Tim Horan: Thanks, guys. Just following up on that. Could you give us a sense of how much you plan on spending in cash on acquisitions in the next few years to kind of hit that target out there?
Hai Tran: I think the answer that’s unsatisfactory is it just depends, right? It depends on the type of assets that are available and certain assets will yield or require a higher multiple than others. But we do, as Brian said, have quite a bit of liquidity as we sit here today, roughly $570 million in cash and our credit facility. So it just depends. But we are working hard to make sure we’re finding opportunities that are truly accretive, right, right out of the gate or shortly right out of the gate as we’re able to realize some of the synergies that baked into any sort of valuation case.
Tim Horan: Yeah. No, I was not looking for specifics, just overall on average. I mean are we looking to spend like $300 million, $400 million to hit that type of target, or is it $100 million or $200 million on the $1.5 billion?
Hai Tran: Yeah. I mean think about it this way, right, we’re going to have to acquire roughly $250 million in revenue, right, so depending on the mix, right? If the $250 million of revenue that we acquire has more CX or payments in there, it’s going to require a higher multiple, right? If it’s going to be more in our traditional revenue monetization, then the valuation multiple will be more akin to kind of where we’re trading at, right? So, those are some of the considerations.
Tim Horan: Got it. And then, can you give a little bit more color on the different segment revenue breakdown for the year? And I guess, just specifically, broadband, obviously, is under some pressure. Do you think you can grow that revenue line item this year? Or what are you kind of assuming in your guidance? And do you think it will worsen here? Because it seems like the cable guys are about to come under a lot more pressure over the next six months, nine months or so.
Brian Shepherd: Yeah. No, I think you said it, Tim. And that’s why we referred to and use the language. We’re feeling some smallish headwinds as it relates to broadband, some of that on the North American cable side. Based on the earnings calls we’ve listened to on some of our customers last week, I think the general tone is you’d expect that to continue kind of into — through the next couple of quarters. And I think there will be some impact on that. That’s been built into our plan. We had that coming into the year. It’s kind of as expected, and we anticipate facing that, which is why we’re excited that the other parts of our business are growing even faster to offset some of those headwinds. Next year, I think next year could be a different equation, right, with the homes passed with competitive response.
We don’t necessarily believe at this stage that it’s a foregone conclusion that those headwinds would continue into next year. But for the next quarter or two, for sure, we’re anticipating there’ll be some smallish headwinds.
Tim Horan: And is there much products you can upsell to improve your ARPU basically to help the cable guys get more efficient? Your ARPU is relatively low. I know you’re doing kind of a modest few things for them. But with AI and a whole bunch of the other products that you have, do you see any way to upsell to make them more efficient?
Brian Shepherd: Yeah. I mean, first, I think they’re doing a lot in their own rights to continue to be efficient, drive improved CX, and we try to do our part to help them with that. But I think the biggest opportunity, both in North America and cable customer and global telecom is on the digital CX side. And a lot of our early success with our Journey Analytics, Journey Orchestration platform was in those other verticals. And now we’ve really — it was the top — one of the top two topics at Mobile World Congress this year and last on the global telecom was all around how do we simplify our business, how do we drive digital CX. It’s also true of the North American cable customers. That’s why we targeted things around AI-driven sales assist to cross-sell to their customers.
That’s why we’ve rolled out billexplainer.ai, which has a huge implication. We’ve viewed digital CX use cases around promo roll-off because a big part of churn comes when somebody — a subscriber rolls off, maybe their introductory price period. So, I do think there’s a lot of opportunities, especially in the digital CX, both in North America and globally.
Tim Horan: Thank you.
Brian Shepherd: Thanks, Tim.
Operator: Our next question comes from the line of Michael Berg from Wells Fargo. Please go ahead.
Michael Berg: Hi. Thanks for taking my question. I just have a quick one on the seasonality of the business. Just looking back historically, it looks like the other revenue line item takes a step function up in terms of the mix of total in Q1 and tends to be fairly flat to the rest of the year. Is there any dynamics to point to that’s driving that phenomenon?
Hai Tran: Yes. I think what you’re seeing is that there’s seasonality on the payments business, right? So if you look at our payments business, by the very nature of the Q4 and Q1 end up being the two strongest quarters and then Q2 and Q3 are the weak quarters. And a lot of that is because a chunk of our payment business is serving the government sector. So, a lot of tax payments, right? And so those transactions hit in Q4 and Q1. And so that’s why you’re seeing some of that trend.
Michael Berg: Got it. Helpful. And then just one quick follow-up. In terms of the guidance and M&A, does the current — does the reiteration of guidance incorporate the acquisition you did? And does it also potentially include the acquisitions you seem to be likely to do?
Hai Tran: Yeah. So the — in terms of the guidance, yes, but bear in mind, the acquisitions, the actual revenue is quite small here, right? We’re talking about single digit in terms of revenue. So, the impact is quite nominal, particularly once you prorate it for timing of the year.
Brian Shepherd: I think the only other thing I would add to that is we expect to have good organic growth in fiscal year 2024. And so, even with that guidance, where we reiterated on the revenue side, and we typically talk a lot about midpoint, and so we talk about at midpoint of our current reiterated guidance, a 4% growth. And as I said, we still believe we can achieve 4% growth organically, and there’s some smallish impacts from acquisitions.
Michael Berg: Helpful. Thank you.
Brian Shepherd: Thanks so much.
Operator: At this time, I’m showing there are no more questions. I’ll now turn the call back over to Brian Shepard for closing remarks.
Brian Shepherd: Thanks, everyone. Appreciate you joining. We’re focused on delivering against our guidance commitments. We’re focused on driving a lot of efficiency ongoing. As you saw in our adjusted margin guidance, we expect to strongly be in the 17% range. We expect to grow top-line. We expect to do — deliver better results as we get into Q2, Q3, Q4. It’s up to us to execute that, and that’s exactly what this management team is focused on doing. Thank you for joining today’s call.
Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
