Rimini Street Inc (RMNI) 2022 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Rimini Street's Earnings Conference Call. (Operator Instructions)

I will now turn the call over to Dean Pohl, Vice President of Investor Relations. Mr. Pohl, you may begin, sir.

Thank you, operator. I'd like to welcome everyone to Rimini Street's third quarter 2022 earnings conference call. On the call with me today is Seth Ravin, our CEO; and Michael Perica, our CFO.

Today, we issued our earnings press release for the third quarter ended September 30, 2022, a copy of which can be found on our website under Invest Relations. A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in the press release. An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading about non-GAAP financial measures and certain key metrics.

As a reminder, today's discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We encourage you to review our most recent SEC filings, including our Form 10-Q for a discussion of risks that may affect our future results or stock price. Now before taking questions, we'll begin with prepared remarks.

With that, I'd like to turn the call over to Seth.

Thank you, Dean, and thank you, everyone, for joining us today. Q3 2022 results. The global macro environment challenges, including currency exchange rate headwinds, negatively impacted third quarter financial and operating results.

We achieved multimillion-dollar sales wins in diverse industries, strong subscription renewals and extensions, a continued increase in cross-sales of our expanded solution portfolio to existing clients, and we maintained our excellent industry-leading client satisfaction rating for support cases and onboarding.

We believe Rimini Street's new broader portfolio of IT solutions provides the services many organizations need today around their enterprise software systems and provides industry-leading value, ROI and proven engineering capability. We grew our client base by 7.8% year-over-year to more than 3,010 active clients. And since our inception in 2005, we've signed over 4,900 clients, including over 180 Fortune 500 and Fortune Global 100 companies. We estimate that we have helped our clients liberate more than $6 billion that they were able to save or reinvest in their strategic priorities, sales environment.

As I noted in our second quarter earnings call, we believe the current global macroeconomic environment is forcing organizations to refocus their businesses in the short-term, including their IT investment and staffing plans and has led to some frozen and delayed IT and IT service procurement decisions. However, as we've already seen with key sales wins in the third quarter, there is increased movement by organizations to optimize their IT spend.

And we believe Rimini Street is well-positioned with its new broader portfolio of services to ultimately benefit from the most macro environment challenges with growth in both new client acquisitions and cross sales. Market demand and sales execution. We continue to see strong and growing global interest and demand for our expanded portfolio of services from new and existing clients and are achieving increasing cross-sale wins.

We are now implementing our successful cross-sell strategies to guide and focus our hunter sellers on new client acquisitions to assure we have balanced between new client sales and cross-sales as our go-to-market strategy matures for growth in both opportunities. Quarter sales wins included large support transaction wins against SAP and Oracle and significant AMS wins against IBM and other providers.

As I detailed on our last quarterly call, I am now dedicating a majority of my time to improving global sales execution, maturing our service offerings and delivering innovative new marketing campaigns to build deeper pipeline of new client and cross-sell opportunities globally.

I have already made changes that improved global marketing of our broader service offerings, ramped up a stronger global demand generation engine for pipeline and equipped are more than 300 global revenue team members with a greater set of lead and opportunity development and closing skills. We even accelerated our 2023 annual global sales kickoff event from its planned early 2023 date to October 2022.

I was very pleased with the leadership cohesion, new marketing messages, focus and energy of the entire team at the event, and I believe it will lead to improved sales execution and sales growth in the coming quarters. In conjunction with the sales of that, we formally implemented a stronger go-to-market road map and strategy for our emerging application managed services referred to as AMS as well as for our security products and services, integration and interoperability products and services, monitoring services and our global professional services.

We are seeing continued pipeline and sales growth across the portfolio. Since our last earnings call, we also completed enhancements to our portfolio solutions such as the launch of Rimini Protect that adds additional depth of layers to our existing security offerings and provides a full suite of security solutions that prevent breaches and provides zero-day speed of remediation of identified vulnerabilities before they can be exploited.

Rimini Protect services include security assessments, hardening and configuration guides, security road maps and the security vulnerability analysis report. To reach clients and prospects with pandemic travel restrictions nearly eliminated globally, our senior executives, including myself, have restarted heavy travel to participate in a growing number of successful in-person Rimini Street and third-party events and executive sales meetings with hundreds of clients and prospects and to collaborate with local Rimini Street management teams to set strategy for accelerated sales growth, client and prospect perception.

I continue to be impressed by how favorably Rimini Street is viewed by existing clients and prospects who spent time getting to know our expanded breadth of services, engineering talent and IT capabilities available with our unique bespoke Smart Path IT solutions. We have a significant asset in our people and the company is closing very high-quality transactions with well-known local and global brands. We believe an increased volume of transactions will drive accelerated growth.

Our high client satisfaction, strong subscription renewals and extensions and strongly growing cross-sales are evidence that Rimini Street clients are leveraging Rimini Street as their trusted vendor to support, run, secure, connect and drive more value out of their enterprise IT investments, client taste studies.

To highlight how clients are leveraging Rimini Street services globally to achieve their strategic goals across different industries, I'd like to say 2 case studies from the third quarter sales wins. First is the University of Technology, Sydney, one of Australia's leading universities with around 45,000 students and 4,000 staff. UTS has switched from Oracle to Rimini Street for improved support and security of its Oracle database and technology platforms.

The university faced challenges relating to the pandemic, including a massive shift to online learning and remote work and a growing IT skill shortage. UTS is Head of IT operations, Brian Kelly stated that skilled staff are only getting more expensive to hire and retaining these employees just to work on support and operational tasks for their enterprise software is no longer sustainable. Kelly goes on to say, thanks to Rimini Street, they now have time and budget to spare, and they are now looking at developing and deploying additional security measures utilizing a cloud-first strategy.

The UTS team is no longer worried about how long a patch or an upgrade will take to put into effect, how long it will take to get issues resolved or how many hours will have to dedicate to something routine. Rimini Street is taking care of that for them and having such a quick turnaround for support has really eased up their workload.

Next is Lotte Mart, based in South Korea, a large-scale hypermarket chain that switched their Oracle application maintenance support to Rimini Street. Lotte Mart wanted to focus resources on strategic projects related to business growth and needed a more practical ERP support to better manage its rapidly changing distribution business. Lotte Mart system strategy leader, Jung-soo Pyo, stated that Rimini Street made a detailed analysis of Lotte Mart's current goals, including the necessity to cut cost and resolve service issues with the software vendor support program and has instead provided a tailored support service that better meets their needs.

The supply of those on to note that after the switch to Rimini Street, they've been able to break free from vendor-oriented support policies and focus on business-oriented service needs and that the work efficiency of their IT services team has been maximized with a swifter response and support to issues when requested.

Oracle litigation update. Rimini Street and Oracle have been in litigation for more than 12 years. While the U.S. courts have confirmed long ago, the third-party support is legal, we presently have 2 active proceedings with Oracle, the injunction compliance dispute and Rimini 2 proceedings, both of which relate to the manner in which Rimini Street provides support services for certain Oracle product lines. Rimini Street is not prohibited from providing support services for any Oracle product.

With respect to the injunction compliance dispute, Rimini Street has filed an appeal to the 9th circuit of the United States Court of Appeals relating to certain rulings of the U.S. District Court. We expect oral arguments to likely take place in the first half of 2023. However, the appeals process could take another 9 to 12 months to receive a ruling, but a ruling could come earlier or later.

With respect to Rimini 2, the case Rimini Street filed against Oracle in 2014 and Oracle filed counterclaims the case remains in a pretrial stage. However, on October 21, 2022, Oracle withdrew certain of its counter claims and all of its claims against Rimini Street and against me personally as CEO for monetary relief of any kind under any legal theory in this litigation.

Rimini Street's remaining claims and Oracle's remaining counter claims seeking only equitable relief are presently scheduled to be tried in the United States Federal Court for the District of Nevada on November 29, 2022. The trial will now only be in front of a judge, known as a bench trial instead of a judge and jury since there are no longer any financial damages of any kind for a jury to decide in Rimini 2.

Please see our disclosures in the latest 10-Q filing for additional information and disclosures regarding litigation with Oracle. Summary, over the past 2 years, we have placed the company in a materially stronger strategic position by achieving 3 key goals: strengthening the balance sheet through a series of key capital market transactions, delivering major wins in our protracted litigation with Oracle and successfully launching the entire portfolio of new IT services and solutions.

We are now focused on sales execution and growth, and we are confident that we are taking the right actions and making the right investments to reaccelerate growth and enhance shareholder value. Now over to you, Michael.

Thank you, Seth, and thank you for joining us, everyone, in Q3 2020 results. Revenue for the third quarter was a record $101.9 million, a year-over-year increase of 6.6%. Annualized recurring revenue was $399.8 million, a year-over-year increase of 6.2%. Revenue retention rate for service subscriptions, which makes up 98% of our revenue was 94%, with more than 80% of subscription revenue noncancelable for at least 12 months.

For the third quarter, clients within the United States represented 52% of total revenue, while international clients contributed 48%. Third quarter aggregate year-over-year revenue growth in the United States was 5.8%, while growth for international clients was 7.4%. We note that our total revenue growth on a constant currency basis was negatively impacted by 2.1% due to FX movements. Billings for the third quarter were $49.7 million compared to $73.7 million year-over-year, a decrease of 32.5%.

Despite challenges with new client acquisitions, our reduced deal size in U.S. dollar terms due to FX headwinds, we achieved strong client renewal and expansion sales and growing cross-sales to existing clients as Seth noted. In addition, client event support services payments beyond first year fees were substantially lower year-over-year, and that has led to difficult comparisons for billings where such advanced payments have historically been a material component of billings.

DSO also lengthened in the quarter. We believe the global economic challenges, the end of low interest rates and an ability to earn increased interest income on short-term fixed income investments are significant drivers of this shift by clients towards tighter cash preservation.

Gross margin was 61.5% of revenue for the third quarter compared to 65.1% of revenue for the prior year third quarter and 62% of revenue on a non-GAAP basis, which excludes stock-based compensation expense compared to non-GAAP gross margin of 65.5% of revenue in the third quarter of last year. Gross margin declined as we continued investing in our service delivery resource base for both our core support offerings and expanded portfolio of solutions we are selling and delivering globally.

The gross margin decline was also impacted by the higher cost of labor, which has been successfully offset in part by our efforts to methodically expand efficiencies and leverage through technology, process control and use of lower-cost labor geographies. Nonetheless, for full year 2022, we continue to guide gross margin to be in the range of 62.5% to 63.5% of revenue on a GAAP basis and 63% to 64% of revenue on a non-GAAP basis.

Operating expenses. Like other organizations globally, we are experiencing cost pressures due in large part to increased labor costs and inflation in all labor categories. We continue to aggressively leverage all options available to ensure we are able to acquire the talent we need to achieve our profitability and growth targets.

Sales and marketing expenses as a percentage of revenue was 35.3% for the third quarter compared to 34% for the prior year third quarter. On a non-GAAP basis, which excludes stock-based compensation expense, sales and marketing expenses as a percentage of revenue was 34.5% during the quarter compared to 33.2% in the year-ago period.

We remain focused on making the appropriate investments needed to capitalize on our growth opportunities and thus, the full year 2022 sales and marketing expenses, including the pull forward of the 2023 sales kickoff event into 2022 to be in the range of 35% to 36% on a GAAP basis and 34.1% to 35.1% on a non-GAAP standpoint, up 50 basis points from prior guidance ranges.

General and administrative expenses as a percentage of revenue, excluding outside litigation costs was 18.1% for the third quarter compared to 16.3% for the prior year third quarter. On a non-GAAP basis, which excludes stock-based compensation expense, G&A was 17% of revenue versus 15% in the year ago period.

Outside of the onetime expenses that occurred in the period, the G&A line continues to be higher than our peers due in material part to the cost for in-house legal and compliance teams and other costs made necessary by our ongoing Oracle litigation and our decision to continue making investments in the systems, process and talent infrastructure needed to support our growth objectives.

As such, we now see full year 2022 G&A expenses to be in the range of 18% to 19% on a GAAP basis and 16.5% to 17.5% on a non-GAAP standpoint, up 150 basis points from prior guidance ranges. Net outside litigation expense was $6.2 million for the third quarter compared to $6.6 million for the prior year third quarter. This year's third quarter and the prior year third quarter both had elevated costs due in part to Oracle litigation costs and other litigation matters. Our outside litigation spend is not linear and can fluctuate each quarter based on timing and the nature of litigation activities.

As Seth noted, the remaining 2 case is currently scheduled for trial on November 29, 2022, resulting in material litigation costs that we had expected to incur during fiscal year 2023 being pulled forward into fiscal year 2022. Accordingly, we expect full year 2022 outside litigation expense to now be in the mid-$20 million range.

For the third quarter, the net loss attributable to shareholders was negative $0.4 million or breakeven per diluted share compared to the prior year third quarter loss attributable to shareholders of negative $6.7 million or a loss of $0.08 per diluted share. On a non-GAAP basis, net income was $8.3 million or $0.09 per diluted share versus $13 million or $0.15 per diluted share in the prior year third quarter. Adjusted EBITDA was $10 million or 9.8% of revenue for the third quarter. Our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation remained in the double digits at 10.5% of revenue.

Balance sheet. We ended the third quarter with a cash balance of $119 million plus investments of $11 million, consisting of short-term treasuries and agency securities totally readily available cash of $130 million compared to $103 million for the prior year third quarter. On a cash flow basis, for the third quarter, operating cash flow declined $24 million, and year-to-date, we generated $36.8 million compared to $47.8 million for year-to-date third quarter 2021.

In addition to the FX headwinds noted that has impacted our cash flow, we have also experienced lower advanced payments from clients, both new and existing, as the overall inflationary environment is leading to a broad-based shift towards aggressive cash preservation. Deferred revenue as of September 30, 2020, was approximately $248 million compared to $244 million for the prior year third quarter.

Backlog, which includes the sum of billed deferred revenue and noncancelable future revenue was approximately $533 million as of September 30, 2020, compared to $553 million for the prior year third quarter.

Capital markets transactions. During the third quarter, we repurchased 200,000 common shares with a market value of approximately $992,000 with an average price of $4.96. I would also like to note that on October 10, 2022, all $14.7 million, up the $11.50 exercise price warrants expired.

Business outlook. We are currently providing fourth quarter 2022 revenue guidance to be in the range of $103 million to $105 million and tightening our full year 2022 revenue guidance to be in the range of $404 million to $406 million. This concludes our prepared remarks. Operator, we'll now take questions.

(Operator Instructions) And our first question comes from Brian Kinstlinger.

I didn't hear much about bookings trends. If I think back 1 year ago, a new sales team and trouble closing deals, and this led to a drop in your growth rate. Can you discuss at a high level, at least how bookings during the third quarter of this year compared to last year? How did the sales force execute? Is it much better, just a little bit better? And then how much did delays play into or freezes that you discussed play into these trends?

Seth here. So we actually executed very well on the sales side. I was pleased with the numbers. The percentage close of pipeline was good. As you know from last year, we have to hand it to SAP. They handed it to us pretty well in the third quarter on any deal size over $0.5 million for us. They really won all of those deals. And this year, we said we would really work our messaging. We would come back to the market much stronger, and we did. We did multimillion-dollar SAP deals in the quarter, some really, really nice strategic wins around the world.

So that was number 1 was getting those SAP deals done. We didn't get enough of them over the line, but it wasn't really losses. It was a lot of issues of delayed deals and we just didn't see the transactions closing at the rates and the numbers that we had hoped for, for the quarter. We had sufficient pipeline globally to make the numbers that we wanted to get out there and do, but those deals just didn't all get over the line. So qualitatively, excellent deals around the world with big deals, brand names. We just didn't have the volume that we needed to make the numbers that we wanted to make.

And I do see a lot of it being macroeconomic. We were able to get some of the customers that were even delayed from Q2 over the line in Q3, but we did have a lot of Q3 that slipped in fact, one of them slipped by 2 hours, 7-figure deals slipped into Q4 just because of signature and other processing issues while people were dealing with other matters in the company.

So I think, again, I would say Salesforce executing well. Challenge, not enough depth of pipeline to make the numbers given the fact that we normally run a 4x, we prefer a 4x number on the pipeline of opportunities to close that we need. We didn't have that depth globally in all markets, and that didn't allow us to close all the deals we wanted.

Great. I have one follow-up, and then I'll get back in the queue. Given what you've said there, probably the lack of pipeline that got actually executed, it wasn't your fault it was just delayed. Is that why when I look at the fourth quarter guidance, it implies, I believe, at the low and midpoint another deceleration of revenue growth compared to the last 2 quarters. And then should we assume that's kind of the starting point for how to think about the next few quarters?

I think, again, visibility, and I think the same thing we said at the end of Q2, visibility with all of the economic challenges. And again, our customers are some of the largest in the world and the ones you hear about in the news that are having serious supply chain shortages, shipping costs, parts, FX issues, all these things, they're inundated with challenges. And I think those still represent challenges to us to get the deals done, but we're very well-positioned with the products and services.

And that's why I even mentioned on the AMS side, the fact that we're newbies in this area, we're one of the youngest players in the AMS space, and we're replacing top-tier companies like IBM, so we're making progress. We're maturing it. I think the pipelines continue to grow in those areas. I just don't have the full confidence of visibility about getting these deals over the line as well as we did in prior years. I just think right now, we don't know whether something is really going to come in, in a particular quarter. Timing is much trickier.

And our next question comes from Derrick Wood.

It's Andrew on for Derrick. Maybe, Seth, just walk us through kind of the change you've seen in the past couple of months. It sounded like it's -- macro-wise has improved so far a little bit in Q3. You talked about some loosening or increased movement to optimize IT spend. Maybe just any more color on that would be helpful.

Yes, certainly. And I think, Andrew, the point being that our broad products and services, the fact that we can now say, well, not just do your support, we'll do your support, we'll run your system, we'll protect it. We'll connect it. It are all really big things to our customers who are looking for us to take a wider scope of services off of their plate, bigger wallet share for us, obviously, but they want to give us more and more responsibility.

And I think that continues to play out in the number of unified support deals, the increased sales and security, the increased sales in our Connect products, which will officially launch here very shortly. But I think overall, we think the demand environment is very good. The challenge is actually execution at the customer level because they have so many different competing priorities. We've been truly sometimes just pushed to the side with a -- we love this, we want to do it, but we've got 3 other bigger fires we've got to get put out first and that is causing some delays.

And that's why I noted it wasn't really that we lost deals in the third quarter. We lost them to other priorities in the quarter. And so I think we're in a really good place. I'm very, very pleased with the progress we've made in sales and organization. As you know, when I took over sales again last quarter, I said I was going to make the sales changes necessary to put us in a position to really start to accelerate growth in quarters into the '23 arena. So we're going to have to go through a little bit more transition.

As you know, it takes a while for all these changes to work their way through when you have a 6- to 9-months sales cycle. So it will take probably through the fourth quarter for these items to take effect. But I do think the training we've done, the additional work that we've done to provide better skills to the sellers I think that we could see some upside to that even in the fourth quarter coming into '23.

Great. And maybe just an update, Seth, on how the Americas specifically the changes you've made there, how those are going? And when do you think will the transition be done by the end of the year or kind of early next year? And could we start to see that U.S. growth accelerate, assuming macro is somewhat stable?

Yes. Taking macro out of the picture, I would expect to see acceleration in North America in '23, but I expect that from all the markets globally. I think we're well-positioned. And if we can just make sure that we are one of the higher priorities that our customers are dealing with, I'm pretty confident about getting these deals over the line. I mean the fact that we were not only moving deals north of $0.5 million, but we did one transaction alone on the SAP side where they're committed to $10 million plus over a 5-year contract alone noncancelable. So we had some really good complex wins on big global energy, telco, a lot of the key markets that we specialize in.

And our next question comes from Jeff Van Rhee.

So I want to follow-up on the sales thread here. So you've obviously dove-in, are in there trying to get things aligned to where you want them. Now that you've had a little more time to look at sales, to get a better sense of what was and wasn't working. Why was sales execution as weak as it was? And then I think you just touched on this, maybe just a little finer point, when do you think you can get billings growth back in that business? I think you said you'd start to see some improvement in execution in Q4, but trying to push a little further on when we can really start driving some billings growth year-over-year.

Well, I think, again, if you just follow the flow-through of a normal 6- to 9-month sales cycle, you make changes upstream. It really takes 6 months to push that through. And if you look at all those changes I detailed in the prepared remarks, moving the kickoff to October, which was an amazing event for 300 people, true training event for the week block and tackling. We went back to figuring out, hey, here's all the products in your bag that you can sell. Here's why people buy them. Here's how you sell them, and we did roll plays. It was a true training event, not a PowerPoint parade.

And I think it was just fabulous for us to be able to reground the global revenue team in all these messages. Even our marketing team was a little sketchy on some of the products and how they fit together. So I think what I pulled in Q3 was get everybody back to basics, let's make sure everybody is grounded and what we're selling in this big new portfolio of services, how do we think about positioning that? We're not just a support provider. We are now an IT services provider, a boutique provider that customers want to give us more wallet share.

And I'll give you an example, support institute of management was a big L4 support customer for us that we brought on board a couple of years ago. We talked to them about a much bigger vision of running their systems, taking over and helping them redesign and refresh their entire student administration system to meet current needs. And they told us, look, we don't want to deal with 100 vendors anymore.

And we hear this a lot from companies. We can't deal with 100 IT vendors. We are going to consolidate down the number of vendors we work with. We're going to build deeper, more strategic relationships with them, and you guys are one of the ones that we want to do that with. And we took over AMS. We've got big new contracts there. We drew out IBM and that one as well.

Really fantastic when you're watching this land-and-expand process works. So I am very bullish about what I'm seeing on the ground. It is simply volume. We need more transactions closed, but we're closing quality transactions for what we're getting done. And I think we're going to see it in '23. I feel very optimistic about that.

Based on all the years experience, when you look back at prior recession, the argument of a higher level of service, 50% off and now much broader portfolio of products we can sell. But when that value prop has been pitched in past recessions, how long did it take for the buyers to go from sort of view-in [ph] and headlights we're in a recession to, okay, we need to Rimini our go-to and we should move ahead on this. I'm trying to get a sense of timing of when this actually might become a tailwind as opposed to something that's delaying cycle.

Yes. I think if you look back at it right, we've all been through 2001. There was the dotcom [ph] meltdown. Then 2007, '08, again, a very unique environment. No one knew where the bottom was, right? And I think it was a true financial meltdown. I think it took 6 months to 9 months for people just to wrap their head around what was going on. And we saw our best years ever. I think we're 708 in terms of high-yield growth once people got a footing.

I do think when I see the deals that got done in the third quarter, when I said at the end of Q2, I said we're not sure whether the cycle of deer-in-the-headlights as you called it, while they're trying to refigure out this new world they're working in and the new plan and then start to execute on it. I said it would go into the third quarter. And I do think we saw it roll through the third quarter still for a lot of players.

But let me give you a couple of other data points. So I was just down in Orlando giving a keynote at the Gartner, the biggest symposium of a mall. I had 1,200 registrations for my session. It was the largest Gartner said that they've ever had for a vendor. And it was amazing. I think we have 500, 600 people just in the room alone, and then it was being simul broadcast in other rooms and things.

Amazing. People are very focused on how to optimize the current operating budget (inaudible) to get that into innovation and things that are going to move the needle. So we are exactly placed where they need to play and where they wanted to play. And I think the interest levels show that. We just did Gartner Japan.

Again, one of the largest they've ever seen of a vendor event in terms of participation. Our boots have been overwhelmed between Gartner Orlando, Gartner, Japan, we're coming up to Gartner Europe in Barcelona. So I think, again, good indicators that the interest is super high, great meetings, and I will tell you that there are millions of dollars of transactions that I would potentially expect coming out of those events alone, where we met and talked to people for the first time and some people are already fast tracking deals with us.

So I do think my #1 goal in the world is recognition, if I can get our teams and our value prop and our services and solutions in front of more CIOs, CFOs, CSOs, Chief of procurement. I am convinced that we would see tremendous pipeline growth that would get us to those 4x, 5x type numbers that would assure some very strong growth numbers in '23 and beyond.

And if I could sneak one last one in there, Michael. On the G&A side, you bumped the outlook there of 150 basis points. I mean can you slice that a layer or to deeper as to what's comprising the bulk of the change compared to the thinking last quarter?

So Jeff, as I highlighted in the prepared remarks, we made a conscious decision to bring on incremental investments versus deferring those, so we can have our structure in place. So we can reaccelerate our growth as we've highlighted. There were some onetime items as well, but they were various. And also, we highlighted that we are seeing, and we are beefing up and have done so our compliance efforts a little sooner than previously planned with regard to our compliance efforts. So a whole host of issues, a conscious decision to put those in place, but we're feeling good where we are now with regard to our investments.

Will that level be the persistent you gave, obviously, the outlook for Q4, but are we looking at things that are kind of onetime in nature to together had a gain, build the infrastructure that's leverageable, other things and then it might fall off as we get into '23? Or how do you think about the G&A levels going into '23?

So I think you're characterizing it accurately there, Jeff, that, yes, they're recurring expenditures, but they're onetime mission in nature from a baseline perspective. And I think you're looking at the outlook appropriately.

(Operator Instructions) We have no further questions in queue.

Great. Well, thank you very much, everyone, and I want to thank you for joining us for the call. I just want to remind everyone, well, we live in a more comfortable place. There are many in harm's way, many troubled folks who really need help out there, which we're so glad that we can participate with our foundation to make a difference, but always a good reminder to think about those in need, and we're there to help them, and I hope you guys all are too. So with that, guys, thank you very much and appreciate you attending the call today. Take care.

That concludes today's conference call. Thank you for attending.