© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to the Q4 2020 Perficient Earnings Conference Call. [Operator Instructions] And as a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host, Chairman and CEO, Mr. Jeff Davis. Sir, please go ahead.
Thank you, and good morning, everybody. This is Jeff Davis. With me on the call today is Paul Martin, our CFO; and Tom Hogan, our COO and President. I'd like to thank you for your time this morning.
As typical, we have about 10 to 15 minutes of prepared comments, after which we'll open up the call for questions. Before we proceed, Paul, would you please read the safe harbor statement?
Sure. Thanks, Jeff, and good morning, everyone. Some of the things we will discuss in today's call concerning future company performance will be forward-looking statements within the meaning of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements and we encourage you to refer to the additional information contained in our SEC filings concerning factors that could cause those results to be different than contemplated in today's discussion.
At times during this call, we'll refer to adjusted EPS or adjusted EBITDA. Our earnings press release, including a reconciliation of certain non-GAAP financial measures to the most directly comparable financial measure prepared in accordance with Generally Accepted Accounting Principles or GAAP, is posted on our website at www.perficient.com.
We have also posted a slide deck, which includes a reconciliation of certain non-GAAP guidance to the most directly comparable financial measures prepared in accordance with GAAP on our website and under Investor Relations. Jeff?
Thanks, Paul. Well once again, thanks, everyone, for joining. We're excited to be with you this morning to discuss our fourth quarter and full year 2020 results. But I'll start with this. I am as proud as I've ever been of Perficient, our performance and our people. In a year marked by uncertainty, challenge and change, Perficient rallied and rose to its strongest position yet. Our colleagues doubled down on their commitment to our clients and our company. And the result was accelerating revenue growth, record adjusted earnings and aggressive global expansion.
Given the uncertainty that was beginning to unfold a year ago at this time, I believe our 2020 results says quite a bit about what Perficient is capable of and also where we're headed. As 2021 gets underway, our momentum is building. We're pursuing and winning bigger deals. Bookings are strong, the pipeline is strong, and we've evolved into a global digital consultancy as capable as any competitor in this space. In fact, we're stronger.
As we continue to augment our broad North American footprint with fully integrated global delivery teams working across technologies and time zones, we become even more formidable, particularly against digital firms that exist only offshore and lack our broad market presence in the United States. Fortune 1000 customers expect and require global delivery, but they also appreciate and value end market talent and high touch service.
Consulting is ultimately about delivering value, but it's also about relationship. It's also a relationship business. And it's much easier to forge long-term bonds when you can engage locally. The current climate has put some of that on pause, but it will return. And when it does, we'll be in an even more advantageous position.
Longer term, it's simply easier to sell and expand accounts when you could walk the halls and establish those personal relationships. It's that blend of local and global, which sets Perficient apart. And as I mentioned earlier, we're building upon our solid foundation in the United States with an aggressive global build-out.
In fact, since the beginning of 2014, our offshore revenue has had a compound annual growth rate of nearly 30%. And in 2020, our offshore revenue growth grew at total of 73% and almost 17% organically. Again, that's in the COVID environment. This year, our plans and projections call for even stronger organic offshore growth, in the high 20s is what we've modeled.
Our teams in India and Colombia, in particular, are hiring at great velocity. Paul will speak to the financial results shortly, but we were again pleased with the key performance metrics, including utilization. In Q4 and throughout the entire year, despite the pandemic, the business performed well and we drove margin expansion and strong profitability. 2020 was full of positive developments. But the most important was certainly our acquisition of PSL Corp. in Latin America in the midyear, in the July time frame. That was our largest deal ever, and we were optimistic wins would come quickly and often because our customers have been clamoring for near-shore talent.
But the pace of our success integrating those colleagues into project teams at many of our large accounts has surpassed even our most optimistic expectations. The demand is very strong. We're seeing a lot of activity there. So again, just a great quarter and a great year, and we expect even stronger growth in results in 2021.
So with that, I'm going to turn the call over to Paul who will share the financial results detail for the fourth quarter and 2020.
Paul? Paul, you might be on mute.
Okay. Sorry about that. Thanks, Jeff. Can you hear me now?
Yes.
Yes. Sorry about that. Let me turn to the fourth quarter results. Services revenue, including reimbursable expenses, were $158.9 million for the fourth quarter of 2020, a 13.1% increase over the comparable prior year period.
Gross margins for the quarter ended December 30, 2020, increased 30 basis points to 38.7% compared to the prior year period. SG&A expense was $33 million compared to $34 million in the comparable prior year period, and SG&A expense as a percentage of revenues decreased to 20.3% from 23.4% in the fourth quarter of 2019.
Adjusted EBITDA for the fourth quarter of 2020 was $35 million or 21.5% of revenues compared to $26.5 million or 18.3% of revenues in the fourth quarter of 2019. The fourth quarter included amortization expense of $7.3 million compared to $4 million in the prior year period, and this increase was primarily associated with the 2020 acquisitions.
The fourth quarter included an adjustment to contingent consideration of $5.7 million compared to $0.6 million in the prior year period. This increase is reflective of the favorable performance and outlook of our 3 2020 acquisitions, which have performed better than originally anticipated, in large part due to cost reductions resulting from travel and other restrictions caused by the COVID pandemic and for PSL quicker-than-anticipated market demand for nearshore resources.
Net interest expense for the fourth quarter of 2020 increased to $3.3 million from $1.9 million in the comparable prior year period, primarily as a result of the August convertible debt offering.
Our effective tax rate for the fourth quarter of 2020 was 27.4% compared to 14.2% for the fourth quarter of 2019. The increase in the effect of -- effective tax rate was primarily due to an increase in nondeductible transaction costs and contingent consideration compared to the 3 months ended December 31, 2019.
Net income decreased 29% to $8.4 million for the fourth quarter from $11.8 million in the fourth quarter of 2019, primarily as a result of the adjustments of fair value of contingent consideration, increased amortization and increased interest expense, partially offset by our strong and improved operating results.
Diluted GAAP earnings per share decreased to $0.26 a share for the fourth quarter of 2020 from $0.36 in the fourth quarter of 2019. Adjusted earnings per share increased to $0.76 a share for the fourth quarter of 2020 from $0.58 a share in the fourth quarter of 2019. And please see the press release for a full reconciliation to GAAP earnings.
I'll now turn to the full year results. Services revenue, including reimbursement expenses, were $599.5 million for the year ended December 31, 2020, a 9.7% increase over the prior year. Gross margins for the year ended December 31, 2020, increased 40 basis points to 37.8%. SG&A expense increased to $134.7 million for the year ended December 31, 2020, from $134.2 million in the prior year. SG&A expense as a percentage of revenue decreased to 22% from 23.7% in the prior year.
Adjusted EBITDA for the year ended December 31, 2020, was $116.3 million or 19% of revenues compared to $95 million or 16.8% of revenues in the prior year.
2020 included amortization expense of $22.9 million compared to $16.2 million in the prior year. The year ended December 31, 2020, included an adjustment to a contingent consideration of $9.5 million compared to $0.3 million in the prior year.
The increase is primarily related to the favorable performance and outlook of our 3 2020 acquisitions.
Net interest expense for the year ended December 31, 2020, increased to $10.1 million from $7.4 million in the prior year, primarily as a result of the August convertible debt offering. Our effective tax rate for the full year was 25.2% compared to 22.6% in the prior year. And the increase was primarily due to an increase in nondeductible transaction costs and contingent consideration.
Net income for the year ended December 31, '20 decreased 18.7% to $30.2 million from $37.1 million, again, primarily as a result of adjustments to fair value of consideration, increased amortization, loss on convertible debt extinguishment, increased acquisition costs and interest expense, partially offset by strong operating results.
Diluted GAAP earnings per share decreased to $0.93 from $1.15. Adjusted earnings per share increased to $2.50 for the year ended December 30, 2020, from $2.07 in the prior year. Our ending billable headcount at December 31, 2020, was 3,884, including 3,628 billable colleagues and 256 subcontractors. Ending SG&A headcount was 649.
Our outstanding debt net of unamortized debt discount and deferred issuance costs at December 31 was $183.6 million. We also had $83.2 million in cash equivalents on the balance sheet, and $124.8 million of unused borrowing capacity on our credit facility. Our balance sheet continues to leave us well positioned to execute on our strategic plan.
Finally, days sales outstanding on receivables decreased to 67 days at the end of the fourth quarter compared to 71 days at the end of the fourth quarter of 2019.
I'll now turn the call over to Tom Hogan for a little more commentary behind the metrics. Tom?
Thank you, Paul. Good morning, everybody. We realized another solid quarter for bookings, large wins with many existing and net new customers. We booked 70 deals greater than $500,000 during the fourth quarter of 2020. That compares to 66 in the third quarter of 2020 and 65 in the year ago period.
As I mentioned last quarter, I think that number really underscores our traction in the market and how well we're executing right now. We can't travel to meet with our customers or prospects, and we're not working at any of our client sites. Yet large deal win volume was up sequentially and year-over-year.
Our fully integrated global pursuit and delivery model is helping us win customers and projects. An example of the many meaningful new client wins during Q4 2020 involves deploying an offshore delivery strategy with the leading maker of packaging processes and materials to support the growth of their commerce capabilities.
We will build the client's first commerce website to enable the scale of its products to the mid-market. The new site will be built to this scale with the company with their long-term goal of creating a commerce environment to score B2B sales for their even larger clients.
Perficient has always been a unique and compelling place to build your career, and that is resonating even more with our colleagues right now. Jeff mentioned on the last call that our employee satisfaction is the highest it's ever been. And we've done a lot of things in the recent years to build culture and ensure our colleagues feel Perficient as the extraordinary place it is.
A great example was our Make a December Difference campaign of kindness that we were able to launch in December of last year. Because of the success we had in 2020, we were able to grant each and every 1 of our global colleagues the equivalent of USD 100 to brighten someone's day during the holiday season.
To surprise a stranger, gives you a charity, donate to a first responder, a health care hero, we put no strings on these funds, only that they had to give it away. And the stories of giving them merge were truly remarkable.
Our concepts inspired and others beyond Perficient to do the same. The funds were multiplied many times over as colleagues matched our contribution or raised more funds within their greater communities. Proudly, we inspired a lot of other paid forward type programs as well.
One of my favorite stories of giving came from our team in India, where many colleagues pulled their funds, gathered additional donations, then purchased a dialysis machine for a health care facility serving very needing patients. This effort alone will benefit hundreds of people for more than a decade and literally save lives.
At the end of such a challenging year for so many, we were so proud to be able to not only grow our business and deliver strong results for shareholders but inspire our colleagues and communities with this program and investments.
So with that, I'll turn things back over to Jeff to discuss Q1 and our 2021 outlook.
Thanks, Tom. Well, before I get into guidance, I did want to mention 1 additional item we included in the news release this morning. Something I'm very excited about and that Tom has done an exemplary job since being appointed COO a couple of years back. It's, of course, a team effort that he's played a key and leading role in driving the operational excellence that has powered our performance. I'm happy the Board approved my recommendation that he'd be named President going forward. His ambition, energy and enthusiasm are well suited for the immense opportunity ahead. So I want to congratulate Tom.
As for guidance, Perficient expects its first quarter 2021 revenue to be in the range of $165 million to $168 million. First quarter GAAP earnings per share is expected to be in the range of $0.31 to $0.34. First quarter adjusted earnings per share is expected to be in the range of $0.65 to $0.68. Perficient expects its full year 2021 revenue to be in the range of $670 million to $704 million. 2021 GAAP earnings per share is expected to be in the range of $1.57 to $1.72. And 2021 adjusted earnings per share is expected to be in the range of $2.85 to $3.
And with that, operator, we can open up the call for questions.
[Operator Instructions] And our first question comes from the line of Maggie Nolan with William Blair.
And congrats to you, Tom. I had a question about the growth in variable employees. So that metric has been fairly strong year-over-year and sequentially in the last couple of quarters here. So I'm wondering what the expectations are for hiring over the course of the year? And then what would be kind of the normalized level of additions when you set acquisitions aside?
Yes. I think it's -- we -- if you look at the midpoint of our guidance for the year, we're about 10% organic. I don't expect much of that to come through rate increases. We're trying to maintain very competitive rates, but leverage offshore and building on our pyramid to drive additional margin expansion, which we've also guided to.
So in terms of headcount, you can expect about 10% across the board. And I should say, probably 5% or 6% in the U.S. and the rest offshore. Of course, the offshore is actually multiplied by the rate differential. So we'll be hiring a lot. We are currently hiring a lot.
Great. And then I wanted to follow-up on both the demand environment and the competitive environment, particularly in your health care and banking and financial services segments. We've seen a lot of a potential competitive new entrants into the health care space, on the services side and then interested in kind of the strong performance that you were able to put up this quarter in banking and financial services?
Yes. It's interesting. We're not necessarily seeing any new players that we're experiencing. It tends to be the majors that we've always competed with in the space. And in fact, we had a knockout Q4 in terms of health care bookings. Health care is about 33% of revenue. We did about 42% in bookings.
And likewise, in financial services, we probably are seeing more competition, but that's because we're penetrating that market more. A lot of our revenue comes from management consulting, business consulting in that sector. But we've managed to expand those relationships now into technology consulting as well.
So we're seeing nice growth there as well. And frankly, not competition that we're terribly concerned about. In fact, I'm certain we're taking share away, at least in financial services.
Our next question comes from the line of Brian Kinstlinger from Alliance Global Partners.
As you look at your industry verticals of focus, which of them do you think is most behind in terms of executing on the digital transformation strategy? And how do you see that changing over the next year or two?
That's a great question. I almost want to say all of them. I think retail is probably ahead obviously, retail on the brick-and-mortar side is waning. And clearly, the business model is changing pretty rapidly.
So that's forcing them to drive accelerated transformation, and they're probably further ahead is the way I would describe it. And I think there's plenty of runway everywhere else. It's pretty fascinating.
We're doing a lot even in manufacturing and sort of what people might consider older businesses to do transformation. But I still think health care, given the high-volume and high-touch nature of that business, and by high volume, I mean customers or patients as it were, is similar to retail in many ways, and they've got a lot of catching up to do still in that industry.
But I still think there's opportunity across all sectors. And in fact, there's sort of the prisoner's dilemma effect that there's a lot of leapfrogging going on. And this is a very dynamic environment. The tools behind digital transformation are very dynamic, changing and evolving rapidly. And so it's sort of a constant process more than a one-and-done type of environment.
So I would say, in terms of digital transformation, like I said, retail is probably ahead, the rest are probably similarly behind. Financial services might be a little bit ahead of the curve. But that's how I would cap it.
Great. And then in the fourth quarter as well as thus far in the first quarter, are the majority of your bookings coming from digital transformation? And in addition, are these generally new logos? Are they existing logos? I mean, obviously, everyone's got to adapt to the changing consumer behaviors.
Yes. It's a strong combination, actually. And I would say the vast majority, 90-plus percent of those bookings are absolutely square in the middle of a digital transformation.
So -- but there's a lot of new logos in there as well, to your question. We've got a long track record of maintaining good tenure. Stickiness as it were in strong relationships for a lot of our business is repeat business, 90-plus percent typically. And I think we'll see that 90% come down a little in a positive way. Not in dollars, but as a relative percent of the business, as we do add new logos.
And we have added quite a number -- we've got a number of new accounts that have joined us in the last, say, 6 months. Starting out kind of small as is typical, if you think about the life cycle of an engagement and yet to ramp up this year. So we're expecting to see a lot of that activity ramping up throughout the year. And additional logos coming in. It's a very major focus that we have.
Which is a perfect segue to my last question. When you take -- can you take us through a typical road map of a digital transformation program? For example, is there initial design that's small? Is there initial development that's small? And how does that change with follow-on projects over the course of years, especially as it pertains to larger customers?
Yes, absolutely. I mean, it typically starts and where we prefer to be in the life cycle is with strategy. And that strategy tends to center around some user experience, whether that's our clients' customer and end customer or corp. to corp. or even internal.
So really, the requirements are developed first and sometimes high level. So you can get that strategy mapped out, and then you go deeper on the requirements and then begin to engage in the technology implementation, whatever that is, typically a lot of custom development. A lot of data as well.
So that life cycle, you can think of it as a -- for a given project, you can think of it as sort of a bell curve. But typically, our engagements are made up of a number of projects, so they overlap. And our relationships are actually made up of a number of engagements so that they overlap. So we tend to get a pretty steady stream coming out of a relationship, if that makes sense.
And our next question comes from the line of Mayank Tandon of Needham.
This is actually Kyle Peterson on for Mayank. Just want to start off on the margins and kind of what your assumptions are, especially on the gross margin side in 2021, I believe that as you guys are continuing to move -- work offshore, should we expect to see some gross margin leverage here in 2021? And will this be partially offset by any like increase in T&E or anything in the back half of the year, assuming things kind of normalize in the world?
Yes. Sure. Great question. We're expecting margin expansion this year, probably 50 to 100 basis points. Our long-standing goal we've talked a lot about is adjusted gross margin that is netting stock comp of 40%. And I think that's right about where we'll be this year. That's -- I think our model reflects that.
But we've got a number of economies below that. We've got great scale that's really kicking in. So I actually expect, and I think the model, if you back into it reflects probably about 150 to 200 basis point increase in adjusted EBITDA. T&E will return to a higher level, probably in the second half of the year we're expecting. I think it's going to take a ramp to get there. By the way, for us, all T&E is below the EBITDA line, so -- I mean, the gross margin line, so it won't affect gross margin.
But I think we'll be able to absorb it. It's reflected in our model and in our guidance, and that still reflects, like I said, about 150, 200 basis point increase.
Great. That's helpful. And then maybe if we could just switch over to the M&A pipeline. I know the PSL deal was a little bigger than you guys have normally done. But do you think like that is integrated? And like, are you ready to do another deal? And if so, like what are you guys looking for, for potential targets?
Yes, absolutely. And I'll answer the -- well, I'll tell you yes, PSL is integrated. That's always sort of an ongoing exercise. But in this case, it was really straightforward. As I mentioned in the script, we've got a lot of business going there in early stages that I think will expand a lot. So that's goodness as it relates to PSL.
But yes, we're absolutely in the hunt again. We took a little pause after PSL 1 because of the uncertainty of the pandemic. But also because it was a larger size, to your point. But we've got a number of things in the pipeline. In terms of the focus, it's certainly digital. We're also interested in more -- potentially more nearshore type deals, as we are rapidly scaling to meet demand that we're seeing increase rapidly.
But beyond that, from a skill set standpoint, it's cloud, it's custom active. It's the typical analytics, data commerce actually is another spot. So we're seeing good demand everywhere and looking at the scale of the business kind of across the board, but again, really all digital.
And our next question comes from the line of Vincent Colicchio from Barrington Research.
I guess, what would your target be for bill rate increases for 2021?
Probably in the sort of 1% to 2% range, Vince. I think our philosophy on bill rates is we want to stay as competitive as we can. There's probably a lower runway there. But again, we've got, I think, such great opportunity in the offshore mix, shifting more work offshore to drive margins that we're comfortable keeping the rates kind of down so we can stay competitive.
The other point I'll make on margins and kudos to Tom and team on this. But our average salary, consultant salary in North America last year was actually down 1%., despite the fact that we gave normal merit increases in the sort of 3% to 4% range, which is the industry standard, we were down about 1%, and that's because of that pyramid I alluded to earlier.
We're actually able to hire people more at the lower end of the bottom or base of the pyramid as we're taking on larger and longer-term engagements. So those are the levers around margin. We're going to hold rates probably again, maybe 1%, 2%, but we're not getting too aggressive on that.
And how is your visibility when you're putting together your outlook for the year compared to what it was like pre pandemic?
I think right now, we've got the largest backlog we ever have. And so we've had really, really strong bookings here in the second half of '20. Bookings have started off strong this year. And so as we sit here today, we've definitely got the largest backlog, certainly, in absolute dollars, but also as a percent of our total forecast going forward.
So visibilities right now is the best it's been in recent memory.
Right. And what was the organic growth in the quarter and for the year? I'm sorry if I missed that.
No problem. It was about 3% for both, I believe. You have about 2% for the year, about 3% in the quarter. And our guidance for Q1 is 8% and for the year is 10%, all organic.
[Operator Instructions] Our next question comes from the line of Jack Vander Aarde of Maxim Group.
Congrats on the strong quarter. Congrats to you as well, Tom. I'll start with a question for you then. So Tom, in terms of large deals, 70 in the fourth quarter, which is good to see. Just given this was a year-end quarter, can you provide some color on maybe 2 things. In terms of timing of when those deals close throughout the fourth quarter, there's any noticeable changes from prior years, like back-end loaded? Or is it kind of evenly distributed?
And then the second one, how many potential large deals maybe got pushed into 2021, then maybe just kind of got pushed out or delayed for whatever reason that maybe could have closed in the fourth quarter?
So thank you for the congratulations. On the compare of Q4 year-over-year, really not much of a difference. We definitely see it's spread throughout Q4. I think by nature, some of it's a little bit closer towards the end as people wrap up some of their fiscal years. But no real material difference between year-over-year when it came to closing deals.
We always see some deals slipping from quarter-to-quarter. Nothing sticks out in 2020 compared to previous years. So we have some nice deals that we closed in Q4, some nice ones in Q1. Some move every quarter-over-quarter if nothing sticks out on that one I guess.
Great. That's helpful. And then a question for Jeff. An analyst just asked about this as well. But in your prepared remarks, bookings are strong, pipeline is strong. Everything seems strong, which is great. But can you maybe just talk about -- back to kind of the visibility topic.
Throughout 2020, it was kind of a common theme was potential contract cancellation risk. Maybe can you just update that view you have in terms of how you're kind of perceiving unexpected -- I know it's a tough question, but unexpected contract cancellations from a few months ago in where that view is for today now?
Yes. I think -- in terms of going forward, I'll really just speak to that. We always bake in a fair amount of conservatism in our guidance and in our forecast. There is an ebb and flow always. But I will tell you, in terms of any impact from COVID, it really appears to be behind us as it relates to contract concerns. In fact, what we are seeing is a significant pickup in demand that I think is probably related to some pent-up demand, projects that were delayed or not even embarked on last year. I think we're seeing that now.
I'll tell you, anecdotally, our sales team is busier than ever. So while that is a factor, it always is. Like I said, there's always an ebb and flow. We feel like we've reflected putting that here. And like I said, that we're reasonable in terms of conservatism in the forecast.
And our next question comes from the line of Surinder Thind of Jefferies.
Jeff, just a big picture question here. Can you talk a little bit about the nature of the projects that you're seeing in the sense that are clients at this point in time starting to embark on bigger projects that are like maybe different than the plans that they had last year? Or are they still -- are they kind of biting off shorter-term projects where they're maybe going to get something done that's going to pay dividends within the next year? Or are these like bigger things that they're thinking about at this point?
I would say they're increasing, definitely. The -- like I said, the demand that we're seeing, pretty bullish. People are embarking on pretty major programs now. And I don't know that it's a fundamental shift, again, related to COVID from last year to this year. Some of it, quite frankly, is how we've managed to elevate our relationships with a lot of the clients that we already had. Is including major Fortune 50 companies where we've managed to become now a preferred vendor, 1 of only 6 globally.
So we're seeing -- with that, obviously, comes more larger, longer-term opportunities. That said, digital transformation is about speed and nimbleness and so you have to yield some results along the way. This is -- gone are the days of a 3-year program before you produce any results. It's much more iterative now.
So that doesn't mean, again, a $90 million relationship over 4 years. Involves a lot of -- again, a lot of iteration, a lot of deliverables along the way, and you're building on a foundation. And then by that time, as I said before, kind of the prisoner's dilemma, it's time to go back and enhance. So it's sort of perpetual.
Got it. That's helpful. And then just a clarification on the growth of offshore revenues just from a definition's perspective. Is that refers to the revenues that are generated by offshore staff? Or is it non-North America base revenues, meaning from a client perspective?
No, it's offshore staff. Yes.
And at this time, I would like to turn it back to our Chairman and CEO, Mr. Jeff Davis, for the closing remarks.
All right. Well, once again, thank you all for your time today. Appreciate it, and look forward to speaking to you in a couple of months with some more great results. Thank you. Take care.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a lovely week.