foundry was really very essential in order to offer full solution to our clients.
Unidentified Analyst: 26:21 Okay, great. And I also noticed in the press release, the company mentioned that around four hundred people have been hired in the last two quarters. First of all, is the company seeing any wage or cost pressures to attract and retain employees? And off that four hundred late, how much of that was from the Moroccan base?
Paul Raymond: 26:44 Claude, do you want to answer that one.
Claude Rousseau: 26:49 Regarding the Morocco base, we are talking about anywhere between fifteen to twenty. The hiring process in to Morocco is going very, very well, but new employees as you can imagine like any other countries, they need to give a notice to their recurring employees before they will become Alithya employee. 27:10 And regarding now the recruitment aspect, we have different strategy. I don't want to expand too much on our strategy because it's pretty, pretty competitive strategic information, but we have several strategies regarding the hiring process. And that a reason we have a certain level of success. As we already described in the Investor Day, no doubt, it's not only people that we are recruiting in Canada, but also people who are coming from overseas. And we have anm outstanding crew, we are doing an outstanding job to attract new talent, and that's exactly what we are doing in our day today.
Unidentified Analyst: 27:48 Okay. Perfect. And just one last question from my end before I jump back in the queue. So, in Q1 the company did mention of six million loan forgiveness. I see that in the news release as well. So did that number just for my own understanding, did that number flow through the adjusted EBITDA number in Q1, that is -- was that a part of the adjusted EBITDA numbers in Q1?
Paul Raymond: 28:16 I'm not sure I understood the question. And you talking about the PPP loans in the U.S?
Unidentified Analyst: 28:22 Yes, the six million dollars forgiveness that the company gave in Q1, was that a part of the adjusted EBITDA number back then or not?
Paul Raymond: 28:32 I'm sorry, I'm having a hard time understanding the question. We booked the full forgiveness, one hundred percent forgiveness in Q1 whatever was left of the six point three million dollars. Nothing is recorded in this quarter. We are still waiting for confirmation of the last loan. We got five loans in five of our U.S. subsidiaries last year. All four of those were forgiven, we're still waiting for confirmation in one case. But we're told that those delays are quite normal with the volume that they're seeing in South of the border. We do not understand why that one loan is taking more time. It appears it's being administered by different persons at different location for whatever reason. But our position has not changed, we believe we will obtain a forgiveness in due course of that loan as well, but no impact in the second quarter on the P& L.
Unidentified Analyst: 29:33 Okay --
Paul Raymond: 29:35 I hope I answered the question.
Unidentified Analyst: 29:37 Sorry. Did that impact the Q1 adjusted EBITDA figure or not?
Claude Rousseau: 29:45 Was there an impact on Q1?
Paul Raymond: 29:45 Yes. There was. If you read our disclosures, you will see all the exact amount that hit the P&L, but it's roughly six million dollars Canadian just under that hit the P& L in Q1.
Unidentified Analyst: 30:00 Okay. I just want to --. Sorry. Go ahead.
Paul Raymond: 30:04 If you go to our presentation the same deck you are seeing today on our website. If you go to the Q1 deck, you will see the exact dollar figure, just under six million dollars Canadian. Nothing in Q2.
Unidentified Analyst: 30:18 Yes, I just wanted to know about the accounting procedure. But thank you for the color. And I'll jump back in line. Thank you again.
Paul Raymond: 30:24 And that is a good point, it would appear our performance of Q1. If you remember, we recorded seven million dollars of EBITDA. Obviously, if you remove this, what we were just talking about, you see a significant increase of our EBITDA not only from last year, but also from the first quarter.
Unidentified Analyst: 30:47 Understood. Thank you.
Operator: 30:54 And your next question comes from Amr Ezzat from Echelon Partners. Please go ahead.
Amr Ezzat: 31:04 Thanks for taking my questions and congrats on a very strong quarter. I'm curious to get more color on what's driving the strong growth in the U.S. I’m pleasantly surprised that it's -- like you pointed, it was typically very seasonally weaker quarter. Is it like vertical -- what's really happening?
Paul Raymond: 31:25 Thanks for the question, Amr. As we mentioned last quarter, if you go back and look at our booking for the last – for the past year, basically quarter after quarter we've been recording very strong bookings and the ramp up of our projects typically in the U.S. will take a couple of quarters, right? Between the time we signed the contract, then you define the requirements and get the project going. Usually the ramp up is a couple of quarters. 31:55 And given we kept our people at the beginning of the pandemic, we were able to accelerate those projects and accelerate the revenue capture of those projects, because we already have the people, right? A lot of companies are struggling right now trying to hire people to catch up. We're in an opposite position, we have people. So because we get the senior folks, we can add on to the junior ones, which we've done through our academy that we talked about earlier. 32:24 So, for the past two years we've been hiring these college grabs, training them and putting them on projects and it's a really, really good way for us to bring on-board new people and get them into the process. So during the summer months, we had a very high utilization rate because of all these projects, which we're now adding people to. So, again, we see this as very positive, these projects are growing, and we have a great backlog. So we're very encouraged by what we see happening out there. But I agree with you. It was a very strong quarter for us, given it was the summer quarter.
Amr Ezzat: 33:01 Okay. So, we shouldn't be expecting weakness in the current quarter? Are your people going to take vacations after the strong utilization rates?
Paul Raymond: 33:13 Well, people have been taking vacation despite that. As we said, we've hired over five hundred people in the last six months. So I guess some of that is -- what you're seeing is that, even though people are taking vacation, we've added so many people that -- the ramp up of those people make it that even though some are taking vacations, the ramp up of the new people are picking up the slack. So that's why it looks like -- it looks like there was no slowdown, but reality is, as we're adding a lot of people because of new projects.
Amr Ezzat: 33:41 That's great color. So in your Investor Day you spoke about the strategy with R3D and taking the margins higher just like what you guys did with Alithya and just like going for higher value add projects. Can you maybe give us a very high level insights into like EBITDA margin expansion and how you see that like evolving? Is it reasonable for us to expect you guys a double digit EBITDA margins in a year?
Paul Raymond: 34:11 Sure. So let me give you some color on that one. And I think you can – Claude tried to provide more details in the numbers here during the call and on the slide. So if you look at Q1, R3D we reported twenty million -- it’s around twenty million dollars in revenue. And if you remember the gross margins were significantly lower than ours. And so, in Q2 if you look at their revenue, we said it was around fifteen million dollars in the MD&A. And we don't comment the exact number, but it’s in that range. So -- and the overall business is growing significantly. So, if you look at in Quebec alone our organic growth, even if you remove -- if you remove R3D, it's still significant double digit over twenty percent organic growth, right? 35:02 So why R3D looks low in Q2 than Q1 is, we're transferring the new business that we signed under Alithya brand, right? So we did two new contracts that we have with Québecor and Beneva as we signed new higher margin business instead of putting them in the old R3D entity, we put them into the Alithya. So if you remove the revenue coming from R3D in Q2, our gross margins are actually over twenty nine percent. So despite the pressures, despite the added costs, despite the inflation, salary increases, we're able to price in those increases into our projects because these are – if you look at the type of business that we do project based, the projects that are beginning and in end, it's not a ten year project. It's multiple projects within these long term agreement. 35:57 So we can price the increases into our project into the higher value business. So the plan is that, as we've said, we're going to be integrating R3D into Alithya over the course of this year. December thirty one is when the full integration occurs, because of everything to do with salary and benefits, retention whatever in Canada, the best time to integrate people into your systems is January first, right? I mean, that's the most simple way of doing things from a technical perspective, we've invested in the platform as we've talked in previous quarters, we've invested in a centralized Oracle cloud platform that enables us to integrate acquisitions faster and put them all in the same system. So it gives us better control and visibility. So over the course of the next few months, the R3D legal entity is going to disappear, it's all going to be reported under Alithya. 36:57 So with the agreements we've signed with Québecor and Beneva, the way they're structured is to enable us to move that business from the lower gross margin to the higher gross margin and everybody is aligned on that. The customers are aligned on that, we're aligned on that, so everybody benefits from that. The plan was to do it over twenty four months starting April first of this year, right? So that's what we said, it would take us twelve to twenty four months of ramp up and we're on track for that as we speak.
Amr Ezzat: Fantastic. That's great color. And maybe one last one, on the book-to-bill, I know it's volatile quarter to quarter, anything to read into this quarter, like how are conversations going with customers?
Paul Raymond: 37:40 Sorry. I'm not sure I understood the question.
Amr Ezzat: 37:43 On the book to bill, it’s coming in below one. I know it's like volatile quarter to quarter. So, is there anything to read into that?
Paul Raymond: 37:52 No, actually, if you look at the summer quarter last year's, same thing. Usually in the summer our customers don't sign a lot of new contracts and typically Q1 and Q3 are very strong and Q2 which is our summer months are usually lower, but we're about the same place we were last year at this time.
Amr Ezzat: 38:10 Great. Just confirming. Thanks. I'll pass line. Congrats again.
Paul Raymond: 38:13 Thank you very much.
Operator: 38:15 Your next -- and there no further question at this time. I will turn the call back over to the presenters for closing remarks.
Paul Raymond: 38:25 Thank you, Julie. Thank you everybody for being in the call today. Stay safe and talk to you soon.
Operator: 38:32 This concludes today's conference call. You may now disconnect.
