Sterling Check Corp. (NASDAQ:STER) Q4 2022 Earnings Call Transcript

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Our goal is by the end of Q1, really to have fully synergized the asset. In terms of A-Check and you should think of its current profitability in buying it and I think this is where Peter shared a little bit about this as having 30 basis point margin drag, combined with what we see in Socrates, we’re not breaking them out separately there obviously at a lower margin than what we’re expecting in our core business, until we synergize them, at which point we would expect them to actually be margin accretive, given the drop-through rates that Peter discussed. In terms of Socrates, this was very important for us, it’s something we’ve had our eyes on for a long time, we’ve worked with them as a provider over time, and we think the Latin America region provides us with significant growth opportunities, really both from U.S. clients in particular, but some other global clients who have business in Latin America and want to have a consistent screening experience and we think that provides us with significant opportunities to win business and grow with existing clients by expanding into the region.

And additionally, we think that it provides us with a real opportunity over time to win global clients who want one provider everywhere, because we think we’re really the only player now who is a leader in all of the key regions with this acquisition and it really helps us to stand apart. So that was much more of a strategic purchase.

Peter Walker: And Mark, I would just add, as we shared on the last earnings call, our M&A pipeline was full, we were really excited that we were able to get these two very high quality assets, what we view as very affordable prices. There were several other deals we walked away from either because of price, or either because of the client base and how that’s being impacted in the current economic environment. If we think about A-Check specifically, they’re leading verticals our health care industrials that leads really well right with where we’re focused in growing overall. So we think this is just a terrific win for us to pick up the A-Check business. And then Socrates as Josh mentioned, we believe it’s got leading capabilities in LATAM, which will help us grow locally and with our global clients.

Mark Marcon: Great. And then the last one, just you’ve done a great job in terms of like adding new clients, how are you thinking about the pipeline in terms of the new pipe– the new client additions. And then also what are you thinking about what are you most excited about with regards to all of your multiple cross-selling opportunities? When I think about identity and post-hire monitoring, it seems like you’ve got really good traction there. So just wondering what are some of the ones that you’re most excited about as it relates to this year?

Joshua Peirez: Sure. But why don’t I start with the second one and then we can see if Peter wants to answer your first question. So, I think I continue to be most excited about identity, because I really do think that it changes the — changes the game for us in terms of something that we believe we can upsell to almost every background screen overtime. We’re seeing the growth rate we put in place those products throughout the year, we had the chance to really enhance the offerings late in the year and we have our Yoti offering for international, which we think is also going to be a game changer for us. As we look to the — as we look to rolling that out through the year. So that’s probably the one I’m most excited about because it is a very straightforward upsell that increases the package density, and we have some stand-alone identity opportunities that we continue to pursue.

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