I3 Verticals Inc (IIIV) 2024 Q2 法說會逐字稿

Good day, and welcome to the i3 Verticals second-quarter 2024 earnings conference call. (Operator Instructions)

美好的一天，歡迎參加 i3 Verticals 2024 年第二季財報電話會議。（操作員說明）

Today's call is being recorded, and a replay will be available starting today through May 17. The number for the replay is 877-344-7529, and the code is 6854757. The replay also may be accessed for 30 days at the company's website.

今天的電話會議正在錄音，從今天到 5 月 17 日將提供重播。重播號碼為877-344-7529，代碼為6854757。也可以在公司網站上觀看重播 30 天。

At this time, I would like to turn the conference call over to Mr. Geoff Smith, SVP of Finance. Please go ahead, sir.

現在，我想將電話會議轉交給財務高級副總裁 Geoff Smith 先生。請繼續，先生。

Good morning, and welcome to the second-quarter 2024 conference call for i3 Verticals. Joining me on this call are Greg Daily, our Chairman and CEO; Clay Whitson, our CFO; Rick Stanford, our President; and Paul Christians, our COO.

早安，歡迎參加 i3 Verticals 2024 年第二季電話會議。與我一起參加本次電話會議的還有我們的董事長兼執行長 Greg Daily；克萊‧惠特森 (Clay Whitson)，我們的財務長；瑞克‧史丹福，我們的總裁；以及我們的營運長保羅·克里斯蒂安斯 (Paul Christians)。

To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation to the most directly comparable GAAP financial measure reviewing yesterday's earnings release. It's the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial information. This non-GAAP financial information should be considered by each individual in addition to but not instead of the GAAP financial statements.

在今天的電話會議中討論任何非公認會計原則財務指標的情況下，您還會在回顧昨天的收益發佈時發現與最直接可比較的公認會計原則財務指標的調節。該公司打算提供非 GAAP 財務信息，以加深對其綜合 GAAP 財務資訊的了解。除了但不能取代 GAAP 財務報表之外，每個人都應考慮此非 GAAP 財務資訊。

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding the company's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements.

本次電話會議可能包含 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述，包括有關公司預期財務和經營業績的陳述等。為此目的，本次電話會議期間所做的任何非歷史事實陳述的陳述都可能被視為前瞻性陳述。

You are hereby cautioned that these forward-looking statements may be affected by the important factors, among others, set forth in the company's earnings release and reports that are furnished with the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it, except as may be required under applicable law.

特此提醒您，這些前瞻性陳述可能會受到公司向 SEC 提供的收益發布和報告中列出的重要因素的影響。因此，實際營運和結果可能與前瞻性陳述中討論的內容有重大差異。最後，本次電話會議共享的資訊自今日起有效，本公司不承擔更新資訊的義務，除非適用法律有要求。

I will now turn the call over to the company's Chairman and CEO, Greg Daily.

我現在將把電話轉給公司董事長兼執行長格雷格·戴利 (Greg Daily)。

Thanks, Geoff, and good morning to everyone on the call. Before getting into the results of second-quarter fiscal year '24, I'd like to provide a brief update on what we announced last quarter, namely the exploration of the sale of the merchant services business.

謝謝傑夫，祝所有參加電話會議的人早安。在討論 24 財年第二季的業績之前，我想簡要介紹一下我們上季宣布的最新情況，即探索出售商業服務業務。

As previously announced in February, the company's Board of Directors have directed i3's management to explore the sale of certain discrete assets related to our merchant services business. The process for considering this transaction is ongoing. We would intend to use the proceeds from the sale of this business to pay down debt.

正如先前在 2 月宣布的那樣，公司董事會已指示 i3 管理層探索出售與我們的商業服務業務相關的某些離散資產。考慮該交易的過程正在進行中。我們打算用出售該業務的收益來償還債務。

Any decision by the Board to engage in any transaction involving the merchant services business will be aligned with the Board's objective to maximize long-term shareholders' value. I don't have any further updates on the process at this time.

董事會做出的任何涉及商業服務業務交易的決定都將符合董事會實現長期股東價值最大化的目標。目前我沒有關於該流程的任何進一步更新。

With that addressed, I'm pleased to share with you some of our results from the second quarter of fiscal year '24. In a minute, Rick will elaborate on the realignment we began last year and how that has better positioned us for sustainable growth. Before he does, I'd like to reemphasize our commitment to highly recurring revenue streams.

有鑑於此，我很高興與您分享我們 24 財年第二季的一些結果。稍後，里克將詳細闡述我們去年開始的重組，以及這如何使我們更好地實現永續成長。在他這樣做之前，我想再次強調我們對高經常性收入流的承諾。

This quarter, several of our nonrecurring lines are lower than last year, especially professional services and software licenses. Some of our revenue here has been impacted by delayed projects in our backlog, such as the Manitoba driver's license project we've discussed with you or the very large and exciting new utilities opportunity.

本季度，我們的一些非經常性項目低於去年，特別是專業服務和軟體許可。我們這裡的一些收入受到了積壓項目延遲的影響，例如我們與您討論過的馬尼托巴駕駛執照項目或非常大且令人興奮的新公用事業機會。

The utilities opportunity has required us to build a complex new project. It is going great. However, we have not been able to recognize any revenue related to it. That's fine with us because we believe that in the long term, this project is going to open up new markets and be highly accretive to our shareholders.

公用事業機會要求我們建造一個複雜的新項目。進展順利。然而，我們無法確認任何與之相關的收入。這對我們來說很好，因為我們相信從長遠來看，這個項目將開闢新市場，並為我們的股東帶來巨大的價值。

In the interim, as we go through a period of lower professional services and license revenue, we benefit greatly from our excellent financial profile. ARR is well north of 80%. Our margins grew over 100 basis points despite lower higher-margin license revenue. We think that's fantastic results which we are proud of. Our future is very bright, and we are excited about the second half of our fiscal year.

在此期間，當我們經歷一段專業服務和許可收入較低的時期時，我們出色的財務狀況使我們受益匪淺。ARR 遠高於 80%。儘管利潤率較高的授權收入有所下降，但我們的利潤率仍增加了 100 個基點以上。我們認為這是令人自豪的出色結果。我們的未來非常光明，我們對下半年的財年感到興奮。

I'll now turn the call over to Clay, and he'll provide you more details on our financial performance. When he is finished, Rick will add commentary on the business and then we'll open up the call for questions.

我現在將電話轉給克萊，他將為您提供有關我們財務業績的更多詳細資訊。當他完成後，里克將添加對業務的評論，然後我們將開始提問。

Thanks, Greg. The following pertains to the second quarter of our fiscal year 2024, which is the quarter ended March 31, 2024. Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion.

謝謝，格雷格。以下內容涉及我們 2024 財年第二季度，即截至 2024 年 3 月 31 日的季度。請參閱我們網站上標題為“補充資訊”的幻燈片演示，以供本次討論參考。

Revenues for the second quarter of fiscal 2024 increased 1% to $94.5 million from $93.9 million for Q2 '23, reflecting organic growth from recurring sources, partially offset by declines in nonrecurring sources. SaaS and transaction-based software revenues each grew 10%, while recurring software services grew 6%. Payments revenues also grew 6%.

2024 財年第二季的營收從 2023 年第二季的 9,390 萬美元成長 1%，達到 9,450 萬美元，反映出經常性來源的有機成長，部分被非經常性來源的下降所抵銷。SaaS 和基於交易的軟體收入分別成長 10%，而經常性軟體服務成長 6%。支付收入也成長了 6%。

Nonrecurring sales of software licenses declined by over $2 million as expected, reflecting the ongoing shift to SaaS. Professional services revenues declined by $1.3 million, principally a result of the delay in Celtic's implementation with Manitoba caused by the public workers' strike. We will discuss the outlook for both line items in our outlook section.

軟體授權的非經常性銷售額如預期下降了 200 萬美元以上，反映了向 SaaS 的持續轉變。專業服務收入下降了 130 萬美元，主要是由於公共工人罷工導致凱爾特人與曼尼托巴的實施延遲。我們將在展望部分討論這兩個項目的前景。

ARR increased 6% to $322.5 million for Q2 '24, a new record compared to $305.7 million for Q2 '23. Over 80% of our revenues in the quarter continued to come from recurring sources. Software and related services represented 48% of total revenues for Q2, with payments, 47%, and other 5%. Payments revenues as a percentage of payments volume improved slightly to 71 basis points for Q2 '24 from 70 basis points for Q2 '23.

2024 年第二季的 ARR 成長了 6%，達到 3.225 億美元，較 2023 年第二季的 3.057 億美元創下了新紀錄。本季超過 80% 的收入繼續來自經常性來源。軟體及相關服務佔第二季總營收的 48%，其中支付服務佔 47%，其他服務佔 5%。支付收入佔支付量的百分比從 2023 年第二季的 70 個基點小幅提高至 24 年第二季的 71 個基點。

Adjusted EBITDA increased 4% to $25.8 million for Q2 '24 from $24.7 million for Q2 '23. Adjusted EBITDA as a percentage of revenues improved to 27.3% from 26.3% for Q2 '23, reflecting improvement in our merchant services margin, along with lower corporate expenses. Both improvements resulted from the internal realignment discussed on previous quarterly calls.

調整後 EBITDA 成長 4%，從 2023 年第二季的 2,470 萬美元增至 24 年第二季的 2,580 萬美元。調整後 EBITDA 佔營收的百分比從 23 年第二季的 26.3% 提高到 27.3%，反映了我們的商業服務利潤率的提高以及公司費用的降低。這兩項改進都是先前季度電話會議討論的內部調整的結果。

Pro forma adjusted diluted earnings per share was $0.34 for Q2 '24 compared to $0.38 for Q2 '23. The decline was driven by higher interest expense following the repurchase of our exchangeable notes in January. Again, please refer to the press release for a full description and reconciliation.

2024 年第二季預計調整後攤薄每股收益為 0.34 美元，而 23 年第二季為 0.38 美元。下降的原因是一月回購可交換票據後利息費用增加。同樣，請參閱新聞稿以獲取完整的描述和調節。

Segment performance: revenues in our software and services segment declined 2% to $59.5 million for Q2 '24 from $60.8 million for Q2 '23, principally reflecting lower one-time sales of software licenses and professional services as previously discussed. Payment revenues represented 25% of the software and services segment's revenues.

部門業績：我們的軟體和服務部門的收入從23 年第2 季的6,080 萬美元下降到24 年第2 季的5,950 萬美元，下降了2%，主要反映了前面討論的軟體許可證和專業服務的一次性銷售額下降。支付收入佔軟體和服務部門收入的25%。

The segment's adjusted EBITDA declined 5% to $20.9 million for Q2 '24 from $22.1 million for Q2 '23. Adjusted EBITDA as a percentage of revenues declined to 35.2% for Q2 '24 from 36.3% for Q2 '23. The biggest factor for the declines were lower one-time software license sales, which fall straight to the bottom line in the quarters they land.

該部門調整後的 EBITDA 下降 5%，從 2023 年第二季的 2,210 萬美元降至 24 年第二季的 2,090 萬美元。調整後 EBITDA 佔營收的百分比從 2023 年第二季的 36.3% 降至 24 年第二季的 35.2%。下降的最大因素是一次性軟體授權銷售額的下降，該銷售額在其發布的季度直接跌至淨利潤。

Revenues for our merchant services segment increased 6% to $35.1 million for Q2 '24 from $33.1 million for Q2 '23, reflecting broad-based growth in our ISO, ISV, B2B, and POS channels. Adjusted EBITDA for our merchant services segment increased 18% to $10.1 million for Q2 '24 from $8.6 million for Q2 '23 outpacing revenues. Our revenue yield increased slightly with continued expense control.

我們的商業服務部門的營收從 2023 年第二季的 3,310 萬美元成長了 6%，達到 24 年第二季的 3,510 萬美元，反映出我們的 ISO、ISV、B2B 和 POS 管道的廣泛成長。我們的商業服務部門的調整後 EBITDA 成長了 18%，從 2023 年第二季的 860 萬美元增至 24 年第二季的 1,010 萬美元，超過了營收。隨著持續的費用控制，我們的收入收益率略有增加。

Balance sheet: our balance sheet remains strong and well positioned for '24. Following our repurchase of convertible notes in January, we have $26.2 million remaining. At quarter end, borrowings under the revolver net of cash approximated $343.1 million.

資產負債表：24 年我們的資產負債表依然強勁且處於有利位置。1 月回購可轉換票據後，我們還剩下 2,620 萬美元。截至季末，循環貸款下的借款扣除現金後約為 3.431 億美元。

Our total leverage ratio was 3.5 times. The current constraint is 5 times under our $450 million revolving credit. The interest rate for the convertible notes is 1%, while the interest rate for the revolver is currently around 8.5%.

我們的總槓桿率為3.5倍。目前的限制是我們 4.5 億美元循環信貸的 5 倍。可轉換票據的利率為1%，而左輪手槍的利率目前約為8.5%。

We have remained disciplined in our approach to growth and acquisitions. We have approximately $4 million in earn-out payments remaining from past acquisitions. In the event we sell our merchant services business, we would have very little, if any, remaining debt. This would free up even more resources to deploy towards the public sector, education, and healthcare verticals.

我們在成長和收購方面始終保持嚴格的紀律。我們從過去的收購中剩餘了約 400 萬美元的收益付款。如果我們出售商業服務業務，我們的剩餘債務（如果有的話）也很少。這將釋放更多資源，用於公共部門、教育和醫療保健垂直領域。

Outlook: this is potentially a transitionary year, so I will first outline our revised outlook for fiscal year '24, assuming no divestitures or acquisitions. And I will touch on the financial profile for what could be called RemainCo in the event we sell the merchant services business.

展望：這可能是過渡年，因此我將首先概述我們對 24 財年的修訂展望，假設沒有資產剝離或收購。如果我們出售商業服務業務，我將談談「RemainCo」的財務狀況。

For fiscal year '24, our revised outlook follows: revenues, $380 million to $394 million; adjusted EBITDA, $107 million to $113 million; depreciation and internally developed software amortization, $11 million to $13 million; cash interest expense, $27 million to $29 million; pro forma adjusted diluted EPS, $1.49 to $1.57.

對於 24 財年，我們修訂後的前景如下： 收入 3.8 億美元至 3.94 億美元；調整後 EBITDA 為 1.07 億美元至 1.13 億美元；折舊和內部開發軟體攤銷，1100萬至1300萬美元；現金利息支出，2,700萬至2,900萬美元；預計調整後攤薄每股收益為 1.49 美元至 1.57 美元。

From a seasonal standpoint, historically, we have not had large step ups from Q2 to Q3 organically. Although actual results on the one-time software line can vary significantly, our current expectations for software license sales remain $1 million for Q3 and $3 million for Q4.

從季節性角度來看，從歷史上看，我們從第二季到第三季並沒有有機地大幅提升。儘管一次性軟體產品線的實際結果可能存在很大差異，但我們目前對軟體授權銷售額的預期仍然是第三季 100 萬美元和第四季 300 萬美元。

The bulk of Q4 amount is an implementation for a large utility customer we have discussed on previous calls. In the event we sell our merchant services business, we currently expect RemainCo would resume high single-digit revenue growth beginning in fiscal year '25.

第四季度的大部分金額是我們在之前的電話中討論過的大型公用事業客戶的實施。如果我們出售我們的商業服務業務，我們目前預計 RemainCo 將在 25 財年開始恢復高單位數營收成長。

Some tailwinds that we have identified include the Manitoba project returning to a normal cadence, continued momentum in the utilities market, and the SaaS transition becoming less of a short-term drag. The education business will also lap the introduction of certain state subsidies for lunch, which began during the back-to-school season in '23.

我們發現的一些有利因素包括曼尼托巴項目恢復正常節奏、公用事業市場的持續成長動能以及 SaaS 轉型不再是短期拖累。教育產業也將接受國家對午餐的某些補貼的推出，這項補貼是在 23 年返校季開始的。

We would expect adjusted EBITDA as a percentage of revenues for RemainCo to improve annually by 50 to 100 basis points per year. We would also expect to resume acquisitions in the public sector, education, and healthcare verticals after using the proceeds from the sale to pay down debt.

我們預計 RemainCo 調整後的 EBITDA 佔營收的百分比將每年提高 50 至 100 個基點。我們也預計在使用出售收益償還債務後，將恢復公共部門、教育和醫療保健垂直領域的收購。

I will now turn the call over to Rick for company updates and M&A pipeline.

我現在將把電話轉給 Rick，了解公司最新情況和併購管道。

Thank you, Clay. Good morning, everyone. Over the past 18 months, we've transitioned from a group of products in multiple verticals into a coordinated efficient organization developing and selling software solutions in strategic vertical markets. Throughout the transition, we've adjusted our organizational structure to drive i3 forward.

謝謝你，克萊。大家，早安。在過去的 18 個月裡，我們已經從多個垂直領域的一組產品轉變為在策略性垂直市場開發和銷售軟體解決方案的協調高效組織。在整個過渡過程中，我們調整了組織結構以推動 i3 向前發展。

Initially, we capitalized on our expertise in public sector by analyzing our products and processes to provide solutions across any government of any size with a single contract. Eventually, the initiative was called UPO or unified product offering. As a result of trust in i3, vendor fatigue, and our solutions and service, we quickly saw buy-in from our government customers.

最初，我們利用我們在公共部門的專業知識，透過分析我們的產品和流程，透過一份合約為任何規模的政府提供解決方案。最終，該計劃被稱為 UPO（統一產品供應）。由於對 i3 的信任、供應商疲勞以及我們的解決方案和服務，我們很快就得到了政府客戶的認可。

Because of the success in public sector, our leadership team rolled out the initiative across the organization. We worked through changes, realigned the reporting structures, and captured market share. Now our focus is on achieving sustainable growth with enterprise software as we scale our strategic markets: public, healthcare, and education.

由於公共部門的成功，我們的領導團隊在整個組織內推廣了該計劃。我們經歷了變革，重新調整了報告結構，並佔領了市場份額。現在，我們的重點是透過企業軟體實現永續成長，同時擴大我們的策略市場：公共、醫療保健和教育。

Now that our company is unified and configured for sustainable growth, we are focusing on quality revenue expansion through sales of our enterprise software solutions. In addition, we plan to make additional strategic hires and product to lead and expand our ongoing investment in web-native configurable next-generation applications.

現在，我們的公司已經統一並配置為永續成長，我們專注於透過銷售我們的企業軟體解決方案來實現高品質的收入成長。此外，我們計劃進行額外的策略性招募和產品，以領導和擴大我們對網路原生可配置下一代應用程式的持續投資。

This past quarter in public sector, we secured long-term software contracts in California, Michigan, New Hampshire, and Tennessee. In education, we landed white space contracts in Georgia, North Carolina, South Carolina, and Texas; and in healthcare, a large health insurance carrier.

上個季度，在公共部門，我們在加州、密西根州、新罕布夏州和田納西州獲得了長期軟體合約。在教育領域，我們在喬治亞州、北卡羅來納州、南卡羅來納州和德克薩斯州簽訂了空白合約；在醫療保健領域，一家大型健康保險公司。

Regarding M&A, we have looked at several opportunities over the last quarter. Most of them are in public sector with a few in healthcare and education. Our dance card continues to be full of target companies largely in public sector and healthcare verticals.

關於併購，我們在上個季度研究了幾個機會。他們中的大多數在公共部門工作，少數在醫療保健和教育部門工作。我們的舞蹈卡仍然充滿了主要在公共部門和醫療保健垂直領域的目標公司。

Some of the solutions include software solutions tailored towards mobile policing; utility management and property tax collection; case management and data intelligence solutions for Justice and Public Safety industries; a school online enrollment solution; tax software and local government specializing in areas such as business license and tax, lodging tax, property tax, sales and use tax, and utility tax; and an RCM solution that automates a proportion of the back office process.

其中一些解決方案包括針對行動警務量身定制的軟體解決方案；公用事業管理和財產稅徵收；司法和公共安全行業的案件管理和數據智慧解決方案；學校線上註冊解決方案；稅務軟體和地方政府專門從事營業執照和稅務、住宿稅、財產稅、銷售和使用稅以及公用事業稅等領域； RCM 解決方案可自動執行部分背景流程。

We hope to be able to share more details on the M&A front in the near future. This concludes my comments, Chris. At this time, we'll open the call for Q&A, please.

我們希望能夠在不久的將來分享更多有關併購的細節。我的評論到此結束，克里斯。此時，我們將開啟問答電話。

(Operator Instructions) John Davis, Raymond James.

（操作員說明）約翰·戴維斯、雷蒙德·詹姆斯。

Hey. Good morning, guys. Sounds like the slightly softer revenue in the quarter was more or less kind of a push out of some revenue, but you did lower the full-year guidance by kind of a similar amount. So just curious if that's revenue that you're not expecting to get until next year, maybe conservatism, because you don't know when that's going to come? Or just any kind of comments on the lower outlook for the full year.

嘿。早上好傢伙。聽起來本季收入的略微疲軟或多或少是對某些收入的推動，但您確實將全年指導下調了類似的金額。所以只是好奇這是否是您預計要到明年才能獲得的收入，也許是保守主義，因為您不知道什麼時候會出現？或只是對全年較低前景的任何評論。

Well, revenue for the quarter we give guidance annually. So revenue of the quarter would pass through to the full year. The Manitoba driver's license project, we don't expect to see any meaningful revenue this year in fiscal year '24, which ends in September. We'll get it in '25, so that is pushed out.

嗯，我們每年給出指導的季度收入。因此，該季度的營收將轉入全年。對於馬尼托巴省駕駛執照項目，我們預計今年 9 月結束的第 24 財年不會有任何有意義的收入。我們將在 25 年推出它，所以它被推遲了。

Okay. That's helpful, Clay. And then it was encouraging to see, despite the lower nonrecurring, high-margin revenue, margin still expanded nicely, and we're in line with expectations. So Clay, was that better than you expected given the nonrecurring headwinds? Just any comments there. I know you guys have some cost initiatives underway, but any thoughts on the margin as we are going to exit 2Q headed into the back half of the year?

好的。這很有幫助，克萊。然後令人鼓舞的是，儘管非經常性高利潤收入較低，但利潤率仍然良好增長，而且我們符合預期。那麼，克萊，考慮到反覆出現的不利因素，這比你預期的要好嗎？只是有任何評論。我知道你們正在進行一些成本計劃，但是當我們即將退出第二季度並進入今年下半年時，您對利潤有什麼想法嗎？

No. We came into the year projecting margin improvement and continue to expect it. And it results from the internal realignment that began in earnest in the fourth quarter, but we're getting a full-year effect this year.

不。我們今年預計利潤率將有所改善，並繼續對此抱持期望。這是從第四季度開始認真進行的內部調整的結果，但我們今年將產生全年影響。

Okay. And then lastly, I think ARR was up 6% in the quarter. You talked about RemainCo, high single-digit gross profile going forward if you were to sell the personal services business. So just help me bridge that gap. Was there anything that kind of weighed on ARR this quarter? Just how do we think about that acceleration from 6% to high single digits for RemainCo?

好的。最後，我認為本季 ARR 成長了 6%。您談到了RemainCo，如果您要出售個人服務業務，那麼未來的總收入將達到高個位數。所以請幫我彌補這個差距。本季是否有任何因素影響 ARR？我們如何看待留歐派從 6% 加速到高個位數的情況？

Well, four things. One is the Manitoba driver's license project will come online in '25. The big utility customer we have will have a big '25. We actually expect most of the $3 million I mentioned for the fourth quarter in one-time license sales comes from that large utility customer also, but then it kicks into a bigger project in '25. Education laps this August, September. And I believe those were the -- and then, yeah, those were the major ones.

嗯，有四件事。其中之一是曼尼托巴省駕駛執照計畫將於 25 年上線。我們的大公用事業客戶將有一個大的“25”。實際上，我們預計我提到的第四季度一次性許可證銷售 300 萬美元的大部分也來自該大型公用事業客戶，但隨後它將在 25 年進入一個更大的項目。教育在今年八月、九月結束。我相信這些是——然後，是的，這些是主要的。

Okay, appreciate it. Thanks, guys.

好的，欣賞一下。多謝你們。

Thanks.

謝謝。

Peter Heckmann, D.A. Davidson.

彼得‧赫克曼，D.A.戴維森。

Hey. Good morning, everyone. I haven't seen the cash flow statement yet, but it looked as if cash flow was pretty good. And looks like to me that you had a working capital inflow. Is that correct? Is that, generally, correct?

嘿。大家，早安。我還沒看到現金流量表，但看起來現金流還不錯。在我看來，你們有營運資金流入。那是對的嗎？一般來說，這是正確的嗎？

I'm trying to just kind of back into some numbers here, but actually it looks like working capital is slightly negative. But it looked like free cash flow conversion was somewhere close to 50% for the quarter. Does that sound about right?

我試圖在這裡回顧一些數字，但實際上看起來營運資金略有負值。但看起來該季度的自由現金流轉換率接近 50%。那個聽起來是對的嗎？

Yeah. I get 47%, Pete. CapEx was $1.5 million. Capitalized software is $6.1 million. Cash interest, much higher at $14.1 million. When we paid off the convertible notes, we traded 1% debt for 8.5% debt. And then cash taxes were a pretty big number this quarter at $5.4 million. So I get 47%. We came into the year expecting 50%, so it's pretty close.

是的。我得到了 47%，皮特。資本支出為 150 萬美元。軟體資本化金額為 610 萬美元。現金利息，高得多，達到 1,410 萬美元。當我們還清可轉換票據時，我們將 1% 的債務換成了 8.5% 的債務。本季的現金稅是一個相當大的數字，達到 540 萬美元。所以我得到了47%。我們今年的預期是 50%，所以已經非常接近了。

Okay, great. And then can you just talk a little bit about the attach rates on some of the software businesses that you had acquired over the last three years? Some of them hadn't even started marketing payments. But can you talk about where you've had some success there, either by vertical or even your sub niche within the verticals?

好的，太好了。那麼您能否簡單談談您在過去三年中收購的一些軟體業務的附加費率？其中一些甚至還沒有開始行銷付款。但您能否談談您在哪些方面取得了一些成功，無論是在垂直行業還是在垂直行業中的子利基領域？

Well, healthcare is still in the infant stages. That's going to be a long, slow role. We have thousands of billing customers who currently use other providers. And they're all small -- most of them are small customers. So we will be trying to attack those one by one. Education is obviously the best in an attach rate and then public sector would be second best.

嗯，醫療保健仍處於嬰兒階段。這將是一個漫長而緩慢的角色。我們有數千名目前使用其他提供者的計費客戶。而且它們都很小——其中大多數是小客戶。因此，我們將嘗試一一攻擊它們。從附加率來看，教育顯然是最好的，然後公共部門是第二好的。

Pete, the other thing is we've talked about the realignment and bringing services to the enterprise level. We've created this past quarter a group that their specific directive is to sell into our three strategic verticals, and there's a support team behind that. So we look forward to seeing some advances from that group with a specific directive to go after those three verticals.

皮特，另一件事是我們已經討論了重組並將服務引入企業層級。我們在上個季度創建了一個小組，他們的具體指示是向我們的三個戰略垂直領域進行銷售，並且背後有一個支援團隊。因此，我們期待看到該小組取得一些進展，並制定具體指令來追求這三個垂直領域。

I see. Okay. And then I'm sure you can't comment too much on the potential divestiture. But just in terms of timing, to the extent that it did happen, would we expect to hear some news in the next 90 days?

我懂了。好的。然後我確信你不能對潛在的資產剝離發表太多評論。但就時間而言，如果確實發生了，我們是否會期望在接下來的 90 天內聽到一些消息？

I don't think we're in a position to say, Pete. We'd like to say more, but we really -- until something is done, we can't really comment on it.

我認為我們沒有資格說，皮特。我們想說更多，但我們真的——在事情完成之前，我們無法真正對其發表評論。

I understand. Okay. I appreciate it. I'll get back in the queue.

我明白。好的。我很感激。我會回到隊列中。

James Faucette, Morgan Stanley.

詹姆斯‧福賽特，摩根士丹利。

Hi. Thank you for taking my question. This is Shefali Tamaskar asking a question on behalf of James. I was wondering if you could provide an update on what the timing might look like for the continued transition from nonrecurring revenue sources like licenses to recurring revenue sources like SaaS, and what that might look like going forward?

你好。感謝您回答我的問題。我是謝法利·塔馬斯卡 (Shefali Tamaskar) 代表詹姆斯提問。我想知道您能否提供最新信息，說明從許可證等非經常性收入來源持續過渡到 SaaS 等經常性收入來源的時間安排，以及未來的情況如何？

Well, our total software licenses sales for fiscal year '23 were $10.7 million, and we expect the total one-time sales this year to be $5 million. So at the end of fiscal '24, it will already be fairly de minimis.

嗯，我們 23 財年的軟體許可證總銷售額為 1,070 萬美元，我們預計今年的一次性總銷售額為 500 萬美元。因此，到 24 財年結束時，它已經相當微不足道了。

We do have some utility customers where we will continue to have some onetime software sales. So I'm viewing this year as the transition year and probably plateauing around the $5 million mark, although we could have some pleasant surprises in the future.

我們確實有一些公用事業客戶，我們將繼續進行一些一次性軟體銷售。因此，我將今年視為過渡年，並可能穩定在 500 萬美元大關附近，儘管我們將來可能會帶來一些驚喜。

Okay. And just as a follow-up, could you provide an update on the current competitive environment you're seeing and if you've seen any changes in competitive intensity as it pertains to winning deals or keeping current customers?

好的。作為後續行動，您能否提供有關您所看到的當前競爭環境的最新信息，以及您是否發現競爭強度在贏得交易或保留現有客戶方面有任何變化？

This is Paul Christians. That's been pretty steady state. We haven't seen that. Clay mentioned a couple of pushouts on projects, which are really tied to our customers having some personnel constraints of their own, which we're attempting to facilitate with additional support mechanisms to help them free up and get back on track. But the overall demand or competitive environment has been relatively constant.

這是保羅基督徒。這是相當穩定的狀態。我們還沒有看到這一點。克萊提到了一些項目的推出，這些項目實際上與我們的客戶本身的人員限制有關，我們正在嘗試透過額外的支持機制來促進這些限制，以幫助他們擺脫困境並回到正軌。但整體需求或競爭環境相對穩定。

Thank you.

謝謝。

Mark Palmer, Benchmark.

馬克‧帕爾默，《基準》。

Yes. Thank you for taking my questions. Outside of the headwinds associated with the nonrecurring revenue sources, how would you describe the demand environment in the public sector, in particular, relative to the macroeconomic environment and other factors?

是的。感謝您回答我的問題。除了與非經常性收入來源相關的不利因素之外，您如何描述公共部門的需求環境，特別是相對於宏觀經濟環境和其他因素的需求環境？

It's been relatively constant. We haven't seen any kind of extraction of RFPs beyond the norm or anything of that nature that would tell that we have more of a macro issue in that environment.

這是相對穩定的。我們還沒有看到任何超出標準的 RFP 提取，也沒有看到任何類似性質的情況，這表明我們在這種環境下存在更多的宏觀問題。

I do think as we get to look at it and we switch more and more to SaaS delivery of product, that eases the pain for our customers because there's less capital requirements, and their dollars go further on a near-term basis.

我確實認為，當我們開始關注這個問題時，我們越來越多地轉向 SaaS 交付產品，這會減輕我們客戶的痛苦，因為資本要求更少，而且他們的資金在短期內會進一步上漲。

So I think the SaaS transition as a natural extension will help mitigate that to a degree if that does surface. But we're not seeing any evidence of it.

因此，我認為 SaaS 轉型作為一種自然延伸，如果這種情況確實出現，將有助於在一定程度上緩解這種情況。但我們沒有看到任何證據。

Seems like there could be some seasonality.

看來可能有些季節性。

Certainly. Yes, definitely.

當然。當然是。

January, February was crazy, busy. Slowed down now. We think it's going to pick up this summer.

一月、二月是瘋狂、忙碌的。現在放慢了。我們認為今年夏天這種情況將會有所改善。

Right. And fresh budget is always impacted, yeah.

正確的。是的，新的預算總是會受到影響。

And one more, should we assume that the company is going to hold off on acquisitions until the merchant services sales process has been completed?

另外，我們是否應該假設該公司將推遲收購，直到商業服務銷售流程完成為止？

I hope not. We do have an active pipeline that we're negotiating with a handful of people, but the two are -- we're not holding off. We're still talking to people every day. And merchant services, it will happen, but we have the capacity to do deals while we wait for that to close.

我希望不是。我們確實有一個積極的管道，正在與少數人進行談判，但這兩個人——我們不會拖延。我們仍然每天與人們交談。和商業服務，這將會發生，但我們有能力在等待交易結束時進行交易。

Very good. Thank you.

非常好。謝謝。

Matt VanVliet, BTIG.

馬特·範弗利特，BTIG。

Yeah. Good morning. Thanks for taking my question. I guess when you look at the cost controls that have been put in place over the last several quarters, how should we think about that cost basis relative to where we're headed?

是的。早安.感謝您提出我的問題。我想當你看到過去幾季實施的成本控制時，我們應該如何考慮相對於我們前進方向的成本基礎？

Maybe more specifically in potential RemainCo, how do you feel like you're staffed? And overall, what head count projections look like for the software side of the business for the next several quarters?

也許更具體地說，在潛在的留歐協議中，您感覺自己的人員配置如何？整體而言，未來幾季軟體業務的員工人數預測是什麼樣的？

Well, I think there are 300. And the exact number, a little over --

嗯，我想有 300 個。確切的數字，有點多--

Just south of 300.

就在300以南。

Okay. 300 people roughly associated with the merchant services business, and the total company is some 1,700. So we are well staffed. And we do believe we've been through the realignment on the RemainCo's side, which will suit us well over the next few years. We're not feeling the need to cut more right now.

好的。約有 300 人與商業服務業務相關，公司總人數約 1,700 人。所以我們人員配備齊全。我們確實相信，留歐派方面已經完成了重組，這在未來幾年將非常適合我們。我們現在不覺得有必要削減更多。

Okay. Helpful. And then you talked about additional internal development needed for the big utility customer. How much of that is purely custom for their environment, their infrastructure versus development that can be leveraged for additional customers, especially if you can grow more in similar types of businesses?

好的。有幫助。然後您談到了大型公用事業客戶所需的額外內部開發。其中有多少是純粹針對他們的環境、基礎設施和可用於其他客戶的開發而定制的，特別是如果您可以在類似類型的業務中獲得更多增長？

One of the things that we're so excited about with this particular opportunity in all of our web-native development is that everything is being built in a highly scalable, configurable native applications. So it really reduces the amount of customization we do for projects, and it enhances speed to market. And it also reduces ongoing maintenance cost.

在我們所有的 Web 原生開發中，我們對這個特殊機會感到非常興奮的一件事是，所有內容都建立在高度可擴展、可設定的本機應用程式中。因此，它確實減少了我們為專案所做的客製化量，並提高了上市速度。它還降低了持續的維護成本。

So historically, if you look at that number, it will -- the new products' custom code that would be required is far less than the historic products. And I just made a note of -- that holds true and with some iterations of slight differences in water, gas, electric. It's all the same fundamental model, just some different data attributes that have to be picked up.

因此，從歷史上看，如果您查看該數字，您會發現新產品所需的自訂程式碼遠遠少於歷史產品。我剛剛記下來了——這是正確的，並且在水、天然氣、電力方面存在一些細微的差異。它們都是相同的基本模型，只是必須選取一些不同的資料屬性。

Yeah. It looks like the commercial off-the-shelf application. The customized piece to it is vendor integrations by utility. That's the difference.

是的。它看起來像商業現成的應用程式。它的客製化部分是按實用程式進行的供應商整合。這就是差別。

And then that gets augmented because we have standard methods of entry on our APIs that ease that process as well.

然後，這種情況會增強，因為我們在 API 上有標準的輸入方法，也可以簡化流程。

Okay. Very helpful.

好的。很有幫助。

Charles Nabhan, Stephens.

查爾斯·納布漢，史蒂芬斯。

Hey, guys. Good morning, and thank you for taking my questions. I appreciate the color on the RemainCo outlook for '25. But just wanted to get a little more color around the linearity of revenue as we think about the quarterly cadence.

大家好。早上好，感謝您回答我的問題。我很欣賞 25 年留歐派前景的顏色。但只是想在我們考慮季度節奏時，對收入的線性有更多的了解。

So you had mentioned high single-digit growth. It sounds like there's some license revenue that's going to come through in the front half of the fiscal year.

所以你提到了高單位數成長。聽起來本財年前半段將獲得一些授權收入。

So that being said, I guess, first, is that high single digit, I assume that's an average for the year? And secondly, are there any weightings towards any particular quarters that we should consider as we think about our model?

話雖這麼說，我想，首先，這個數字是不是很高，我認為這是今年的平均值？其次，在考慮我們的模型時，我們是否應該考慮任何特定季度的權重？

There will be seasonality, particularly on the one-time software line. I do believe Manitoba, we believe, is going to be more second half as opposed to first half because of the -- we haven't received the requirements yet.

會有季節性，尤其是一次性軟體產品線。我確實相信曼尼托巴省，我們相信，下半年會比上半年更多，因為我們還沒有收到要求。

When it comes to utility license sales, which are the big ones that we see for '25, it's hard at this stage to predict which quarter that falls into. I think that line item is just going to be a variable going forward.

當談到公用事業許可證銷售時，這是我們在 25 年看到的大額銷售，現階段很難預測屬於哪個季度。我認為該訂單項將成為未來的一個變數。

Got it. Okay. Appreciate the color. Thank you.

知道了。好的。欣賞顏色。謝謝。

Rufus Hone, BMO Capital Markets.

Rufus Hone，BMO 資本市場。

Hey, guys. Thanks. Good morning. Maybe I'll ask about merchant services from another angle. I guess, hard to not notice that you're seeing decent revenue growth in that business. You're now at $42 million of adjusted EBITDA over the last 12 months. That seems to be growing mid- to high teens. Do you think prospective buyers are seeing the value of these assets? And just curious if you've adjusted your view of the valuation through this process. Thanks.

大家好。謝謝。早安.也許我會從另一個角度詢問商家服務。我想，很難不注意到您在該業務中看到了可觀的收入成長。現在，過去 12 個月的調整後 EBITDA 為 4,200 萬美元。這似乎正在增長到十幾歲。您認為潛在買家會看到這些資產的價值嗎？只是好奇您是否透過這個過程調整了對估值的看法。謝謝。

It's a good business, and we've never thought it was not a good business. And it's been really steady Eddie for us ever since going public and even before that. Do you want to comment?

這是一個好生意，我們從來不認為它不是一個好生意。自從上市以來，甚至在此之前，艾迪對我們來說一直非常穩定。你想評論嗎？

Amazing team, nice pipeline. It constantly executed -- I can't really comment about pricing on the transaction, but it's a great opportunity for the buyer. It cleans up our story, makes us a software business, pays off our debt.

很棒的團隊，很棒的管道。它不斷地執行——我無法真正評論交易的定價，但這對買家來說是一個很好的機會。它清理了我們的故事，使我們成為軟體企業，並還清了我們的債務。

Okay. Fair enough. And then, I was wondering if you could help us quantify the size of the headwind you're facing from the subsidized launches. Thanks.

好的。很公平。然後，我想知道您是否可以幫助我們量化您因補貼發射而面臨的阻力有多大。謝謝。

In a normal year, we would expect education to grow 10%. And coming into this year, on our Q4 call, which was our September call, we adjusted that down to 5% for fiscal year '24. And I think once that anniversaries, we would expect to resume 10% growth in education.

在正常年份，我們預計教育將成長 10%。進入今年，在我們的第四季電話會議（即 9 月的電話會議）上，我們將 24 財年的利率下調至 5%。我認為一旦這個週年紀念日到來，我們預計教育將恢復 10% 的成長。

Got it. Thanks very much.

知道了。非常感謝。

(Operator Instructions) Alex Markgraff, KeyBanc Capital Markets.

（操作員說明）Alex Markgraff，KeyBanc 資本市場。

Hi, everyone. Thanks for taking my questions. A couple, maybe one first. I think for Paul, just on some of the product level improvements, I think I heard you mention earlier speed to market, implementation timeline. Just curious if you could quantify some of those changes and some of the improvements as you work through some of these product initiatives.

大家好。感謝您回答我的問題。一對，也許是第一個。我認為對保羅來說，只是在一些產品層級的改進上，我想我聽到你提到了更早的上市速度和實施時間表。只是好奇，當您實施其中一些產品計劃時，您是否可以量化其中一些變化和一些改進。

Sure. When you're doing -- in the public sector, in particular, there's significant pent-up demand or such a large, diverse market or a variety of enterprise solutions across the spectrum. And historically, when people have done that, it's been a very long, elongated project where they're basically trying to customize existing internal processes that they've done over a decade.

當然。當你這樣做時——特別是在公共部門，存在著大量被壓抑的需求或如此龐大、多樣化的市場或各種跨領域的企業解決方案。從歷史上看，當人們這樣做時，這是一個非常漫長的項目，他們基本上是在嘗試自訂他們已經完成了十多年的現有內部流程。

Those are pretty well set in place and pretty well configured, and there's commonality amongst those. And we have deep domain expertise in particular areas. So as we are working to develop products, we are doing it with that domain expertise and, in many times, concert with core customers to give us the capability to meet that as more of a commercial off-the-shelf component and also standardized integrations into the systems, which can be significant in large enterprise arrangements.

這些都設置得很好並且配置得很好，並且它們之間有共同點。我們在特定領域擁有深厚的專業知識。因此，當我們致力於開發產品時，我們會利用該領域的專業知識，並在很多時候與核心客戶合作，使我們有能力作為更多的商業現成組件和標準化集成來滿足這一要求到系統中，這在大型企業安排中可能非常重要。

It's really a domain-by-domain expertise. And we're organized in a fashion that's domain-specific around ERP products or enterprise utilities or courts as an example and tax considerations. We have, in many cases, 30 or 40 years' worth of history and people who have been developing those over time. And so it's -- we find it easier to work with customers to show them something that's tangible and their optionality because they're able to do the things in these systems that they didn't imagine they'd be able to do because of historic hard coated constraints.

這確實是各領域的專業知識。我們以特定領域的方式組織起來，圍繞 ERP 產品或企業公用事業或法院作為範例和稅務考量。在許多情況下，我們擁有 30 或 40 年的歷史，人們一直在不斷發展這些歷史。因此，我們發現與客戶合作更容易向他們展示一些有形的東西和他們的選擇性，因為他們能夠在這些系統中做一些他們因為歷史原因而無法想像的事情。

Okay. Great. Thank you. And then just one quick one, Clay, just the sort of confidence level on that license revenue in the fiscal fourth quarter.

好的。偉大的。謝謝。然後，克萊，我簡單說一下，對第四財季授權收入的信心程度。

It is in there. It has been delayed once from Q3 to Q4, but we still believe it will happen in Q4. If it doesn't, it would be our Q1, but we currently expect it in Q4.

它就在那裡。從第三季到第四季已經推遲了一次，但我們仍然相信它會在第四季發生。如果沒有，那將是我們的第一季度，但我們目前預計是第四季度。

Okay. Thank you.

好的。謝謝。

And at this time, we are showing no further questioners in the queue. And this does conclude our question-and-answer session. I would now like to turn the conference back over to Greg Daily for any closing remarks.

目前，我們在隊列中沒有顯示更多提問者。我們的問答環節到此結束。我現在想將會議轉回格雷格·戴利 (Greg Daily) 發表閉幕詞。

Thank you. I'd like to thank my team, our team that are out there every day, killing it. Thank you. And thanks, everybody on this call for your continued interest, and call us if you need anything else. Thank you.

謝謝。我要感謝我的團隊，我們每天都在那裡奮戰的團隊。謝謝。感謝大家對本次電話會議的持續關注，如果您需要任何其他信息，請致電我們。謝謝。

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

會議現已結束。感謝您參加今天的演示，您現在可以斷開連接了。