Jack Henry & Associates, Inc. (JKHY) Earnings Call Transcript & Summary

Good morning, and welcome to the Raymond James Investors Conference. Good to be back in person. We're excited to have Dave Foss, Jack Henry's CEO, with us this morning to talk a little bit about the story. It will be a fireside chat. If you have questions at any point during the presentation or fireside, feel free to raise your hand and we'll make this as interactive as possible. So first off, thanks for joining us, Dave.

Yes. Good to see you, JD.

So maybe there might be a few people here that are newer to the story. So let's just like start off with a kind of a higher-level overview of Jack Henry, what you do, kind of problem to solve?

Sure. So Jack Henry, last year, by the way, we celebrated our 45th year as a company. So 45th anniversary last year. We refer to ourselves as a well-rounded financial technology company. So what that means is we are not a payments company, although we do a lot in payments. We are not just a core company, although we certainly do a lot in core. We provide a broad suite of technology solutions to banks and credit unions in the United States. So we're -- by strategy, we're focused on the domestic U.S. market. We could be international. We have had international divisions in the past, but we are, by strategy, focused on the U.S. market. And by strategy, we do not serve the money center banks, so we do not go after the top 10 banks, let's say, and we do not serve the really tiny banks and credit unions. And there are thousands of them, really small banks and credit unions, that's not our market. We have some customers in that market because they come to us and ask to do business with us. And we don't say no, but we don't target that market. So if you think about all that middle band of banks and credit unions in the U.S., that's our primary market. That's who we seek to serve with this broad suite of technology solutions. So if you're running a community or regional bank or a credit union in the U.S., almost anything you need as far as technology support, Jack Henry can provide it to you. We serve today about 8,500 banks and credit unions in one way, shape or form. There are about 11,000, by the way, total in the U.S. We serve about 8,500 of them with at least one Jack Henry solution today. So we're broadly distributed. We're well known in our space and well known for outstanding technology and customer service. We are today primarily a SaaS company, meaning almost everything thing we delivered is in a hosted model, either private cloud or public cloud, although we do still have some solutions that are licensed solutions that we support. We rarely sell a licensed version of software anymore, almost everything we do is hosted today.

Okay. Great. A big focus of the last earnings call was the newly announced -- although you've been working on it for a while, technology modernization strategy. So maybe just kind of outline what you're doing there, what's been in the works and kind of how you see the business going forward.

Sure. So in our space, historically, banks and credit unions have -- their desire has been not to stand up solutions in the public cloud environment. Bank's credit unions generally have viewed that as risky, and certainly for their core solution that has not been an area that they focus on. But over the last several years, we've been evolving several other technologies from private cloud onto the public cloud, and so we have a number of things on the public cloud today. But the one thing that we have not done is offer our core solution. And by the way, when anybody in our space refers to a core solution, what they're talking about is the primary accounting system that processes loans, deposits and general ledger for the bank or credit union. That's the core. We wrap the core with all kinds of things, teller systems and check capture and mobile banking and voice response and all these other things, but those are not core. So when you hear somebody in our industry refer to a core system, it's that accounting system that processes loans, deposits and general ledger. Historically, all the core providers have had those in either a private cloud environment or they've sold them as on-prem. And so the announcement that we've made recently, and JD is referring to the last earnings call, we've been migrating many of our solutions to public cloud deliverable over the past several years, our digital banking solution today well known in the industry as an industry leader as a public cloud platform, but we had not announced any movement of our core solution to public cloud. That changed in February. But what we talked about was we're not just going to do a lift and shift. We're not just going to move our existing core solution over to the public cloud. We're essentially doing a rewrite of all that technology, and we're unbundling the core. So if you're a bank or credit union, when you think about a core solution -- and this has been true forever, I've been in this industry 36 years and this is the way it's always been. If you buy a core, it is a thing. It's got a whole bunch of functionality, but it's a monolithic thing that processes the loans, deposits and general ledger. And so what we're doing as part of this strategy is not only are we moving to this public cloud platform, but we are unbundling the core. So we're going to create these discrete components and put them as freestanding components on the cloud platform, and now the banker credit union can pick and choose which of those they need and want as opposed to accepting this monolithic core that the core provider defines for them. So it's created a lot of interest, a lot of excitement in the industry. Nobody else is doing this, by the way. It's created a lot of excitement because now it puts the power in the hands of the bank or credit union to decide what pieces do I need. And maybe I'm using a fintech for some of these things and I'm going to use Jack Henry for other things, on the public cloud through API connectivity, I can connect these things together and create a differentiated solution for my customer, whether that's a consumer or a small business. And so this was a strategy announcement. We've been working on the strategy for about 3 years. We've been actually -- we've actually had programmers writing code for about 2.5 years to start to enable all of this new technology. And then we'll be evolving our core systems over years. So this -- again, this isn't something that's near term. It's a strategy announcement. That's the -- it kind of paints the picture for a customer or prospect as far as where our company is going from a technology point of view and how they can get to the public cloud with a major provider like Jack Henry. So it's created a lot of buzz, a lot of interest, a lot of conversation. I've been on the speaking tour here talking to bank CEOs, credit union CEOs. I was just in St. Petersburg yesterday speaking at a conference to a bunch of credit union CEOs, because there's just so much interest in this strategy that we've announced recently.

So really, what drove kind of 2.5 years ago to think about, hey, we need to modernize and think about a different approach? To your point, you haven't seen other core providers do it. Yet you have seen the nCinos and some kind of product companies that have tackled 1 product area. So just curious like what drove that decision?

Yes, so it wasn't a company that was doing something that we were feeling threatened or something. And you referenced nCino, nCino serves a little sliver of the market. They do loan origination on the public cloud. We have a division at Jack Henry that does all those things already. So it wasn't that there was some competitive threat to Jack Henry, what we did see was the opportunity. So this is an offensive move as opposed to a defensive move for our company. We saw the opportunity to create a new model and attract new customers to our company. But we also saw that there was this -- most bankers are wrestling today with we know we need to get to the public cloud at some point, we don't know when, we don't know how, but we need to figure out a strategy for how we're going to get there and what is that going to look like when we go to public cloud. And so we decided to announce this now to help them understand how we're going to get there and how we can enable them to move to the public cloud. So the origination of this was really about us. We were already in the public cloud with our digital banking solution, had great reception, great response. So we saw this and we anticipate a need for bankers to want to get everything to the public cloud. So that was one of the drivers. I think the other key driver for us was there is disruption happening in banking. You don't have to pick up any newspaper any day and you read about fintechs that are disrupting the banking space. And so we know that a lot of bankers are trying to figure out, okay, are these fintechs, friend or foe? Are they competitive or do they create an opportunity for my bank or credit union? Well, if we create this platform, this ecosystem that allows them to easily connect in fintechs into what they're doing, that creates opportunity for our customers to grow. It creates an opportunity for them to differentiate from anything anybody else is doing. And so it was a combination of we know they're trying -- our customers and people in our space are trying to figure out how to get to public cloud. We can see an opportunity for them to leverage public cloud to create a differentiated experience which, in turn, creates an opportunity for Jack Henry. If we do this right, if we get it on the public cloud, create all those hooks so they can easily connect in through open APIs, it can create a real differentiated experience for our customers to deliver to their customers.

Okay. So in other words, you already have ridiculously low attrition rates.

We do, yes. But we think...

So this would potentially even help those further as you get more hooks and then you can sell more products to more people. So there's -- the revenue opportunity is bigger than if you were just to stay in the current.

That's right. And so one of the things people think is totally counterintuitive at Jack Henry for years -- I've been at the company for 22 years and ever since Jack Henry was at the company -- and there was a Jack Henry by the way, he founded the company. So when Jack Henry was still alive, I remember having the conversation with him because his philosophy was we should create as many opportunities for our customers, banks and credit unions, to integrate other things into our platform as possible. Well, that's counterintuitive for a company like us that has this broad suite of solutions, you would think that we would make it really difficult so customers would buy more stuff from us, right? That's never been the philosophy of Jack Henry. We try to create this open environment. And what it has done, and we've seen it, it's been true for years, because we create this open connectivity, because we create an open environment, people want to do more business with us because we give them choice. And they say, okay, well, you guys are the company who we want to do business with. We are expanding on that now with this open cloud-native platform to create these other opportunities for them to connect in, but we do believe it will prompt people to do even more business with us, and it will prompt people to come to Jack Henry, who haven't done business with us in past because we're creating this opportunity for them to differentiate themselves in their markets.

Okay. And I want to touch a little bit on COVID, not from a P&L perspective, it was -- revenue was remarkably resilient through the pandemic given kind of the long-dated SaaS contracts you have. But has it driven banks to adopt technology maybe faster than they would have without the pandemic? Or just curious what trends you're seeing on the other -- hopefully, the other side of COVID.

Yes. I don't know if we're -- I was doing my COVID test last night, so evidently we're not on the other side yet. So yes, it's been interesting. Leading up to COVID there was a lot of conversation with banks and credit unions. Most banks and credit unions have an Internet banking solution and a mobile banking solution. And they are 2 different things, right? They look different, they function different. And we had created this thing we call Banno. It's an integrated digital banking solution. So regardless of form factor, whether you're on your PC or your tablet or your phone or whatever you're using, it looks and functions the same. It's a single experience. So we have been marketing that leading up to the pandemic, really trying to encourage banks and credit unions to think differently about their digital presence and how they present themselves to their customers. And there was movement in that area. But COVID, all of a sudden now everybody is trying to do their banking 100% virtually, that has really inspired a lot of banks and credit unions to think differently about not just what we thought about before as Internet banking and mobile banking, but what are the other things that we really need to ensure our customers have a great digital experience. So think about consumer lending, we've doing a lot of consumer lending online for a long time. Well, how about commercial lending? Most banks and credit unions still expected, for a complex commercial loan, that the borrower would come into the branch and work with a loan officer and do a lot of that in person. Forget that. COVID has changed all of that. So you have a lot of banks and credit unions where the CEO grew up as a lender. And on the banking side, they're almost always a commercial lender. That's how they grew up in the business. Now they're the CEO and they're starting to think differently about how do we deliver an experience for our commercial borrower that really is tech forward, is really thoughtful about using technology. And so that has created opportunity for Jack Henry for sure on top of just the overall digital banking experience. But then you can expand that out. And there's lots of conversation about what are the other things that we should try to enable digitally, try to make it easy for our customer, whether it's a small business or a larger commercial customer or a consumer, what are those things where the bank can take advantage of digital technology. And that's where, we stressed to them all the time, we got this very broad suite at Jack Henry. We would love to do business with you on a Jack Henry solution. But if you have a fintech solution that is the thing you need, it's easy to connect that into our infrastructure. We use the same API connectivity tools to connect our own solutions into our infrastructure that we have make available to a fintech to connect in. So it's really easy for them to do that. So as they're emerging from the pandemic, as they're thinking differently about what solutions they're going to deliver and how they're going to deliver to their customers in the future, we're trying to make all that as easy for them as possible. Again, with the idea they're going to want to come and do business with us because we're creating options for them.

Yes. So maybe just to drill down on Banno for a second. There's been a lot of excitement over that over the last couple of years. Obviously, I think the pandemic was an accelerant. Where are you as far as selling that outside the core on the road map? And those disclosures -- you've given a couple of stats, but when do we expect it to be a material driver of the P&L?

Yes. So Banno, for those of you who don't know, Banno is the name for our digital banking platform. We acquired a little, tiny company 7 years ago. They had almost no revenue, just a handful of customers, but the technology and the vision they had was like nothing we had ever seen. We were really enamored of the story that they had and kind of the way they were approaching development. So we acquired them 7 years ago, put a lot of investment into that division and have created now this platform that is really, really outstanding, #1 rated app in the App Store as far as the digital banking application. And so today, we have hundreds of banks and credit unions on that platform. I reported on last earnings call, 6.6 million users on the platform, so that's consumers today. But there are a couple of major things that are coming now in the near term. Number one is Banno has been consumer focused in the past. So we haven't had the business side of Banno. We really were focused on the consumer side originally. The business side of Banno rolls out later this year. So now for a small business, medium business, we'll have that functionality for business customers to use with a digital-first cloud-native platform. And then the other thing that JD is alluding to here is that we'll start selling outside our core base. To date, we've only been selling inside our core base. We have a couple of thousand captive customers who really are committed to doing a lot of things with Jack Henry. And it's easier to sell in your core base because there's nobody you need to work with on integration. It's all our own stuff and we can do our own integration. And so it's easy to get those systems integrated. But we'll start it later this year, selling this solution outside the base. We expect some real success there because we know there's demand. And again, it's the highest rated app in the App Store already, people know that. And so we have some pent-up demand as far as people waiting to buy that solution from us. The thing I'll point out to everybody here, so digital banking, yes, there's a bunch of companies doing that. I've heard about Q2. I heard about Alkami. There's a whole bunch of companies out there doing that. Everybody tries to convey that they're all doing the same thing. They're not. So with the Banno application, one of the things that is a significant differentiator for us with Banno, and we're the only company doing this, there's a function that's called Banno Conversations. So if you are a customer, just think of your own experience, you bring up your mobile banking app with whoever you bank with today, if you see something on that app, you see a transaction in your account today with whoever you're banking with and you're not quite sure what that is or why is that there, how do you go investigate that? What you do is you either -- you probably pick up the phone and call somebody at your bank and ask what is this, right? Or maybe there's a chat or a text function that they have, but that is not embedded in the app. So it's not secure, you can't share private information in that situation. With the Banno application Banno Conversations, we've built this function directly into the application. So you're authenticated and it's controlled, as far as security is concerned. And so now through the application, you can have a conversation with somebody at the bank during that moment of need and moment of relevance, that's the term that we use. When you've hit some situation where you need help, right in the application, you can question or ask about something. And you don't need to type it out. We're not doing a text here, you can -- using a widget, you can point to this and just say, either you can do question mark. What is this? And the person on the other end, somebody -- employee at the bank will have a conversation with you through the application. You can share confidential information. They can see what you're looking at on your screen. Totally differentiated from what anybody else in the industry is doing, and that's part of what's really gotten us a lot of attention. In fact, I was doing one of these last week in New York, a session like this with a different banker. And there was a guy sitting second row in front in a meeting just like this, I'm doing the fireside chat. We got all done. He's the CEO of one of our large banks, didn't realize he was going to be there. And when I stood up, he came and grabbed me and said, "What you said about conversations has changed our bank. It has created an entirely different relationship with our bank." And he grabbed 2 investors that were in the room and said, "Let me tell you about what Jack Henry is doing and what it's done for our banks." So it was the greatest commercial I never staged. But that's how revolutionary it is for our customers, and it's what's changing the way they have interactions with their customers, with their consumers, and that's all happening now with small business in the near term. So it's a game changer, and that's just one aspect of our business at Jack Henry, digital banking. It's an important aspect, but it's just one aspect of the business for us. So we're really excited about it. We think it's a game changer for the industry and certainly for our company. As far as quantifying revenue and what kind of an impact is that going to have, it's already material for us today. The growth that we've seen is material. We don't report it as a segment, it's within our Complementary segment, but it's already become a material piece of our business, and it's growing rapidly.

And I assume you just charge on a per user basis?

We do, yes. So it's -- and that's one of the beauties of a solution like this. We charge on a per user basis, which is why I report number of registered users on the earnings call because everybody is trying to figure out how do I model this and compare it to these other players out there that are only offering a stand-alone solution like that. So I'm reporting those numbers so you can model and kind of see how we're succeeding. And since we don't report it as a segment, you can logically kind of apply the same modeling that you -- for one of our competitors. It's pretty similar to what we do. You charge -- the financial institution is charged a kind of license, a monthly fee, to be on the platform. But then it's a per user on top of that, and so you can kind of figure out how to model that for yourself.

Okay. Great. You mentioned you've been in a couple of CEO conferences lately. So would love just to get your pulse on how they're feeling, tech spend, thoughts on rates. These guys finally have, theoretically, rates going in the right direction for them first time in a long time. So just curious what you're seeing and hearing from the CEOs that [ you met there ].

Yes. In the past 3, 4 weeks, I spoke yesterday at a CEO conference over here in St. Petersburg, CEO -- credit union CEO conference. Two weeks ago, I spoke at the American Bankers Association conference in Palm Springs. And then a week before that, I spoke at the Acquire or Be Acquired Conference for bank CEOs out in Phoenix. So I've been in front of hundreds and hundreds of CEOs, banks and credit unions, just in the past 3 weeks. And it's interesting because they're a very optimistic group right now. I'll tell you, with rising rates, net interest margin improvement, they're optimistic about the future. Yes, there's wage inflation. Yes, there's concern about the overall economy and the impacts there, but they're really an optimistic group. And so what that has translated into, and I've cited on the last couple of earnings calls, I normally track the Bank Director survey, which I cited on the November call. I track the Cornerstone Advisors survey, which I cited on the February call. And then KBW just put out their survey last week. All 3 of those surveys, which have happened over the course of the last 6 months or 5 months, I suppose, all 3 of them have pointed toward a fairly significant increase in tech spending among customers in our target markets as they look into 2022. So the average, when I look at those 3 together, the average increase in tech spending was about 9% to 10%. KBW's was right on 10%. I think Bank Director was a little bit less than 8% and then Cornerstone was right in the middle there. But that's significant. That's a year-over-year planned increase in technology spending. And of course, a lot of that is centered around how do I deliver digital first, new digital technology for our customers. And then the other thing, the other topic that comes up regularly in those conversations is around delivering efficiencies. So banks and credit unions are looking to increase efficiency. Some of that is certainly related to the great resignation. People have resigned and they're trying to figure out how do we do more with automation. And so it's those 2 topics that are generally top of mind. But overall, because I talked to all these different CEOs, I've talked to just in the past couple of 3 weeks, very optimistic about the future and their ability to kind of do more now that rates are expected to rise.

Yes. And correct me if I'm wrong, but it was more of a mid-single-digit number pre-pandemic.

Yes. Yes. So yes, right. So 5-ish was kind of a good number before. Now the average is 10%. Yes, that's absolutely right.

Okay. Maybe touch a little bit on the competitive environment. We touched a little bit earlier on nCino or maybe a Marqeta, these companies offer a different product. But on the core side, you've seen Temenos try and come in the U.S., really hasn't had much success. So just curious, your big competitors have done big deals. Just thoughts, are there any changes? What's going on from a competitive standpoint?

Yes. Yes, so on the core side of the business, there's been a lot of talk. I won't say that there's a lot of significant change. You highlighted Temenos, yes, they've tried for many years trying to get a foothold in the United States. They reported recently, I think, that after 5 or 6 years, they finally took one bank live with deposits, which, by the way, after 36 years in this industry, I can tell you deposits is the easiest part of a conversion. So they got the easy part done after 5 or 6 years. And so it's a long road for them. I think they have a good company. I think they're well run, and I think they have a good solution. But cracking the U.S. market for an international player is a really, really high hill to climb. Partly because, if you think about it, we have federal regulations that we have to deal with in the U.S., but then each state has regulations you have to deal with. So if you trying to come in from another country, just adapting to the federal regs is a major hurdle. And now you got to deal with every state that you're trying to deliver a bank to, it's a really high hurdle. So the international players have a tough time coming into the U.S., and I don't see that changing. There have been start-up U.S. companies. The most viable, I think, has been Finxact. They were making some headway. They were started by guys who had a track record, who had built a core system many years ago. The major difference so -- and they were just recently acquired. So from our perspective, the best thing that could happen to them was for them to get acquired the way they did. So it's a little less of a worry for us today. But the other thing for us is they created a monolithic core. Yes, it's cloud native, sits on public cloud, yes. But it's a monolithic core. Totally different strategy from what Jack Henry is doing. And I think for most folks, they look at that and say, "Okay. Well, yes, it's cloud native. So it's new, it's fresh." But it's not the type of strategy that Jack Henry is employing here, where we're trying to really put the customer first, our customer first, and create a deliverable that allows them to kind of customize what they're delivering to their customers. So I think we -- well, I know we have a very differentiated strategy from what any of those folks are doing even as the startups are trying to establish a foothold in our market.

Okay. And then I want to touch on the payments business for a second. You guys went through a multiyear payments platform migration, which is now complete. Talk a little bit about the recent strength, double-digit growth. How much of that is improved debit attrition versus new credit customers and just any update there would be helpful.

Yes. So for those of you who don't know, we -- several -- I don't know how many years ago now, 5 or 6 years ago, probably, we announced that we had 2 debit processing platforms at Jack Henry, and we did not -- we were not a credit issuer. So we've been a debit issuer for years. We were not a credit issuer. Had 2 aging, frankly, debit platforms. And so we decided several years ago, 6 years or so, that we needed to rewrite, refresh those platforms. We were losing customers on our debit platforms because our technology was not keeping up. We were spending all of our time and money just keeping up with mandates from the card associations. And so we needed to refresh those platforms. So we went through the build-buy-acquire or build-buy-partner analysis. Building something like that to do debit and credit in this day and age, that would be millions and millions of dollars and take many years, it wasn't really a viable option to build. Acquisition was an option, but not a great option at that time. And so we chose to partner and then migrated all of our customers over to the First Data processing platform. The thing that did for us was it got us this industry standard platform, a really outstanding platform. It gave us the opportunity to put our own layer over the top. So our customers don't see that platform as the processing engine. That our customers don't see that platform raw or native, that we have our own layer on top. So it's a Jack Henry solution with our own technology sitting over the top. And it allowed us to offer credit, to be a credit issuer, which we hadn't done in the past. So now we have a single platform. We've migrated all of our customers over. So there are about 900 customers that we migrated over the course of 3 years. And it was a very successful migration. Again, I've been in the industry a long time. The success of that project was pretty stunning to me. And what it really did was it not only stopped the bleeding as far as people leaving us, but we were able to win a lot of customers to come back to the platform -- or come back to Jack Henry and customers who hadn't done debit with Jack Henry in the past. So over the course of that 3 years, not only did we migrate the 900-or-so customers over to the platform that were on our old platforms, we gained 150-or-so customers new that hadn't done business with us before and then put them on that platform. And then of course, we have credit now to sell. So we're not in that business. For us, we had to build that skill set, because credit is very different from debit. And it's not only the sales side, it's the managing fraud and all that kind of stuff. So we had to build that skill set inside our company. But we're now in that position where we're selling debit and credit. I report -- usually on the earnings calls, I report those numbers, I don't every single time because we have a lot of other things to talk about, but I try to report those fairly regularly to kind of give you an idea what's happening as far as our success on that platform. But it has been a wildly successful initiative for Jack Henry and has created this new opportunity for us to sell credit inside and outside our core base.

Any issues -- you saw a lot of debit usage last year with stimulus and we're kind of seeing, if you look at the networks, the credit/debit mix is normalizing. Is that a material headwind for you? Or how should we think about it?

No. So we're growing and we reported it on the last call, our card business, just overall, is growing at the double-digit rate and we don't see that slowing down at all. We're really, really having good success as far as the card business. But I emphasize all the time. We do a lot in payments at Jack Henry. We are not a payments company. We are not a merchant acquirer, for example. And I got a lot of questions about that 3 years ago, "Oh my gosh, you guys should go pursue merchant acquiring." And at the time, I was very transparent about the fact that we had investigated merchant acquiring for years. We had been looking at that and trying to decide if we wanted to get into that space for several years. In fact, we added a Board member to our Board, who had been the CEO of a public merchant acquirer, just because we were so serious about trying to understand is there opportunity here or is there more risk in the long term? We made the strategic decision not to pursue merchant acquiring. And so we are an issuer, but we are not an acquirer. And I think that decision has really worked out well for us as we look back on today. Because that industry is changing rapidly with all the fintech-y solutions, the Squares and everybody that are disrupting the entire business model, not to mention the pricing in that business. We're glad that we're not in that business. One of the key reasons we chose not to pursue that is because when you're in that business, your customer is not the bank or credit union, your customer is the merchant. And I don't care what anybody says about, "Oh, it's enabling us to sell more through the banks." Yes, there's this much of that, but primarily, your relationship is with the merchant. And the merchant doesn't care about the great service they get from Jack Henry, they care about price. That's really what the merchant player is about, it's what's the lowest price to get my transaction processed. And that's not our business. We are a premium provider of technology and service. And so that was kind of antithetical to who we are and what we do to kind of run down that path.

Okay. Well, before we wrap, I'd be remiss not to touch on the balance sheet here. You guys have essentially no net debt. We've been talking for years, it feels like, about unrealistic expectations from a lot of private companies. Obviously, the public markets here, you've seen a lot of the recent IPOs come under pretty significant pressure. I was just curious what you're seeing from a private company perspective? Are expectations coming down? And just general thoughts on the M&A landscape.

Yes, I'm pretty optimistic. So we were -- we've been a serial acquirer for years. So from 2004 to 2018, we acquired 32 companies, one public, all the rest were private takeouts. And in the course of the last 2, 3 years now, with IPOs, the craziness that was happening with IPOs and SPACs, we were still competing against PE. And of course, we have strategics that we compete against, but IPO and SPACs, that's been a crazy market for us. So we've been essentially on the sideline for 3 years, I guess, as far as acquisition. I'm very optimistic for this year. I believe there are some of these public companies who probably shouldn't have gone public in the first place, who are now will be looking for a white knight to come in and maybe get them out of trouble. So we hope there will be some of those opportunities later this year. I think it's too early for that right now, but I think that's going to change. And then some of these private companies who are planning to IPO, they had stars in their eyes because they saw what was happening and we're going to go do that same thing. And then, of course, it all stopped. I think there are some really good private companies out there that we'll have an opportunity to go after here, maybe this summer or this fall as their expectations have kind of rationalized.

Okay. I think we're going to have to wrap it there. Thanks, Dave.

You bet. Thank you.