Rackspace Technology, Inc. (RXT) Earnings Call Transcript & Summary

Thanks, everyone, for joining. This is the Rackspace session at the Technology, Media and Communications Conference here for JPMorgan. My name is Tien-Tsin Huang. I cover the payments and IT services sector at JPMorgan and super excited to have the Rackspace team with us. With us from Rackspace, we've got Amar Maletira, the CFO and President; as well as we've got Joe Crivelli, who does a great job in Investor Relations with us. So welcome. Thank you both for spending some time. We're going to do a fireside chat, if that's okay. We'll also take questions from the audience through the Ask A Question portal. So I'll be keeping my eye out for that. But again, welcome to you both. Unless you guys have any questions for me, let's get right into it.

Thank you. Thank you for having us here, Tien-Tsin. Excited to be here.

For sure. For sure. I hope you guys are having a great day. So I'll just get right into it, if you don't mind. And I know the stock had a relatively harsh reaction to the first quarter. What do you think the market is underappreciating or maybe overreacting to? If you can -- if you don't mind just starting with that?

Absolutely. I think that's a good question to start with. Unfortunately, as you know, Tien-Tsin, we had sort of a knee-jerk reaction to our stock price as soon as we announced the earnings, around 2 key metrics, 2 metrics. One was bookings, and the second was gross margins. And they came in lower than what Street was expecting. In fact, it's interesting. That's not some -- bookings is not a metric that we guide to. And when I looked at The Street estimates, we have about 12 analysts following us. And roughly 50% do an outlook on bookings, the rest, 50%, don't. But clearly, bookings and gross margins were lower than The Street expected. Both of these can be easily explained, and both metrics indicate that we have a positive underlying changes that we are executing against. And to be honest, when we talk with investors through it after the earnings call, they typically walk away realizing that the market essentially overreacted on those. And I'm more than happy to get into some of those details later during our fireside chat, Tien-Tsin. The market, in fact, lost sight, to be honest, of a number of good things that we delivered in the quarter, right? We beat our guidance on Q1 revenue as well as earnings. If you take a look at our Q1 revenue, we came in about, don't know, $3 million to $4 million higher than what we were expecting and what we had guided to. Our operating profit was about $3 million to $4 million higher than where Street was. And it was essentially a great operating leverage story. And EPS was also higher than what we had -- what The Street was expecting and what we guided to. So we also delivered $103 million of cash flow from operations in the very first quarter. Just as a reminder, in all of 2020, we delivered $117 million. So this was a good turnaround in cash flow from operations. And I have said this before, in my first initial investor call, that I do believe that this company has a lot of cash flow generation kind of capability. And that's what we will be focused on. And also, we maintain the 2021 guidance range for double-digit revenue and EPS growth. So all in all, I believe we delivered good results. I think we are on the right path. We are a business in transition, and we are pivoting to high-growth areas. And I would say we are executing quite well, and you can see that in our results. So go ahead, Tien-Tsin.

No. I'll let you finish. But I was just going to dig in on some of those things. I totally agree with you. It was -- there was some overreaction. I think we've -- easy to lose sight on some of the important things you've done, including improving the cash collections and the cash flow. So I don't want to lose sight of that. But I thought we could just dig in, if that's okay, on some...

No. Absolutely. No, as I said, that was the knee-jerk reaction around those 2 metrics. More than happy to dig in.

All right. So let's do bookings. I know you did tell us that you were going to be more selective in some of the deals that you would pursue and close. And you had the luxury of doing that given a very large backlog that you had built in the year going into it. So -- but because we're down, I guess, $50 million from recent levels as well. So walk us through this being more selective. What does that mean? And I've gotten the question of, if you're being more selective now, what does that tell us about the preceding year wins? Were those lower quality that you wouldn't have done if you were here? So just walk us through your thinking around that, the -- being more selective.

No. Absolutely. Let me start by saying the selectivity of the deals we take is really focused on ensuring that the customers that we sign and we onboard have the right margin profile at the start and will also, more importantly, and this is a key point here, will serve as a foundation for expansion in the future. So if there are customers that when we are signing these deals do not have an opportunity for expansion in the future, we will not make the investments in taking the lower gross margin deals or on start-up costs. So that's where the selectivity comes in. Now last year, in some cases, we did accept lower initial margin for the right new logos. These were good customers and were strategic for us, and I believe they will be the cloud partners for the next decade. We believe that we can expand these customer relationships in the future. And in fact, we have proven with the land-and-expand strategy, and it is actually working. For example, if you recall, Tien-Tsin, that we had shown a data during the earnings call that showed that we expanded both bookings as well as sold margins with the Q1 2020 cohort of customers both existing as well as new logos, where we had actually sold a managed public cloud business. Now coming to the bookings itself. Now with the solid base of new logos that we landed in 2020, I think we can be more selective and increase our initial sold margins on any new business that we go win. Having said that, we are very, very focused on expanding into the current installed base. And as you know, we basically landed with 400-plus new logos in our fiscal 2020. Now I will just take it a step further here, Tien-Tsin, if I may. I'm confident in the double-digit revenue growth because if you look at the bookings level, bookings is only incremental new business. That's what we report. It's incremental new business to new customers as well as existing customers. It does not have any renewals. It does not have any contract extensions built in. It is an annualized revenue run rate or ACV. We call it annualized contract value. And based on all the analysis that I've done since I've been here, and I've been here for 6 months-plus, I still remain a student of business. But I do understand the services business quite well. I believe that if we deliver a $1 billion-plus of new bookings, we can drive actually double-digit revenue growth in this business. Just to keep it at a very high level, and I've been explaining this since the earnings call and a lot of investors -- it's resonating quite well with the investors, is we need roughly about $300 million to $350 million of new revenue from this $1 billion of new bookings to grow double digits from a revenue perspective, assuming that we have the same renewal rate, same churn rate, same contract expansion and also the revenue realization as in the past. Now we are improving on those metrics, too. And secondly, we also have a high mix of recurring type revenue, Tien-Tsin, in our base business, which also drives good visibility into the future. So we feel good about the revenue growth sustainability in 2021 and beyond. And as an example, if I go back to my guidance, at the midpoint of 2020 revenue guidance indicates that we will grow even our core revenue at 13%. And this is up from a pro forma growth of 9% last year. So all in all, yes, we'll be selective. I think you should appreciate the fact that we need about $1 billion-plus in bookings, high-quality bookings, good starting gross margins and good margins overall. And we'll be selective because we want to make sure that we have the right customer, installed base to go expand into in the future.

Okay. No, thanks for sharing that. I mean, look, we do appreciate and like the ACV metric because TCV is so hard to use as a measure to take a view on duration and renewal versus new logo. So ACV is a good metric. It's just -- it's good to understand how it fits with some of those other KPIs, Amar. So thanks for that. Let's hit quickly gross margin. So I think you expressed a lot of confidence in stabilizing gross margin in 12 to 18 months. You've said you're targeting, what, mid-30s gross margin, give or take 2%. So talk us through the variability, what drives the variability. And then what drives the confidence that you'll get to a point of stability? I know you gave some charts on that. But if you could walk through that again here, that would be great.

Sure, absolutely. I think -- so starting at the high level here, the key factors that's actually driving or impacting the gross margins is the mix shift that is happening in the business. Now we have mix shift happening within the multicloud business, as we are moving from mature areas to high-growth areas and also within OpenStack, as OpenStack continues to run off. And now it's less than 7% of our revenue, right? And that business, even if you take the runoff and continue, it will be still a sizable business for the next couple of years. But that's -- those are 2 things that are driving the gross margins changing or mix shift that is actually impacting the gross margins. Now I've been saying this for several quarters that the mature offerings that we are migrating from are high gross margins but also have high CapEx and OpEx intensity, and the newer products that we are migrating into are initially lower gross margins but also require lower CapEx and OpEx investments. And these are the high-growth areas that's actually driving the double-digit revenue growth that you are seeing in our business. And also, keep in mind that initially, as we go into the high-growth areas and the initial part of the cloud engagement, you have a higher ratio of infrastructure for the services in the early stages of the relationship, so to speak. So we are in a transient phase, Tien-Tsin. We will manage this mix shift and expect to deliver operating margins in the mid- to high teens, as we have stated before. And that is a result of OpEx efficiency and more importantly, the OpEx leveraging the model. So I do expect to see stabilization in the next 12 to 18 months. You will see gross margins move up and down. But at the end of the day, what's driving that is, I believe, our growth products. Our high-growth offerings will be over sort of 80-plus percent of our total multicloud revenue. I did give -- I did unpack the multicloud segment for you guys during the earnings call. And also, OpenStack will also be a less material piece of the business. But all in all, I think I'll reiterate what I've said before. We want to grow top line at a consistent double-digit rate. We want to maintain margins mid- to high teens while stabilizing the gross margins in the long term. And more importantly, I will be very focused on driving operating profit, free cash flow and making sure that cash flow that we generate is used to delever and also make very targeted investment on the inorganic side of the business.

Very clear. Very clear. I know the OpEx leverage is important. We shouldn't get too hung up on gross margin, but we're going through the transition with you. But the -- just because I've gotten this question a lot, I'll ask it anyway. Just the relative margin difference for cloud infrastructure versus legacy infrastructure and cloud migration, can you just give us -- is there a way to help frame the relative difference?

So I think for competitive reasons, I want to be selective in the way I answer this question. But as you guys know, I'm very transparent on how I approach this. So at a high level, any public cloud infrastructure will be at a lower gross margins compared to corporate average by definition, right? And I'm okay in accepting those low gross margins because we attach services to it. And we basically bundle services with that infrastructure and sell it as a solution. That's our key differentiator. We are a solution provider for our customer. And those cloud infrastructure, public cloud infrastructure, come in at a lower gross margins. But also keep in mind, we do not spend a dollar of CapEx in upgrading the infrastructure or a dollar of OpEx or R&D OpEx in keeping it all updated. That's spent by the hyperscaler. So for us, every single dollar is accretive, and it has a very high return on invested capital, okay? Now legacy infrastructure -- and by the way, that's capital-light, as I said. But legacy infrastructure, on the other hand, is high gross margins, higher than the corporate average, for sure. And it carries a high OpEx intensity and high CapEx intensity. And the cloud migration services, you talked about this, too, cloud migration services also come in at gross margins that are higher than corporate average. That's a place where our customers really need help. And this -- we don't see a lot of pricing pressure there. In fact, we -- this is -- we also announced multiple service offerings, and I'll come to that later, like Elastic Engineering, et cetera. And these are very high-demand service offerings in the marketplace. So that's -- it's very subjectively I've described it. But if you think about what I had unpacked during the -- in the multicloud segment, where you have a high growth area which is roughly about 65% to 70% of the mix, that business is growing 30% to 40%. And that particular high-growth market or high-growth offerings across the 4 cloud platforms, AWS, Azure, GCP as well as VMware, is roughly between 25% to 30% our gross margins, okay? And the gray area in the chart that I've shown, which is the mature market, if you just do the math, it's about 30% to 35% of the mix. And because it's a mature product, it is mid-40s to high 40% operating margins. So that's the kind of mix, and that's what you're seeing from a mix shift perspective. But ultimately, regardless -- as you said earlier, regardless where the gross margins land, we do have operating leverage in the model. We have -- we continue to drive OpEx efficiency. And during the transition phase, we do expect our operating margins to be in the mid- to high teens.

Yes. So let's just close out margins by going in on that. So on the OpEx side, your confidence in the efficiencies, on the SG&A side, I know you're going through some cost management initiatives, et cetera, there. Can you just quickly run through that so that we get comfortable?

Sure. Sure, absolutely. I think -- so when you think about OpEx, right, you've got sales OpEx. You've got marketing OpEx. And within that, you have product management OpEx as well as G&A. And I think we are working through all the line items. In fact, in sales, we have made a lot of investments. And I will talk about investments later, if you would like me to. But what we are doing here is making sure that we rightsize our cost structure and align the cost structure to where our business model is shifting. For example, let me just give an example on G&A. Now especially in G&A, we are very focused on making sure that we have the right G&A as a percentage of revenue. So the initiatives that we are driving is, for example, is automation and streamlining the process. As you know, we have used a lot of technology automation in our operations group in driving 70-plus percent automation in how we deliver services to our customer. We need to apply the same automation to our back-office functions, and that's what we are focused on. We have a team that is focused on doing it. Now these things take time because any technology doing efficiency and productivity improvements through automation does take time, but it has a lot of stickiness. And this will be a continuous process. The second is, as I mentioned, you can leverage G&A as the revenue grows and also increasing the leverage of our partner R&D, our product and market development spend that our partners do. And we can leverage that spend as we go to market. The third aspect, I think it's very important and is a major driver, it would be driving the mix of our G&A across the board. We are less than 30% at the company level from an onshore/offshore mix. We want to drive it to greater than 50%, so to speak. And then the fourth one is nonlabor expense reductions. For example, as we optimize our real estate, our legal entities around the world, there are a lot of opportunities for us to continuously drive OpEx efficiency in the model and reduce our nonlabor expenses, too. So many initiatives in flight, as we speak, Tien-Tsin, and this is a continuous process. And I'm a big believer that your cost structure needs to align to the business model shift that is happening within our company as well as in the marketplace.

Got it. Now I know improving churn can have a very positive impact on margin. Of course, I know you mentioned that, that's a lever and -- or that's an area of focus in the revenue model. So just transitioning back to that, I don't think you gave a net revenue retention number in the first quarter. I may have missed it, but just can you update us on churn and how that's performing on legacy and new work?

Yes. Absolutely. I think -- so let me start with net revenue retention. And this was -- the number is -- we did about 99% in Q1. So this is an improvement from 98% in last year's Q1. But it is sequentially down from, say, 102% in Q4 2020. And there is some seasonality in our business going in from Q4 into Q1. And that does impact the effect -- impact the net revenue retention rate number that just I mentioned at 99%. But it is up 1 percentage point year-on-year. Now I've been here, as I said, for 6 months, and I've looked at all the metrics. I do believe that the quarterly NRR is a more relevant metric for a SaaS-like business, where the customers have a lower switching costs because this is a quarterly number that you report moving from 1 quarter to another quarter. And to be honest, I have been in the services industry for close to 2 decades, and quarterly NRR is not a commonly reported external metric by companies in the IT services industry for 2 reasons. One is the mix of the business is definitely different, and number two is NRR by itself is not a very meaningful metric. So at a high level for us, NRR of 100% plus or minus a couple of points is a good range for a company in our business. It indicates a stable installed base. And if it is within that range, which has been within the range for the past number of quarters, I think I feel good about the base business that we have. So yes, we stopped reporting NRR. But if anybody wants NRR, I'm going to give that number. But that's not a metric that by itself is meaningful for you guys to understand what's happening with the installed base. I think a more meaningful metric would be something that I'll periodically report. For example, in my last quarter earnings call, I gave you a Q1 2022 -- 2020 cohort of customers for managed public cloud and showed you how that's performing over the last 5 quarters. That's a very meaningful metric. In Q3 2020 earnings call, we also provided revenue growth for 2016, 2017 and 2018 new customer cohorts, which had all grown well into double digits. So those, in my opinion, are a meaningful metric than just NRR. So that's how I look at it, Tien-Tsin, and I do believe NRR is not a commonly reported metric in the services industry. And by just providing one metric, it doesn't really give information that the investors need to assess how our installed base is doing.

Agree. And having covered services companies for a couple of decades, we were not used to it as well. But we're sort of starting to use it a little bit more with some of the SaaS companies, as you mentioned. So I'm trying to learn when and where it's appropriate. So I agree with you. But just on the churn, just to close that out, I mean, is churn an area of focus, where there could be some improvement here based on your...

Yes. So yes, churn is always an area of focus. We -- and in the services business, you will have churn, needless to say. And we are very focused on churn. Like bookings, we are focused on churn. We are focused on delivering new services, offering multiple things, and churn is definitely a focus. Now just to give some additional color, churn on mature products or low-growth products are higher and has been -- has maintained the same level, actually, the last multiple quarters. So it's not changed. The churn rate has been pretty steady. And -- but what we are finding is the churn rate on newer offering is much lower. So as we transition more and more to high-growth areas, which are the newer offerings, we believe that churn rate will lower. And again, it's by definition, right, these newer offerings that are in the market for the last 18 months or so. And people have just started migrating to the new platform. So they're not going to churn that soon. So -- whereas the mature products have been in the market for 5, 6, 7 years. And so it's -- so the churn rates have been pretty stable, surprised positively on the churn rates on the newer offerings, which are much lower. And I think we -- overall, we are comfortable where the churn rate is. And that's a metric we measure, and we make sure that we manage it proactively.

All right. Good. Good. So you mentioned new offerings. Let's talk about that. Elastic Engineering, the -- I think you spent a couple of slides on the VMware Cloud. What excites you the most, Amar, on the new offerings side? What can we...

Well, everything excites me. Any new offering excites me, but I will tell you the -- what was a real positive surprise, in fact, we were expecting it, so to speak, because we were working on this for a few months, and we had tested it very well with the customer as well as our customer advisory board, is Elastic Engineering. Elastic Engineering is -- really reinvents, Tien-Tsin, how managed services gets delivered in a cloud environment. It's -- to be honest, it's -- what -- when I look at the history, it's one of the most successful new product launches in the history of the company. In fact, we closed more than half a dozen deals in the very first 3 weeks of the offering. Every region closed deals, existing and new customers, so we are selling both to installed base as well as to new logos. And we have over 100-plus new deals in the pipeline. And there's a lot of excitement in the marketplace with Elastic Engineering. It's really invented -- reinvented how managed services gets delivered. And customers are really looking forward to it because it helps them to manage their cloud environment and operate their cloud environment more effectively in a very flexible way. The other new offering that we just launched about a couple of weeks ago is the Rackspace service for VMware Cloud. This is almost like a private cloud offering, but it is different because it is -- it has a multi-tenant environment. It is a consumption-based, flexible offering. So think about it. It offers a private cloud to a customer with the -- with similar economics as a public cloud but with the security and control framework of a private cloud. And so this is what's very exciting because many customers have a lot of applications, whether it's sitting in a managed hosted environment or colo or on-prem that are all built on VMware platform. So they are lifting and shifting it and moving into public cloud, but they also are asking for sort of a bridge transition to public cloud. And this is where this particular offering fits in, where customers want to transition to a private cloud environment for a couple of years and then move to a public cloud. It's a perfect offering for those customers. And some customers like, for example, in health care industry and even in public sector, they would prefer a private cloud environment. And this is a great offering for them. So very excited about both Elastic Engineering, and Elastic Engineering will span across all the 4 public cloud platforms we have, and also very excited about the VMware private cloud offering. We expect these 2 offerings to take off in the market. As I said, we validated with the customers before we launched it. And we also got very good feedback from our customer advisory board even before we launched it. And we have a customer advisory board every quarter. And we are getting very good feedback from our customer advisory board members, who, in many cases, are CIOs and C-level execs, CIOs or CTOs in major enterprises.

Okay. No, that's great. So we'll be sure to keep asking you for updates on those. It just brings me -- you're talking about VMware and a lot of growth and momentum. We've had a lot of companies at the tech conference talking about cloud and cloud journeys and investing in cloud. I know we hear this a lot like Accenture spending another $3 billion on their Cloud First initiative. So just thinking about the competitive side of things, why does Rackspace win? I know -- and I like this un-GSI. So Kevin coined that at the event, but -- at your earnings call. I'm just curious how Rackspace stacks up against all these other players that are also trying to chase this cloud momentum.

Yes. So I think the great news is the cloud services market is really growing very fast, Tien-Tsin, and I know you follow this. And you just pick up any industry analyst estimates, every analyst has hundreds of billions of dollar market sized for this. For example, Gartner estimated it to be about $520 billion market. And so there's plenty of opportunity for everyone. I think we can all win, and I like our chances of -- Rackspace's chances of winning for various reasons. One is the mix of capabilities we bring to the table. We are very vendor-agnostic. We come in with scale and nimbleness, and this is what we have heard from a customer. In fact, the un-GSI, actually, term is from our customers. The customers believe that we are exactly opposite of a GSI. Now think about what we did with Elastic Engineering as an example. The Elastic Engineering offering basically gives customer the flexibility of consuming managed services in a framework that doesn't bind them for -- on a multiyear basis with a lot of SLAs, a lot of variables and contract structure. It's a very easy way of consuming services and making sure that they have the capability on demand on the cloud side. We'll have cloud architects. We'll have cloud engineers. We'll have cloud solution architects, all in those parts that will serve the customer, so exactly opposite to a GSI, right? Number two is, for example, as we migrate customers from the old platforms to the newer platforms, these are our customers that we proactively approach and have the discussion with them to migrate to our newer platforms. And we know it's going to be sort of gross margin dilutive in the initial stage, but we do it proactively because we want to extend the relationship with the customer. If we don't do it, somebody else will come and do it. And we are cannibalizing our own revenue in -- with the expectation that we will sell, upsell and cross-sell higher-margin and higher-value services into this installed base as they move to the newer platform. So you won't have GSIs do that because they have -- it's a boat anchor for them when they basically are supporting and managing old applications. There's a lot of revenue for them. And for them to go cannibalize, they wouldn't do it. But we are not afraid of doing it because if we don't do it, someone else will do it. And more importantly, we want to move our customers and extend that relationship so that we can upsell, cross-sell more services to where the puck is going. So quite excited about it. I think that our affinity to our customers, the fact that we have a culture of fanatical customer experience and the way we bring value for our customers is a key differentiator for us. And also keep in mind, we are also focused on mid-market as an example. We want to go and attack markets which are $500 million of revenue companies to, say, $4 billion, $5 billion. These companies, they are not on the radar of any of the big GSIs, as an example. They have the same complexity. They want to do cloud transformation. They deal with the same complexity, which is a smaller team, and they don't have the wherewithal of a large enterprise. And these customers are looking for help. And I think we have the scale and we have the presence, global presence to go help these customers around the world. So that's why we feel very comfortable, and I do believe that we have a very solid and sustainable competitive advantage in this whole cloud transformation market.

Right. So there is a rising tide. I think everyone agrees on the demand side. Does that pressure you to want to invest more aggressively? Do you feel like -- I know we're asking you these silly questions about gross margin and operating margin. But are we doing that and losing sight of the need to invest now to sort of -- to lock this in, given where we are in this momentum?

No. I think we are -- that's a great question. We are investing, and we would like to invest in growth. I've spent a lot of time in the last couple of months, along with the team, to look at our portfolio of offerings. And we have sort of rationalized the portfolio into areas that we want to invest and double down on and areas we want to sustain so that we can actually save in one area and reinvest back into the business to drive growth. So there are 4 or 5 areas I can point out that we will continue investing in. One is our go-to-market function to continue driving top line growth. And there, Tien-Tsin, we'll be focused on not just quantity but also quality of sales, resources and demand generation and also productivity. So it will be in all 3: Quantity, quality and productivity, right? Number two is we are ramping our professional services business. We want to capture growth in advisory and assessment services, migration services. There's a huge demand in the marketplace. Third investments which we are making is in new offerings, how do we deliver value to our customers, solve their customer problems but more importantly -- not just create but also deliver value. So we are making investments in coming up with new offerings, which we just launched a couple of them, you'll see us continue to launch offerings, and also make sure our operations and delivery organizations ramp up to go deliver those new offerings. So we are making investments there, too. We're also making investments, as you know, as we land new customers, we are making gross margin investments. We are making start-up cost investments. So those are investments that you will see us continue to make. The other area, by the way, for us, a competitive differentiator is the technology that we have, our Rackspace Fabric. So we continue to make investments in our Rackspace Fabric. We are also making investments in training programs so that we can train people and retrain them from mature offerings to new offerings and use the Racker culture to go deliver fanatical experience to our customer. So a lot of investments going on in the company and -- which I expect will continue to generate a good return in the mid- to long term.

Okay. Good. I think we have less than a minute left, Amar. I'll let you go with one quick question. You've been in the role for a little bit now. And as President and CFO, where are you going to spend the most time here in the short term, given everything we've discussed here? Where -- what's the biggest priority for you?

Yes. I think -- thanks for asking the question. I think let me just say 4 or 5 of them are very key for me. One is, both Kevin and I are very focused on executing our land-and-expand strategy, that is number one. Number two, I'm spending a lot of time working to make sure that our cost structure aligns to the continued shift that is happening in our business model. I really want to get ahead of it because at the end of the day, it's not looking at fiscal '21 but beyond fiscal '21 and how our business model is shifting. Number three is as we improve our cost structure, as we talked about, we'll also invest in high-growth areas, both organically and inorganically, and also investments in new cloud offerings across go-to-market and our operations. So that's another area that I'm focused on. And of course, at the end of the day, I'll be focused on driving profitability and focus on cash flow generation. So over the next 12 to 18 months, I do expect that, as I mentioned earlier, that our new growth platforms will be over 80% of our multicloud revenue. And we will be executing on our cost structure alignment. And we should emerge as a company, Tien-Tsin, with continued double-digit revenue growth, mid- to high teens operating margins, stable gross margins and earnings growing faster than revenue and more importantly, also growing a strong free cash flow and using the cash to partly delever the company and also reinvest it back into the business.

I think that's a great way to end on that note. Thank you for going through all of that with us, Amar. It was a pleasure to chat with you here.

No. Thank you very much, and thanks for having us here, Tien-Tsin.

Of course. Thank you. Be well.

Thank you. Bye-bye.