Exela Technologies Inc (XELA) 2021 Q1 法說會逐字稿

Good morning, and welcome to the Exela Technologies' First Quarter 2021 Financial Results Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to William Maina, Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to the Exela Technologies' First Quarter 2021 Conference Call. I'm joined today by Ron Cogburn Exela's Chief Executive Officer and Shrikant Sortur, our Chief Financial Officer. Following prepared remarks made by Ron and Shrikant, we'll take your questions. Today's conference is being broadcast live via webcast which is available on the Investor Relations' page of Exela's website at exelatech.com. The replay of this call will be available through May 11, 2021. Information to access the replay is listed in today's press release, which is also available on the Investor Relations' page of Exela's website.

During today's call, Exela will make certain statements regarding future events and financial performance that may be characterized as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements reflect management's current beliefs, assumptions and expectations as of today, May 4, 2021 and are subject to a number of factors that may cause actual results to differ materially from those statements. We undertake no obligation to update any statements that reflect the events that occur after this call, and actual results could differ materially from any forward-looking statements. For more information, please refer to the risk factors discussed in Exela's most recent periodic report on Form 10-K, along with today's press release and the company's other filings with the SEC. Copies are available from the SEC or the Investor Relations' page of Exela's website.

During today's call, we will refer to certain non-GAAP financial measures. We believe these non-GAAP measures provide additional information on how management views the operating performance of our business. Reconciliations between GAAP and non-GAAP results we discuss on today's call can be found in the Investor Relations' page of our website. Please note the presentation that accompanies this conference call is also available on the Investor Relations' page of our website.

With all the mandatory Reg FD disclosures out of the way, I'm pleased to turn the call over to our CEO, Ron Cogburn. Ron, Please go ahead.

Good morning, and thanks everyone for joining us on our first quarter 2021 conference call. Today, I would like to highlight a few key topics, which I hope everyone takes away from this call. To begin with, Exela's improving key performance metrics, especially our profitability, which grew considerably in Q1. Second, I will address Exela's participation in the digital transformation of our customers by building digital roads over broken processes, which drives growth in the B2B and B2C, leaving the existing networks behind. Next, we'll talk about new products and markets, which represent exciting growth opportunities for Exela, these include our Digital Asset Group or DAG, our Exela Bills and Payments or XBP, and the Intelligent Data Processing or IDP solutions, along with the adoption of these solutions in the small and medium business market. Next, we'll talk about our ongoing efforts driving operational leverage and margin improvement, strengthening our balance sheet and financial flexibility. And then we will also highlight the stability of our revenue base, growing pipeline improving customer sentiment, all of which gives us increased confidence in our 2021 outlook.

So let's begin today on Slide #4, with an overview of our Q1 results and some recent business highlights. Revenue for the first quarter was in line with our expectations at $300 million. Variations from Q1 of last year were primarily due to the exit of non-strategic transition revenue, volume impacts from COVID-19 and our non-core asset sales. Our revenue base is stable and diversified from a customer, industry and geography standpoint. Our backlog is substantial and our pipeline growth remains strong, particularly for our DAG solutions, where we're seeing increased demand with new and existing customers. Through Q1 of 2021, our DAG business represented about 8% of our total revenue including our SMB business. From a profitability perspective, we delivered strong margin improvement in the first quarter as well. Our Q1 gross margin was 22.5%, an increase of approximately 370 basis points sequentially, and 250 basis points year-over-year.

Q1 adjusted EBITDA margin was 15.5%, an increase of 365 basis points from the last quarter and 334 basis points year-over-year. This is noteworthy in this environment. We delivered multiple key new business wins and solution launches in the first quarter as well. With respect to the new business wins, our recent expansion into the small and medium business market showed strong growth in Q1, 2021. SMB customers for our digital mailroom solution grew 117% sequentially in Q1, and our SMB DrySign users increased almost 170%. This is the kind of adoption we were looking for. Our pipeline continues to grow in this segment and we have plans for further global expansion of this business.

As we previously announced, in early March, we also delivered our first cloud-hosted deployment of PCH Global with a major U.S. insurer. Under this $90 million 10-year licensing agreement, Exela has deployed PCH Global digital exchange platform to execute the end-to-end processing of complex healthcare claims for this large customer. Now regarding the new products and recent solution launches, I was happy to announce the global expansion of our Exchange for Bills and Payments or XBP into the Americas, Continental Europe and the Asian markets. Now we discussed our XBP platform at length during our recent Cowen Fireside Chat. The legacy-billing processes for both payers and receivers today is fraught with inefficient manual processes that are inherently expensive, risky and they don't give companies the full transparency into their corporate bills and payment process. XBP enabled billers to send bills to businesses and consumers electronically, offering transparency and simple reconciliation. It also allows payers to receive all their bills in one place with the analytics, alerts and more payment options. Our XBP solution is garnering accelerating interests across our existing and new customers, and I look forward to providing you with updates on future calls.

Now we're also excited about our recent rollout of our Intelligent Data Processing or IDP platform. Now IDP was designed to provide customers with an easy to implement highly scalable secure cloud-based environment to run their critical business processes. Our IDP platform leverages artificial intelligence, deep learning architecture and Exela's vast library of knowledge from customer and industry rules across existing and future processes to generate continuously improved results for our customers. Next is our RPA or Robotic Process Automation. It's another digital solution we're excited to talk about. We invite you to join us for another Fireside Chat with D.A. Davidson on May 20, where we'll go into further detail on the use cases and how these bots are working hard for our customers.

Now turning to our operational leverage improvement initiatives. We have a couple of important highlights to mention here. In the first quarter, we completed 25% of our multi-year plan to reduce our facilities' footprint, rationalizing our footprint. Also, our initiatives to increase automation in our organization enabled us to continue optimizing our workforce. Our total employees as of March 31, 2021, were 18,400 as compared to 19,000 on December 31 of 2020. Finally, with respect to our balance sheet, we remain focused on strengthening our financial flexibility and liquidity position. As a reminder, in mid-March, we raised $26.8 million in gross proceeds via an equity offering.

Now let's turn to Slide #5. Now many of you will be familiar with this slide from our last earnings call, but I think it's important as it gets to the heart of our strong market position and illustrates the significant addressable market opportunity that we have for our BPM and digital solutions. With over 30 years of experience, we served 4,000 plus customers globally, including 60% of the Fortune-100. Exela's customers across verticals such as banking, insurance, commercial, healthcare and public sector rely on a fully deployed technology stack, 140 plus delivery centers and over 18,000 employees to execute mission-critical business processes. Now our solutions are integral parts of our customers day-to-day operations, and they include, Liquidity Solutions, Paving and Technology Solutions, my favorite, Human Capital Management, which we replaced Workday, Work from Anywhere Technologies and of course Information Management and Communication. We believe we've only just scratched the surface in terms of a significant market opportunity with our current customer base.

Now let's turn to Slide #6. I'll note that we have deep valuable and long tenured relationship with our customers, including many of the world's largest enterprises. Our largest customers have been with Exela an average of 15 years. With low customer concentration and a focus on the industries that have the strongest projected CAGRs like banking, financial services, insurance and healthcare, we are well positioned for growth. Furthermore with the most -- with most of our revenue in the U.S. and in Europe, we're strategically positioned to benefit from the economic recovery post COVID-19. Exela's digital foundation and our engineering heritage powers our long tenured customer relationship and this is what enables us to continue to innovate and launch new disruptive solutions, that further widen our competitive moat.

Now let's turn to Slide #7. You heard me mention at the beginning of the call expect Exela's expansion into the SMB segment. While we have significant whitespace opportunity available with our large enterprise customers, we see strong potential for our leading solutions for small and medium businesses. SMB today is an untapped market for Exela, and we believe it represents a significant future opportunity. Here are some stats on -- some recent stats that really give us confidence in our offerings. As shown on the left side of the page, we've seen a very strong growth in the number of new SMB customers, which I mentioned earlier in the call. For our digital mail room, as I mentioned, it's up 117% quarter-over-quarter. DrySign is up 170% quarter-over-quarter, driven by an increase in demand for the Work from Anywhere solutions that we offer.

With the success we have achieved within this space so far, we plan to bring more subscription-based business process as a service or BPaaS solutions, software as a service or SaaS, to the SMB market across Americas, Europe and Asia. Now software licenses and subscriptions for our digital platforms strengthen our backlog and improve our profitability. Our enterprise customer contracts tend to be 5 to 10 years, with renewals and annual maintenance and support services. And they also generate higher gross margins as well. Now SMB customers are a little different. Their contracts tend to be per user per month and our cloud hosted solutions with features and flexibility at the ideal for that marketplace.

So in closing, Exela remains well positioned in today's environment. The global trend towards digital transformation to grow market share, increased productivity and reduce costs through modernization and automation of a business process, is generating strong tailwinds for our sector. Our extensive investment in technology enables us to build longstanding, trusted relationships with our customers. Our multiple patents in process and new digital solutions deepens and widens our competitive moat as well. As we execute against our strategy and benefit from the normalization of volumes and customer renewal rates toward pre-COVID levels, we anticipate improving performance throughout 2021. We will continue to execute on our cost efficiency and operational improvement plans to drive future market -- margin expansion, while continuing to focus on strengthening our balance sheet and financial flexibility. Based on our Q1 results and the momentum we're seeing in our business, we're reiterating our prior 2021 guidance.

With this, I'll turn the call over to Shrikant Sortur, our CFO, to run through the numbers in more detail. Shrikant?

Thank you, Ron. Good morning, everybody. In my prepared remarks, I'll take you through our consolidated results and segment revenue and discuss guidance for the full year. We're happy to report sequential and year-over-year gross margin and adjusted EBITDA margin growth this quarter. As we have done in the past, we are reporting both GAAP and non-GAAP numbers. The reconciliations are in our filings and in the appendix of the presentation.

So let's start on Slide 8 and review our first quarter 2021 results. Revenue for the first quarter totaled $300.1 million, a decrease of 17.9% year-over-year on a reported basis and 19.3% in constant currency. A look at our segment revenue. Revenue for our ITPS segment was $231.9 million, a decrease of 18.4% from $284.1 million in the first quarter of 2020. This decline is primarily driven by the transition revenue and COVID related volumes.

Our Healthcare Solutions segment revenue totaled $51.1 million, a decrease of 20.2% from $64 million in the year ago period. This decline was primarily driven by COVID volumes. Our Legal and Loss Prevention segment revenue was $17.1 million, essentially flat year-over-year. Despite the $65 million year-over-year decline in our Q1 revenue, our gross profit only declined by approximately $5 million, reflecting our ongoing focus on operational improvement and efficiencies.

Our gross profit margin for the first quarter increased 370 basis points sequentially and 250 basis points year-over-year to 22.5%, primarily due to better cost and capacity management and the reduction of stranded costs attributable to the transition revenue. Our gross profits were lower by approximately $5 million due to a non-cash restructuring charge reserved in France for operational improvements. The benefit of our ongoing actions to reduce our cost structure nearly offset the full impact from lower revenue.

Going down the income statement. SG&A expenses for Q1 totaled $41.9 million, down 16.9% year-over-year and down 8.7% sequentially, representing 14% of sales. We delivered lower year-over-year and sequential SG&A despite the higher professional fees and advisory costs in Q1 of 2021, which we expect will decline in subsequent quarters this year.

Shifting to EBITDA and adjusted EBITDA. In Q1, we delivered EBITDA of $23.5 million compared to $54.6 million in the prior year period. As a reminder, EBITDA for our prior-year quarter, Q1 of 2020 included a gain of $35.3 million recognized from the sale of SourceHOV Tax, LLC. Adjusted EBITDA for the first quarter was $46.5 million, up 4.7% from $44.4 million in the prior year period. Our adjusted EBITDA margin for the first quarter was15.5%, up 366 basis points from the prior quarter and 334 basis points from 12.1% in the first quarter of 2020.

Our Q1 margin expansion benefits from cost efficiencies which I just mentioned, including our deployment of Work from Anywhere Solutions, which has helped reduce our real estate facility costs as part of our multi-year facilities plan and cloud deployments, which are benefiting our IT infrastructure expenses.

Moving to Slide 9, and focusing on our profit and operating metric performance. As I mentioned earlier, our gross profit and EBITDA margins were up substantially in Q1 versus Q4 of 2020, driven by business mix and effective cost management. Also importantly, our O&R charges continued to decline in Q1 and we are currently at an approximately $20 million run rate for 2021 compared with $46 million for full-year 2020. Our adjusted EBITDA less CapEx for Q1 2021 was $38.8 million, representing 12.9% of revenue and 590 basis points improvement from Q4 of 2020.

Let's touch briefly on our balance sheet and liquidity. In March, we raised approximately $26.8 million via an equity offering before deducting placement and other offering expenses. Our global liquidity for our credit agreement was $62 million as of March 31, 2021, consisting of $22 million of cash, and an additional $20 million of availability under global credit facilities, and an additional $53 million undrawn on our committed securitization facilities in the U.S. Our total net debt as of March 31, 2021 was $1.48 billion.

We believe we are well positioned to further strengthen the balance sheet as we prepare for the return of COVID volumes and growth in the DAG SMB space. This past Monday, we filed an S-3 to provide the company extra financial flexibility. Our strategic objective remains, one, achieving higher gross margins by strategically focusing on high quality revenue that includes return of COVID volumes and continued strong growth in DAG SMB markets. Two, strengthen the balance sheet with the ultimate objective to reduce our cost of capital and enhance financial flexibility on a levered basis.

Turning to a review of our 2021 outlook. As Ron mentioned, we are reaffirming our prior guidance ranges. For the full year 2021, we continue to expect total revenue to be in the range of $1.25 billion to $1.39 billion. Our current estimates assume the normalization of pre-COVID-19 volumes, renewal rates to return to historical levels, pre-COVID-19 and continued momentum in winning new business. We expect gross margin in 2021 to be between 23% and 25%, reflecting improved operating leverage, resulting from the normalization of volumes to pre-COVID-19 levels. and increased productivity of existing employee base and higher utilization of production infrastructure.

We expect adjusted EBITDA margin to be in the 16% to 17% range reflecting higher gross margin as well as improved operating leverage, resulting from the scaling of revenue with minimal additions to production infrastructure and reduction in professional and legal expenses due to normalization of capital structure. We expect CapEx levels of approximately 1% of revenue, in line with historical levels and working capital in line with historical levels and recent trends.

Turning to Slide 10, I will leave you with 3 takeaways from today's presentation. First, our rising performance reflected in the sequential growth in profits and operating metrics with improving operating leverage. Second, recently launched SMB business showing robust growth in Q1 of 2021, the substantial backlog and growing pipeline. And third, plans to continue to strengthen balance sheet as previously announced are in progress. I'd like to thank you all very much for joining us on the call today.

With that, operator, please open the call for questions.

(Operator Instructions) Our first question will come from Jerry Wang of Carlyle.

Just had a few here. Shrikant, I think you mentioned a few quarters ago that in the ITPS there's the low margin revenue streams there, call it $150 million, and most of that, if not all of it will be exited at least on the revenue line by the first quarter of '21. Is that still the expectation currently?

That is correct, Jerry. Q1 of 2021 March almost one full cycle of the transition revenue, we have trended -- internally as we look at it, we are trended at $147 million of exit, so it's in line with the $150 million that we had expected.

Okay. And then if I look at the 3 line items, healthcare, ITPS and Rust. If I were to just look at your guidance for the year, even looking at the low end of guidance, you should at least see some uptick or at least flattening on the ITPS line. Is that something you see going forward in the next few quarters, at least on ITPS?

I would say so. Again, as you saw on our guidance and our discussions today, there are assumptions built into it, COVID volumes coming back up. Couple of additional color if you would want. Healthcare Solutions for example, quarter-over-quarter remained flat, which is in a way good because traditionally Q4 tends to be a higher quarter for Healthcare Solutions. The fact that Q1 of this year was flat with Q4 bodes well for us. We expect to see the volumes to continue to pick back up. LLP as we have said that -- a few different times in the past, project driven, so anything could happen. Rest of the growth is going to be picked up from ITPS. And the DAG and all of the SMBs that we're focusing on, we expect growth to come in that area as well as from payments and a few different business verticals within ITPS.

In this quarter, it looks like your -- moving on to cash flows and working capital sources and uses, it looks like AR and AP moved a little bit outside of where you were in the last quarter or 2. And I think per your guidance, you're expecting it to be, call it 1% or so of growth or right around that area. Do you expect that AR/AP to re-normalize over the next few quarters?

Yes. So I'm sure -- maybe I'm getting -- I'm not getting the question right, but the 1% is obviously our CapEx estimates, right Jerry? From a working capital perspective, you're thinking about it the right way, in the sense, we have swings on the odd and even quarters, we continue to -- we'll continue to expect that. Obviously, as we convert cash, as you saw between Q4 and Q1, we had additional margins and cash generation that will help us either to get to a neutral or a cash positive situation from an operational perspective, eventually.

And just last one for me. I think you mentioned the S-3 -- the $500 million mixed shelf that was filed. Can you provide any additional color there in terms of timing or quantum or use-of-proceeds?

Yes. It's really -- if you think about it, we already had the shelf registration in the past. This was to give us extra flexibility, no specific usage earmarked right now, but we're going to be very strategic about it. From a use-of-funds perspective, it's mainly for general corporate purposes, importantly to invest, to fuel growth in profitable revenue in the near term, right? But also you could -- we could look at it, and we have 2 or 3 other areas that we would like to focus on strengthening, strengthening the balance sheet, reducing our cost of capital, and as I said, to improve our liquidity.

And just on the liquidity piece of it. Can you say how much liquidity you currently have, maybe at the end of April or early May?

Sure. So what I would like to do is, 2 point answer. One, the liquidity at the end of April is better than March. And from a business perspective, every month of the quarter, in particular, March was definitely much better in terms of volumes and returns compared to Jan and Feb. We have seen a good trend in April. So our liquidity, end of April is better than what it was in March, #1. #2, I think we have been disclosing our liquidity in our Qs and Ks and presentations, so you have a good feel for -- at various points in time, what those were. Lastly, as I said, we are looking at hitting all of the parameters, profitable growth, margin improvement, etc. So rather than give you a number a point in time and get locked in, I think we are happy to see the cash conversion or the better margin improvements in the business.

(Operator Instructions) And the next question will come from David Foropoulos of Unum.

One question. My primary one is, there wasn't any mention in the release or the prepared remarks regarding asset sales like we've seen over the last 4 or 5 quarters. I just was curious if this is still in your plans, has there been any change to further divestitures?

Thanks for the question. No change in plans as such, but we most certainly want to be very strategic about it. It's depend on the valuations. I think on the last earnings call, I kind of mentioned the 2 asset sales that we did were relatively smaller. The next one that we want to do is probably which one will be -- it will be much bigger -- potentially bigger and also make a strategic fit. So depending on the valuation, depending on where we land, we are still looking at it.

So you're still in the process here, and those parameters, I believe $125 million to $150 million of proceeds are still -- is still in your sight here?

That is correct, yes.

Okay. Secondly, the cash burn. I know this is a cash burn quarter, the cadence here, it looks like -- and I think you cited earlier, your AR and maybe some of those items were a little bit -- you ate a little bit more cash on those that -- was there any one time as just usually you don't burn this much cash on a quarter. I'm wondering if I was to look at this and walk through exactly, what would be the outliers this quarter that made it a little bit higher. Was it simply working capital issues with the AR and such, or is there some one timers I'm missing?

No, actually, I wouldn't even assign it really to one timers. The way I look at it, you rightly pointed out, it's working capital swings. What is probably a little bit more pronounced in Q4 versus Q1 is that Q1 revenue was sequentially down by $14 million but our AR went up by $10 million, which is an indicator of A, the collections in Q4 were pretty robust, pretty good. And conversely, in Q1, collections were lighter. So we have that lever to pull, right? So not to -- yes.

So a little bit back end loaded, Q1 is if things got better as the quarter went on. That makes sense. Okay. And then, the second where you said the cadence of your healthcare volumes is improving, so we would expect better margin business that's a tailwind going into the -- with more discretionary procedures going on, that's definitely a benefit for you guys?

Exactly, but I want to be cautiously optimistic there. I think the good trend, as you look at years past is Q4 healthcare tends to be better than Q1, whereas this quarter-over-quarter it was flat, that's very pleasing for us. But again, I want to be cautiously optimistic given everything going on, and hopefully late Q2 and onwards, we'll start to see some pre-COVID volumes come back up.

The next question comes from Allen Kato of Beach Point Capital.

First on the $66 million year-over-year decline in revenue. Could you help bridge that between transition/exited revenue, and then just COVID impacts on the dollars basis?

Yes. High level -- again, take this as a directional number, but transition impact as we've said $150 million run rate, approximately $37 million or so a quarter, and I think for Q1 to Q1 that's in the same range, $35 million, $36 million from a transition revenue impact perspective. COVID impact late -- start of late March, so the 2.5 months of COVID impact when you compare year-over-year, approximately $20 million. And then the other $10 million is from the contribution from the asset sales that we did. So in Q1 of last year, we had approximately $10 million from those 2 assets contributing to the revenue which did not repeat in 2021. So that's the high level breakup for the $65 million.

Got it. And then on the year-over-year declines still being around 20% going from 4Q to 1Q. With some of the reopening going on, I would have thought you'd see some minor sequential improvement. So what areas within ITPNS (sic) [ITPS] and healthcare services are still lagging and are still feeling a pretty severe COVID impact?

Yes. One is, as I said already, you're specifically asking about ITPS which you're looking at it right, healthcare and legal sequentially. Allen, you asked me sequential, right?

Yes, just year-over-year decline rate going from 4Q to 1Q seems like it's pretty consistent. But I thought it would have improved on an easier comp.

Okay. Like I said, healthcare and legal Q4 to Q1 sequentially, relatively flat. Drilling down into ITPS, our payments business was actually flat Q4 to Q1. It is in the Digital Assets Group, where in European region we tend to have a onetime Q4 benefits from higher software sales, professional service goods sales and equipment sales, that obviously doesn't repeat in Q1. But what is good about this Allen is that -- not just the revenue decline is never good, but what I mean to say is, in Q1, traditionally every year going from Q4 to Q1, while there's seasonality in Q4 that doesn't get repeated in Q1, we tend to see a lot of postage and pass through in Q1 of every year. This year it was not that pronounced. What this means is, while revenue was lower sequentially, it didn't really impact our margins. I think that's a positive takeaway. But long story short, payments within ITPS remain flat. We had some compression in the on-site and our united communication services businesses.

The next question comes from Amer Tiwana of Imperial Capital.

I have 2 questions. First one is around liquidity. You mentioned that you have a little over $50 million from --available from the undrawn part of the AR facility. My question is, is that available to you today?

Amer, thanks for the question. It is available to us today subject to conditions. If you have a follow-up, you can address, instead of jumping into a conclusion. So short and sweet answer, it's available to us subject to conditions.

Okay. The other question I have is regarding the healthcare business. When you look at 2020 versus 2021, how should we think about -- you've given the overall revenue guidance. Is the health care going to perform in line with those year-over-year ranges or should it perform better? I'm just trying to get -- without getting any specific numbers, maybe directionally, if you can help us.

I think -- again, if you look at our base assumptions, as long as the pre-COVID or not as long as, as the pre-COVID volumes start to pick up, as our renewal rates return back to normalcy, and as we continue to win new business, we certainly see growth in the healthcare space. What is the unknown right now, and that's why we are cautiously optimistic about this, is that we don't know how things will pan out in the next 2 to 4 months. As inoculation happens, as things start to return back to normalcy, there is additional revenue or business to be picked up, but that's where we need to wait and watch in the near term to see how it will pan out.

Got it. And just broadly, EBITDA margins for the healthcare business, where are they roughly?

Yes, from a segment perspective, we only look at it at a gross margin levels because of the shared services and corporate cost that is on SG and other. So gross margins, we expect it to be in line with historical trends, and as you saw in our guidance, we expect our gross margin pickup from prior years to land at 23% to 25%. So we'll continue to be in the range of growth that we had projected.

The next question comes from [Jeff Hutz] of JPMorgan.

One quick one on Slide 8, just about one of the add-backs that you have on your EBITDA line. You have non-cash and other of $13.1 million. Could you just maybe detail what -- how much of that is non-cash and/or what exactly those charges were for?

Yes, sure. We usually have the details listed in our [factsheet]. For this quarter, we have still not put it out, as we file the Q we'll put it out. But to address your question, Jeff, typically these non-cash charges are -- if there are impairments to goodwill or other intangible assets, which is not there in Q1, things like non-cash equity, a loss on sale of assets, those are the non-cash elements. Then the other charges includes potentially, employee severance, dark facilities and things like that, customer exit cost and things like that. I will preempt and tell you, you'll see a higher number there this quarter, mainly because, I mentioned in the prepared remarks, we took a non-cash charge for our restructuring in France, restructuring a couple of facilities. That is part of the non-cash add-back, which is driving the higher number in Q1.

And one follow-up, if I may, totally different question. Some of the new segments and the newer products that you're going after, you list them there on Slide 7, but can you tell us what revenue like DrySign or the HCM stuff or the XBP products are generating? Can you give any color on the size that -- you gave some growth rates, but it's hard to tell.

Yes, no problem, Jeff. I will provide you that answer, and then maybe Ron can add more color from a business perspective. Jeff, at this point in time, it's almost too early to talk about a revenue number because it's not very meaningful right now. What we are excited about is the number of customers are getting onboarded into some of our products, the -- the DMRs and DrySigns, particularly for our digital -- our products that we have. That's exciting. And at this point in time, we are more focused on building up these customers. if you have followed us, if you know us from the past, we have always focused on our top customers, our enterprise customers, which we'll continue to do. The SMBs provides us a new opportunity to grow revenue where a lot of these products it's easy to deploy, regular revenue stream and then importantly, we have more products lined up. So simple answer to your question would be, it's not meaningful revenue right now, but it's something that in the pipeline that it will grow. We hope to grow it in a bigger way. That said, Ron, if you want to give a little bit more color on the products, or if you want to add some color, feel free to do so.

Thanks, Shrikant. I was feeling left out there. Jeff, what's interesting about these products is that we are always users of our own solutions and services. I've heard some people use the phrase you -- eat our own dog food, but at the end of the day, I have been a user of the DMR solution and DrySign for well over a year. So I think I can tell you with confidence that as we roll this out, we did sort of a soft rollout, we are thrilled with the adoption rate that we're seeing among that customer set. The -- if it's per user, per click, per instance, it's a much different approach, and for us that's really exciting, because we had not opened up that channel within our business. When we look at that and we look at the other things that we can offer on a subscription basis, we're very hopeful about where this is going to take us. And in future quarters we can give more detail around the revenue, but right now we're off to a great start.

This concludes our question-and-answer session. I would now like to turn the conference back over to Ronald Cogburn for any closing remarks.

Thanks, operator. As always, we are very appreciative for everyone that joined the call today, and we really enjoy addressing any questions you have. And you know always you can reach out to us directly if you have questions that we did not answer, you didn't get a chance to ask. But let me remind you as I did during the prepared remarks, we have got another Fireside Chat coming up with D.A. Davidson on May 20, and it's around our RPA solution, Robotic Process Automation, which is part of the overall growth or approach with the digital assets. So please make plans to join us and thanks, everyone. And we'll see you next quarter.

Conference has now concluded. Thank you for attending today's presentation and you may now disconnect.