Brandon Osten: Okay. Okay. And two other questions here, can you give me a feel for, I mean, you really have two markets that I would consider somewhat cyclical, I mean, law enforcement isn’t particularly cyclical, but like cyclical material and somewhat impacted by rules and regulations. Can you give me a sense about how you are feeling on the repo market, which should be starting to come up? And on the other hand, the real estate market, which you are adding, you do seem to be adding customers there, but can you give me a sense of what you are seeing on that side as well?
Derek Dubner: Sure. Absolutely. Thanks, Brandon. Yes. We have seen an uptick in the repo market, of course. What you are seeing is and rather not surprising is that a lot of the government support from COVID in the way of subsidies and moratorium on collections and standoff on mortgage payments and evictions, you are seeing those wear off and you are seeing the consumer on the low end, if you will, sort of sub-prime, as they call them, having difficulty. Inflation has impacted them significantly, as it does everybody, but more significantly to that type of base and savings are depleted. And they are turning to credit cards, you are seeing credit card delinquencies moving up. And you are also seeing reported repossessions of autos that were bought many times during the COVID period.
And so — and with shortage of supply, probably, paying too much for those autos, so finding themselves in difficult positions. So the repossession market is relatively strong and so we are seeing volumes move up there. As far as real estate, we did talk about it last year, that very swift move in mortgage rates from — in March of last year I believe for about mid-3% to 6%, did slow down the real estate, I will call it, marketing or identity side of the business. That’s where we power some of the real estate software solutions to identify certain demographics of propensity to sell or — and/or purchase. So think of identifying a disease in a home, a multi-homeowner, age, et cetera. So we had some real estate customers in that segment that when mortgage rates spiked, when they spend with us, it’s all a matter of ROI.
What are they getting? What can they do with the information? And how can they translate that into ROI? And so there was a pause. It did pick back up throughout the year a bit and stabilized. That is different, I want to be very clear, that’s different than FOREWARN. FOREWARN is a risk and identity product. It’s a safety tool used by realtors. FOREWARN is very highly effective, it’s entirely contractual and so different from our FOREWARN product. So, but we have seen relative stability in the real estate market since that impact in Q2 last year.
Brandon Osten: Yeah. Also, I saw Apple News article out of London Times or one of the European ones that real estate agents and the dangers that they face for showings when they don’t know the counterparty, like physical dangers, maybe worth looking at. And then my last question and I am going to ask a stupid question, I know it’s a stupid question before I ask, but I will ask it anyway
Derek Dubner: No problem.
Brandon Osten: just because everyone wants to hear. Yeah, everyone wants to hear something. So just with regards, I mean, in terms of all the hype recently around, call it, artificial intelligence, machine learning, whatever you want to call it. You have a platform that has a major — has a significant database. So for you guys, maybe there’s an output component, but there’s also the fact that you have the database. So there’s sort of an input component, right? It’s all about who’s got the data on one side, how they process the data in the middle and who spits out the data. Have you guys given any thought strategically to how you use your database on behalf of your customer or on behalf of your customer base? I mean even FOREWARN is somewhat of a predictive system in terms of what might be looking on the other side of a transaction. So just any — I don’t need detail, just any thoughts there, what you are telling people when asked?
Derek Dubner: Sure. I appreciate the question. It’s Derek. Setting aside all of the AI talk, that’s really the hot buzzword right now. As we have told the street many times, this is the third platform we have built in this space. This platform it was built from the cloud — in the cloud from the ground up and it is really the only platform that was built that way as far as the competitors we have and we built this platform with machine learning built into it, always with the goal of analyzing data, looking for commonalities, looking for anomalies. As you know, as consumers, we leave our footprint in society every day. The data trail, the data we leave behind grows with our multiyear address history, with events in our lives with bankruptcies, liens, judgments, criminal histories, you name it, with asset transfers, with businesses formed and affiliations within those businesses and those we interact with.
So that’s always a big component of our platform, and we believe a significant competitive advantage of what’s out there and really the ability for our end users to use what we believe to be far more intelligent interface than what’s out there as well with the platform underlying and generating a lot of that knowledge, creating — taking data and making it actually actionable. So that’s how we view our platform. That’s how we have been telling our story for quite a while. We are still small, we only have 7,000 customers and those customers are realizing the advantages of getting our platform and our solutions into their workflow. So we feel we are very competitively differentiated from what’s out there and feel great about our future.
Brandon Osten: Great. Thanks, guys. Keep moving forward.
Derek Dubner: Thanks, Brandon.
Operator: Thank you. One moment for our next question. Our next question will come from the line of David Polansky from Immersion Investments. Your line is open.
David Polansky: Hey, guys. Thanks for taking my questions. I want to talk about headcount a little bit. I think you are capping off your biggest year ever for hiring, you hired about 46 net new people. Are you ready for this year with the current headcount or should we expect similar hiring patterns in 2023, and then going off of that, can you discuss how that may or may not impact your margin profile on gross margin and adjusted EBITDA?
Derek Dubner: Sure. Thanks, David. You are right. We made significant hires last year and we looked around the organization and said, look, we see significant opportunity as we roll out the product roadmap and as we expand in certain verticals and as we enter new markets. So we made hires in various parts of the organization to, for example, bolster our infrastructure. While we add to our data science team, our product development team and build those products to add to sales and marketing, to get out there and to tell our story and to bring these fantastic solutions to market. So I would say there is going to be no repeat to the number of additions that we did. I think we are pretty well-positioned as far as who we have already added.
So there’s no intention of significantly or even insignificant — too insignificantly adding to that position other than where we see we have nice traction. We have always said we will spend into that traction a bit to really get going. Dan, why don’t you talk a little bit about margins and what you can expect?
Dan MacLachlan: Yeah. Sure. Thanks, David. Great to hear from you. Look, I think, this kind of sets for us kind of that new level, if you will, that gives us a lot of leverage over the next several years. Strategically, as Derek said, we will look at areas where we start to gain traction, potentially lean in, but the expectation is, we would kind of maintain around this level for most of the year. What that means for margin, the expectation is, for this year, margins would be relatively consistent with what you saw in 2022, and then, ultimately, as we are leaving 2023 and seeing increasing in revenue, we will start to see that nice leverage in that margin profile and really start to see that margin profile extraction if you will going into 2024, starting to hit towards those targets that we have talked about in the past, closer to the 35%. So that’s kind of what the expectation is for 2023 and then leaving 2023 going into 2024.
