Peter Heckmann: Okay. Okay, great. And then can you just talk a little bit about the attach rates on some of the software businesses that you had acquired over the last three years? That some of them hadn’t even started marketing payments, but you talk about where you’ve had some success there, either by vertical or even your sub niche within the verticals?
Clay Whitson: Well, health care is still in the infant stages. That’s going to be a long, slow roll. We have thousands of billing customers who currently use other providers, and they’re all small customers. Most of them are small customers, so we will be trying to attack those one by one. Education is obviously the best in an attach rate and then public sector would be second best.
Greg Daily: The other thing is we’ve talked about the realignment and bringing services to the enterprise level we’ve created this past quarter, a group that their specific directive is to sell into our three strategic verticals, and there’s a support team behind that. So we look forward to seeing some advances from that group with a specific directive to go after those three verticals.
Peter Heckmann: I see, okay. And then I’m sure you can’t comment too much on the potential divestiture, but just in terms of timing, is it to the extent that it did happen, would we expect to hear some news in the next 90 days?
Clay Whitson: I don’t think we’re in a position to say, Pete, we’d like to say more, but we really, until something is done, we can’t really comment on it.
Peter Heckmann: I understand. Okay, I appreciate it. I’ll get back in the queue.
Operator: Our next question comes from James Faucette with Morgan Stanley. Please proceed.
Shefali Tamaskar: Hi, thank you for taking my question. This is Shefali Tamaskar asking a question on behalf of James. I was wondering if you could provide an update on what the timing might look like for the continued transition from non recovery – non recurring revenue sources like licenses, to recurring revenue sources like SaaS, and what that might look like going forward.
Clay Whitson: Well, our total software licenses sales for fiscal year ’23 were 10.7 million and we expect the total one time sales this year to be $5 million. So at the end of fiscal ’24 it will already be fairly de minimis. We do have some utility customers where we will continue to have some one time software sales. So I’m viewing this year as the transition year and probably plateauing around the $5 million mark. Although we could have some pleasant surprises in the future.
Shefali Tamaskar: Okay, thank you. And just as a follow up, could you provide an update on the current competitive environment you’re seeing and if you’ve seen any changes in competitive intensity as it pertains to winning deals or keeping current customers?
Paul Christians: This is Paul Christians. That’s been pretty steady state. We haven’t seen that. Clay mentioned a couple of push outs on project which are really tied to our customers having some personnel constraints of their own, which we’re attempting to facilitate with additional support mechanisms to help them free up and get back on track. But the overall demand or competitive environment has been relatively constant.
Shefali Tamaskar: Okay, thank you.
Operator: And the next question comes from Mark Palmer with Benchmark. Please proceed.
Mark Palmer: Yes, thank you for taking my question. Outside of the headwinds associated with the nonrecurring revenue sources, how would you describe the demand environment in the public sector in particular, relative to the macroeconomic environment and other factors?
Greg Daily: It’s been relatively constant. We haven’t seen any kind of extraction of RFPs beyond the norm or anything of that nature that would tell that we have more of a macro issue in that environment. I do think as we get to look at it and we switch more and more to SaaS delivery of product, that eases the pain for our customers because there’s less capital requirements and their dollars go further on a near term basis. So I think the SaaS transition is a natural extension. We’ll help mitigate that to a degree if that does surface. But we’re not seeing any evidence of it.
Clay Whitson: Seems like there could be some seasonality.
Greg Daily: Certainly, yes…
Clay Whitson: Definitely. January, February was crazy busy, it slowed down. Now we think it’s going to pick up this summer.
Greg Daily: And fresh budgets always impacted.
Mark Palmer: And one more should we assume that the company is going to hold off on acquisitions until the merchant services sales process has been completed?
Greg Daily: I hope not. We do have an active pipeline that we’re negotiating with a handful of people, but the two are, we’re not holding off. We’re still talking to people every day. And Merchant Services, it’ll happen, but we have the capacity to do deals while we wait for that to close.
Mark Palmer: Very good. Thank you.
Operator: The next question is from Matt VanVliet with BTIG. Please proceed.
Matt VanVliet: Yeah, good morning. Thanks for taking the question. I guess when you look at the cost controls that have been put in place over the last several quarters, how should we think about that cost basis relative to where we’re headed? Maybe more specifically in potential RemainCo? How do you feel like you’re staffed? And overall, what would headcount projections look like for the software side of the business for the next several quarters?
Greg Daily: Well, I think there are 350 – do you know the exact number?
Clay Whitson: Just a little over 300…
Greg Daily: Okay. 300 people roughly associated with the Merchant Services business and the total company is some 1700. So we are well staffed and we do believe we’ve been through the realignment on the RemainCo side, which will suit us well over the next few years. We’re not feeling the need to cut more right now.
Matt VanVliet: Okay, helpful. And then you talked about additional internal development needed for the big utility customer. How much of that is sort of purely custom for their environment, their infrastructure versus development that can be leveraged for additional customers, especially if you can grow more in a similar types of businesses?
