TriNet Group Inc (TNET) 2014 Q4 法說會逐字稿

Good day and welcome to the TriNet Group fourth-quarter 2014 earnings conference call.

(Operator Instructions)

Please note this event is being recorded.

I would now like to turn the conference call over to Mr. Alex Bauer, Investor Relations. Mr. Bauer, the floor is yours, sir.

Thank you, operator. Good afternoon, everyone, and welcome to TriNet's 2014 fourth-quarter and year-end conference call.

Joining me today are Burton M. Goldfield, our President and CEO, and Bill Porter, our Chief Financial Officer. Burton will begin with an overview of our operating and financial performance. Bill will then review our financial results in more detail as well as provide our guidance for the first quarter and 2015 full-year. Bill, Burton, and I will then open up the call for the Q&A session.

Before I hand the call over to Burton, please note that we may make forward-looking statements during today's call that are subject to risks, uncertainties, and assumptions. In addition, some of our discussion may include non-GAAP financial measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements and reconciliations of non-GAAP financial measures, please see the Company's public filings, including the Form 8-K filed today -- all available on our website.

With that, I will turn the call over to Burton for his opening remarks.

Thank you, Alex.

During the fourth quarter, we generated $90.1 million in professional service revenue, representing 18% growth. We increased our client base significantly. We achieved our sales force expansion targets, and we executed our vertical sales and product strategies.

While the underlying fundamentals of our business remain strong, I am disappointed that our Q4 net insurance service revenue was below our estimate. This resulted from higher than expected large medical claims.

Our net service revenue of $126.9 million was $11.1 million below the midpoint of our net service revenue guidance of $138 million. In order to improve our ability to forecast large medical claims, we're working closely with our health insurance partners to obtain more data on these type of large claims much earlier in the medical treatment pipeline. Bill will provide more detail in his section.

As I reflect on our business, TriNet grew net service revenue on an organic basis by 15% in 2014, and we have entered 2015 with considerable momentum. With January firmly in the books, we are confident in our ability to execute the year ahead and believe we can achieve the net service revenue growth in excess of 15% for 2015.

We have also looked carefully at our claims experience and remain confident in the quality of our forecast of net insurance service revenue in 2015. There is no doubt that our tailored products are resonating with a broad range of companies across the country.

All told, we finished the fourth quarter with 288,312 work-site employees, or WSEs, representing an increase of 15,466 quarter-over-quarter, for a sequential growth rate of 5.7%. Year-over-year, 2014 WSE growth was up 25%. Let me emphasize, all of this growth is organic.

Underlying the opportunity at hand, small- and medium-sized businesses, or SMBs, faced a complex HR environment throughout 2014. The Affordable Care Act, wage and hour issues, and a variety of additional federal, state, and local compliance requirements resulted in HR becoming more onerous, consuming scarce management resources. We expect these trends to continue in 2015 and beyond. Against this challenging backdrop for SMBs, TriNet continues to deliver the differentiated HR products critical for addressing the HR needs faced by these companies.

During our fourth quarter, our vertical focus translated into strong sales across each of our bundled product offerings. Passport is characterized by an intuitive, paperless self-service platform with an extensive selection of benefits. Clients cite Passport's complete platform, defined by its technology, service model, and benefits as the key reason why they choose Passport.

Our technology, life sciences, consulting, and financial services vertical all contributed heavily to Passport's Q4 wins. The life sciences vertical has been particularly strong, contributing over 30 new clients in Q4 alone.

In the 18 months since we established this vertical, we have more than doubled the number of our life sciences clients. These clients cite our extensive benefits packages, our workers' compensation program, and our tailored technology offering as deciding factors in choosing TriNet.

We continue to gain traction across our consulting vertical. Our ability to streamline core business processes and give consulting firms an accurate view of their cost structure is allowing our consulting clients to more accurately price their offerings and enable multi-state expansion. I believe we are adding tremendous value to these clients.

A key win with a management consulting firm exemplified the power of Passport's value proposition. The consulting firm operates in 10 states. The firm joined us with approximately 30 WSEs and manages a complex compensation formula, due to its mix of full-time and commissioned employees.

Passport was a perfect fit for this firm's needs and has delivered multi-state services, including ACA compliance, cloud-based travel and expense reporting, time and attendance reporting, and performance management. This simplifies the firm's core business processes.

Regarding our SOI product line, which is characterized by complex, multi-state HR and payroll needs, we had major wins in the property management, hospitality, and [white] manufacturing verticals. Our vertical focus, ability to mitigate multi-state compliance and operating risks, and ACA-compliant offerings are all fueling client wins.

For SOI, our investment in technology continues to pay dividends, as business wins were specifically attributed to online tools. These enable our clients to proactively analyze and define their company benefit contribution strategies. Two new SOI clients in Q4, a 140 WSE property management company and a 547 WSE facilities services company, each volunteered that TriNet's technology platform for managing ACA and multi-state compliance were the deciding factors for choosing TriNet over our competition.

Our Ambrose product, which is characterized by a high-touch service model with top-tier benefits and direct access to compliance, tax, and other specialists, also generated strong sales during the fourth quarter. Ambrose continues to attract clients in selected verticals, including hedge funds, private equity, and legal firms.

A key Q4 win was a 17 WSE private equity group. In the competition for the business, the combination of our high-quality benefits and high-touch service model provided the deciding factors. Furthermore, the private equity group referred us to their smaller sister company, demonstrating the power of our referral network.

We're also seeing growth in a number of our clients who are becoming publicly traded companies. In 2014, three of our client companies successfully entered the public markets. We now service nearly 2 dozen public companies, representing clients from our technology, life science, financial, and property management verticals. The fact that these clients continue to work with TriNet, even after securing major funding and going public, underscores the power of our product and our people.

Our go-to-market strategy is predicated upon a knowledgeable and experienced sales force that is organized by industry vertical, taking full advantage of the industry expertise, the relationship networks, and our focused offerings. We remain committed to growing our quota-carrying sales force by 25% each year.

Our goal in 2014 was to reach a total of 375 quota-carrying reps, and we ended the year with 385. As we discussed in our call last quarter, we are committed to having 470 quota-carrying reps by June 30 of 2015. I could not be prouder of the TriNet organization for successfully onboarding and training our sales organization in 2014, and I fully expect a repeat performance in 2015.

Our strategy is yielding a strong referral network and growth in our target verticals and geographic leverage, supporting our ongoing efforts to introduce our offering to the underpenetrated SMB market. We believe the SMB market remains an enormous opportunity, and our targeted 25% annual sales force growth is integral to exceeding our vertical strategy and seizing this opportunity. Consistent with previous quarters, approximately 75% of our new clients in the fourth quarter came from an unbundled HR environment, previously assembling their HR function through a mix of insurance brokers, software applications, and limited in-house HR expertise.

Finally, in December 2014, President Obama signed into law the Small Business Efficiency Act. This was a culmination of nearly 17 years of work to create a federal framework defining the PEO business model. While the implementation remains unfinished, this is unequivocally a positive development for our industry going forward.

To recap, TriNet entered 2015 with considerable momentum. And I'm confident in our market opportunity and the ability of our business model to consistently generate 15% organic growth with 33% to 34% EBITDA margins.

Let me turn it over to Bill Porter for the financial review. Bill?

Thanks, Burton.

During the fourth quarter, net service revenue grew 4% to $126.9 million. We grew WSEs by 15,466 in Q4, or 6% since the end of the third quarter, to finish 2014 with a total WSE count of 288,312, up 25% from 230,203 WSEs at the end of 2013.

Professional service revenue increased 18% to $90.1 million, while our net insurance service revenue decreased 19% to $36.8 million during the fourth quarter. Net insurance service revenue was adversely affected by an unexpected impact of large medical claims.

The nature of these claims is that they develop over a number of months, and there is usually a lag before they are reported to the carriers by the providers. We had a number of large claims develop during the second half of 2014 that we were not aware of until after the close of the year. The result was these claims were not included in our trend as we forecast our fourth-quarter medical claims.

Within a healthy population such as ours, example of the types of large claims requiring ongoing medical treatment includes complex births, muscular and skeletal injuries, chemotherapy, and rare conditions such as hemophilia. Our experience, when we're aware of these large claims, is that we can usually forecast them close to their ultimate cost outcome. In order to improve our ability to more accurately forecast these large claims, we are working with our carrier partners to gain visibility into potential large claims much earlier in the treatment process, including access to diagnostic codes and estimated length of stay data.

Our 2015 forecast takes into account a similar frequency of large claims as we experienced in 2014. The result is that our Q4 experience does not have an adverse impact on our 2015 outlook. Total adjusted EBITDA for the fourth quarter decreased 8% to $40.1 million, compared to $43.7 million for the prior-year period. Our Q4 adjusted EBITDA margin was 31.6%.

Adjusted net income for the fourth quarter increased 12% to $19.2 million, or $0.26 per share, compared to $17.1 million, or $0.24 per share, in the prior year. Our GAAP effective tax rate was 54.6% for the fourth quarter, primarily due to a discrete tax charge of $1.2 million for the revaluation of deferred taxes, based on final state tax return filings.

During the fourth quarter, we generated $51.4 million in free cash flow, which is defined as operating cash flow of $54.9 million less CapEx of $3.6 million. For the year of 2014, we grew net service revenue 21% to $507.2 million.

Professional service revenue increased 26% to $342.1 million, while our net insurance service revenue increased 14% to $165.1 million. For 2014 on an organic basis, net service revenue grew 15%, professional service revenue grew 20%, and net insurance service revenue grew 7%.

Total adjusted EBITDA for 2014 increased 22% to $165.3 million with an adjusted EBITDA margin of 32.6%, slightly under our target margin range of 33% to 34%. 2014 adjusted net income increased 29% to $74.4 million, or $1.03 per share, compared to $57.4 million, or $0.81 per share, in 2013.

Our GAAP effective tax rate for 2014 was 53.1%, due to the revaluation of deferred taxes, based on an income tax accounting method change in Q3; final state tax return filings in Q4; and the increase in nondeductible, stock-based compensation expense for the year. As I indicated in previous quarters, we expect our non-GAAP effective tax rate to continue to be approximately 39.5%.

Our ability to generate free cash flow is supported by our strong margin profile and asset-light model. For 2014, we generated $133.3 million in free cash flow.

Historically, we have spent approximately 3% to 4% of our net service revenue on an annual basis on capital expenditures. For 2014, our CapEx spending totaled $20.6 million, representing 4% of our 2014 annual net service revenue, in line with our CapEx spending level.

We closed the quarter with total debt of $544.9 million, representing a debt-to-EBITDA ratio of 3.3 times trailing 12 months EBITDA. Total cash was $134.3 million at the end of the fourth quarter, and working capital was $55.6 million.

Turning now to our 2015 full-year financial guidance, we expect net service revenue in the range of $590 million to $600 million, which represents growth of 16% to 18%; adjusted EBITDA in the range of $192 million to $202 million, in line with our target margin range of 33% to 34%; and adjusted net income in the range of $98 million to $104 million, or $1.32 to $1.40 per share. Based on our 2015 full-year guidance, we expect our first-quarter net service revenue in the range of $142 million to $147 million, which represents growth of 11% to 15%; adjusted EBITDA in the range of $44 million to $49 million; and adjusted net income in the range of $22 million to $25 million or $0.30 to $0.34 per share.

And now, I'd like to turn it back over to Burton.

Thanks, Bill.

In summary, we're executing on our strategic plan and delivering compelling bundled solutions that are designed to effectively address the many complexities SMBs face today. We believe we are the only Company successfully addressing our large, underpenetrated market, with three distinct bundled solutions and a sales force dedicated to targeting specific industry verticals. This differentiation sets us apart from the competition and supports our growth targets.

Clearly, we have some work to do in improving our ability to forecast our insurance revenue. We are highly focused on it, and we are making the right steps to improve visibility into this metric.

Building on the strength of our sales force and growing referral network, our momentum has continued into the first quarter and we fully expect to aggressively grow the business in the year ahead.

This concludes our formal remarks. And now, I'd like to turn the call back to the operator for the Q&A session.

Thank you, sir.

(Operator Instructions)

Smitti Srethapramote, Morgan Stanley.

Hi. Thanks for taking my question. This is Danyal Hussain.

I just want to follow up on the insurance claims. Could you maybe give us a sense for how many claims drove this? And how much may have been attributable to a broader industry trends? And also, perhaps, a breakdown between whether this is all attributable to health and benefits, or whether worker's comp played a role, as well?

Sure, Danyal. This is Bill.

Let me start off -- it is all large medical claims. So there really was no significant impact from any other areas, in terms of medical claims or total claims.

Also, do not expect any macro factors, really, to be involved here. As I mentioned in the third quarter, we are paying attention to the cost of large pharmacy drugs, but that was not a significant impact to us in the quarter. And that's something that we have built into our trend.

So really, what we experienced, here, was a spike in large medical claims in the fourth quarter. And as I mentioned, based on their nature, these things have a tendency to develop for a number of months at the carriers and then come over and take a couple months for the carriers actually to pay them from the providers.

Okay.

And then you had warned us, in general, about seeing bumps from quarter to quarter, suggesting that you would absorbed the higher cost over the course of the year. This one sounds, obviously, a bit larger, probably, than what you were referring to. So is the difference, this time, just the sheer quantity of these one-time claims coming in?

Yes. By their nature, the larger claims are a little bit harder to predict. What we had seen earlier in the year was a lower level of large claims. And what we do need to be able to do better is to see these claims developing in the provider pipeline so that we can see them and build them into our forecast.

When we step back for the year, we were actually fairly close to our annual estimate. We just didn't get it right between -- there were lower claims in the first half, and we didn't have enough visibility into the claims that were developing in the second half to be able to build them into our Q4 forecast.

Got it.

Danyal, this is Burton, as well.

I just want to add -- to be very specific, I have said in the past that variability would be $2 million to $3 million per quarter, and I was clearly wrong. This was a larger number.

What happened with this spike in large claims make us reevaluate how we're analyzing the large claims and separating them from the general business and the trend. We've always tracked the trend, and as Bill said, we were highly focused on the increase from the pharmaceuticals and the drugs. But this spike was certainly something that was not expected, and we need to monitor that closely.

As Bill said, if you look at the entire year of 2014, we were, frankly, running lower on the large medical claims early in the year, and this balanced it out. But I've never tracked those specifically in the past because, over the past three or four years, I've never seen variability more than the $2 million or $3 million.

Understood.

And then your initiative to work more closely with the carriers -- does that change, at all, your outlook, in terms of the expected quarterly variability? Or does it just give you a higher degree of confidence in your one quarter out guidance?

That's a good question

No, it's a very good question. As we step back and think about the total year, my view is, with getting this better data from the carriers, we should be able to come up with an estimate for the year, which is within $10 million for large medical claims. That being said, we have increased our range on a quarterly basis to $5 million, and you can see that in our guidance, just because we had experience this quarter of double that.

So we think with better information, we should be able to get a good range for the year. But we just want to make sure we have enough variability -- or enough capability to cover any variability within a quarter, which is why we did the $5 million.

Thank you.

Paul Ginocchio, Deutsche Bank.

Thanks. Bill, can you talk about your ability to -- how quickly you can reprice the contracts to your underlying clients? Can you raised your overall health care premiums? What percent in the first quarter, second quarter, third quarter, fourth quarter? And then, I've got a couple follow-ups

Sure, Paul.

And we do have the ability to increase our premiums on a quarterly basis. And we, in fact, do that on the anniversary of our client's years.

That being said, one of the things that we cannot do is, we cannot recover, on an individual client, a catastrophic claim. And we don't really expect to do that. When we step back and look at what our experience was for these large claims, we don't expect it will impact our trend on a significant basis. So it's -- when we do our pricing, it is based on estimated medical trend.

So our pricing, we expect to be fairly stable. But we look at that every quarter. And as I mentioned, historically, we do raise rates for those who are better or higher utilizers of medical and lower those for those who are utilizing on the lower end.

I did some rough calcs, and it looks like you were estimating on up per work-site employee, roughly 2% to 3% healthcare cost inflation. And it came in at more like -- let's call it -- 3% to 5%. Does that sound right, including those large medical claims?

Actually, our total trend for the year is probably closer to 7%, in terms of medical costs, Paul. It's on an annual basis. So our pricing is, generally, a little bit higher than that.

Okay.

And were these large medical claims -- were they isolated to any one of your three technology platforms?

They're primarily Passport, as we've indicated in the past. SOI -- generally, only 25% of their work-site employees are covered with medical. And with Ambrose, it's a smaller population that's on a guaranteed cost arrangement. So this is, really, the white-collar book.

We have looked at it, also, on a regional basis. We've looked at it by vertical, and nothing jumps out at us as indicating there's any adverse selection on a region or on a vertical. So this is just something that was a bunching of claims that happened to us, unfortunately, all in a quarter.

Great.

Just two more, if I may. I calculate that the healthcare costs were maybe $15 million higher than you were expecting. Does that sound about right to you?

Yes. That's in the ballpark.

And how many -- you didn't say earlier when asked -- how many claims would that have been?

It's really difficult to determine how many claims. I think a good benchmark -- and we've looked at this ourselves and with consulting actuaries -- is that generally, you would expect about 30% to 35% of your total claims dollars to be from large claims. And that's, effectively, what our history has told us. So we're right within that range.

And when you talk about number of claims -- and we define a large claim as greater than $50,000. But we're talking about claims that are going to be -- on a monthly basis, we're talking close to what 150 to 200 claims. So it's a fairly large number of claims if you just average out claims for the year.

So it really isn't coming down to a handful of claims. It's a number of claims.

Great.

And then, lastly, I know you take some deductible risk where you, to get better pricing on healthcare, you'll take a little healthcare cost risk. Can you just remind us what your gross exposure is before the what reinsurance or insurance will kick in, either on a per work-site employee or total millions of dollars exposure? Thanks.

Sure, Paul.

What you are referring to is, we have a deductible structure, which has a per occurrence limit. That's called the pooling limit. And the reason we do that is, it gives us more flexibility to formulate our plan structure and pricing in connection with our carriers. It's a very common type of contract.

And the pooling limit varies by carrier. On our largest plans, it goes up to $1 million. And we look at the pricing of that limit, actually, ever year.

And it's just determined, based on what kind of pricing we get offered from the carriers, at what level we will drop that pooling limit. But generally, it's $1 million at the largest level.

Difficult to indicate a total aggregate, but when we look at the experience of our plans in total for 2014, we came in at a medical loss ratio -- something that most of you are familiar with -- in the low 80s%, and that's including our Q4 experience. We also are expecting, based on our forecast, to have an MLR ratio at the same level in 2015. So what that tells us is that our pricing seems to be pretty close, and the health of our insurance book is solid, given that low 80s% MLR ratio.

Thanks for your time.

Jason Kupferberg, Jefferies LLC.

Hi. This is Amit Singh, for Jason.

Just quickly, to delve a little bit deeper into the insurance costs. If I look over the last five quarters and also over the last couple of years, the trend has been that insurance cost, as a percent of insurance revenue, has been going up.

So as you provide the adjusted EBITDA guidance for next year, what are you generally expecting? Do you expect the insurance costs, as a percent of insurance revenues, to say and similar level in 2015 as it was in 2014? Or do you expect it to come down?

No, I expect it to be fairly similar. Given the MLR ratio I mentioned, I think it's going to be fairly stable at that low 80s%. That's inferring that ratio will stay fairly constant.

All right.

And then, you talked about your current leverage ratio. Just wanted to get a sense, as you're slowly pay down your debt, what is the general level that you would be comfortable at, so that you can start looking for additional acquisitions?

Generally, our use of cash will always be, first, to look to see if we can put the cash to work with acquisitions. So that's always the first thing we look at, and we did the same in the fourth quarter.

Then that we will look to see if we would pay down some debt and/or a repurchase stock. And we're repurchasing stock, primarily, to keep our stock compensation plans from being dilutive. So that's the same priority that we will continue to use with the use of our cash.

All right. Thank you.

[Tenzin] Wang, JPMorgan.

Hi, thanks.

Just wanted to test your confidence in the net service revenue outlook of 15%. I know the selling fees is obviously important. Did you realize the claims issue in time to recalibrate your underwriting to get to that 15% for the year?

Yes, Tenzin. What we did was we, historically, will look at our medical over a long period of time. So as we were planning 2015, we had already assumed that target MLR ratio in the low 80s%. So as we did see our experience in 2014, it pretty much came down to the level we were already planning for 2014 -- excuse me, for 2015. We were expecting a slightly higher number as we were forecasting 2014, and obviously, it didn't come in as high as we thought, in terms of--

And Tenzin, this is Burton.

Just to add to that, obviously, January is in the can. And I'm pleased the way January came up with both new sales -- and you understand how important that selling season is -- as well as attrition. And ultimately. I believe it sets us up well for achieving our organic growth targets in excess of 15%.

Okay. Fair enough.

So as my follow-up to that, organic -- still been a little bit quiet on the inorganic side. I know that your peers have been happy with their PEO performance as well. Any updated thoughts on timing of when we might see some M&A activity? Or is this more of a--

Tenzin, let's put Jimmy Franzone to work. He's in the room, here. So I'm going to give him the microphone, and he can answer that for you. How's that?

Sounds good. Hey, Jimmy.

Hey there. How are you?

I would say the market on the M&A side has been fairly active, in terms of the conversations. As we've described before, we're focused on a couple of different things as we think about any kind of M&A opportunity. Is it expanding the market opportunity for us as opposed to just giving scale?

There are a handful of players out there right now that we have conversations with that I think fall into that category. It comes down to timing and valuation and whether or not something's going to make sense.

Okay. Thank you. That's all I had. Thanks.

Thanks, Tenzin.

Tim McHugh, William Blair & Company.

Yes. Just on the guidance for Q1, the growth guidance is less than the full year. Are you expecting the healthcare costs this year to carry into Q1? Or is there something else, in terms of why it's lower in Q1 versus the full year?

Sure. No, it's a valid question. We're not really expecting anything slower. But given our recent experience, we thought it was prudent to widen our range just to account for the potential variability that we could see from large medical claims.

As you look at the total year, our total year guidance was very consistent with the growth we expected in 2014. So the midpoint of our annual guidance puts us at a growth rate that's15% above the midpoint of our forecast for 2014. So we are expecting good growth. But we also want to be prudent, given the variability we just saw in the fourth quarter.

Okay.

And why wouldn't some of those issues -- some of those things, I imagine, could continue for a few quarters, where you could see an elevated level of claims related to some of those issues for a while. Can you tell us why you wouldn't expect those for the next two or three quarters? Some of those health issues, I imagine, don't go away right away.

Yes. Tim, I think it's a valid point. One of the things we did look at very carefully is, obviously, the claims that came in subsequent. We saw our claims initially coming in January. We looked hard at the claims that came in at February.

And we've also started to get those reports that I mentioned at the lower level of granularity for large claims from our carriers, so that we can see what levels they are coming in that. And right now, the levels that we're seeing in Q1 are consistent with our forecast.

So we don't expect anything that's significantly different. But clearly, there is very ability for these large claims, which makes it a little bit difficult to follow, which is why we're going to be paying very close attention to these on a monthly basis. There is cyclicality. We've seen that in the past. And that's, unfortunately, what we experienced in Q4 to a much greater extent.

And just to follow up earlier, just to make sure I understand it -- because these are catastrophic-type event, your argument was you don't reprice for those. So you don't view this as a pricing or underwriting decision-making issue.

No. Clearly, we look at our underwriting experience and determine is there anything we may need to change. But when you have things like complex births, it's generally a healthy population, and it's just a matter of sometimes these things will happen in bunches.

But when we step back, we will continue to look at -- do we need to tweak, slightly, how we would price someone that's healthy in that demographic range? But it's not looking like it's anything that's dramatically different than we're currently doing today.

Okay, thanks.

David Grossman, Stifel.

Hello. This is Irvin Liu, calling in for David.

Hey, Irvin.

So if my calculations are correct, it looks like professional service pricing was down modestly in the December quarter. Just wondering if I can confirm that? And then, what kind of pricing does 2015 guidance assume for professional service?

Sure. I think it's a valid question.

The one thing I would remind everyone of is, in the fourth quarter of 2013, we did receive a $2 million payroll tax refund. And some of you may recall that we also received one in Q3 of 2013, and our final one was in Q1 of 2014. So it was $2 million.

So when you take that $2 million one-time item out of the fourth quarter of 2013, our pricing, when we looked at average professional service pricing between Q4 of this year in Q4 of last year, is within around a percentage point, which, to us, is pretty much flat, given how precise this calculation is. So we expect at least stable pricing, if not slightly increased pricing, based on an inflationary price adjustment that we generally will pass through to our clients during the year.

Got it. Thanks.

And can you provide for how much 2014 revenue was from new clients and what the overall attrition was?

We do not give out attrition information on a granular basis. Our model is around 20%, and we continue to do slightly better because our clients don't leave quite at that rate.

And when we look at revenue, it's approximately 14% of our new revenue is coming from our new clients. And the install base, generally, is going up around 1% or so, to get you to the 15% growth for 2014.

Got it. Thanks. That's all I had.

Thank you very much.

This will conclude today's question and answer session and conference call. I would now like to thank management for their time today and thank you, all, for attending today's presentation.

At this time, you may disconnect your lines. Thank you, and have a great day, everybody.