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

Page 9 of 11

Toni Kaplan : Yeah. Got it. Okay. And in the past, we’ve heard about some increased pricing from some of your suppliers. Have you seen any pricing moderation there or has that continued sort of full steam? Any update on that would be helpful.

Joshua Peirez: Sure. I think what I would say is that there are some provider. So again, a lot of our criminal costs which are state fees, et cetera, those have not really changed. So that’s one big piece, most of our providers with maybe one exception on the verification side, have generally remained consistent or in some cases even reduced our pricing for competitive reasons. And then of course we do have the one big provider who continues to increase prices, we continue to pass those along and have those baked into our expectations, both on revenue and margin.

Toni Kaplan: Great. And then just lastly, I’ll sneak one more in. Could you talk about how Gig has been trending and your view on whether it’s a — how, any update on how you look at it as a growth driver more long-term?

Joshua Peirez: Sure, so I think for us I’m going to separate U.S. and international Gig for just a moment. I think U.S., gig performed more or less in line with our expectations for last year, and we do expect it to be an area of growth for us going into this year. As you see on our chart of verticals that we provided you with an update it’s still a relatively small percentage of our overall U.S. business. Internationally where we think we really are the leader in Gig, we did see a relatively big drop-off in 2022 and international Gig from where in particular U.S. delivery service sorry UK gig delivery services during COVID in 2020 had huge hiring that they had done for all the delivery, and they slowed that significantly in ’22. And that was an effect on our UK business, but we do continue to see it be a growth driver and we think that there’s a lot of new business out there that we can go in to add to our book.

Operator: Due to time constraints participants are asked to limit themselves to one question, so we can get through the queue and good time and the next question comes from Scott Wilson from Wolfe Research. Scott. Please go ahead, your line is open.

Scott Wilson: Hey, guys. Good morning, and thanks for taking my questions. I guess going back to the Socrates acquisition. I was wondering if you could maybe touch on the competitive dynamics within the LATAM space and how that maybe compares to some of the other international geographies you’ve expanded into? Thanks.

Joshua Peirez: Thanks, Scott. So I think that Latin America is an area where it’s a very nascent market for background screening, particularly for domestic local businesses. And there really are very few players in Latin America, it’s obviously a very big region, and so there really is only one of our — one of our competitors that has a true Latin American business, it’s very highly concentrated in Mexico from our understanding. What we really like about Socrates is the significant presence also in Brazil and Colombia, which are important markets where we think we are a clear leader in addition to having a Mexico presence and the opportunity to grow there. So those are three very key markets for us, we were thrilled to see that. Importantly, I will say Socrates does actually support some of our competitors in terms of some of the business that they’ve done historically, so we see that as a continued opportunity, as well in the market.

Operator: The next question comes from Shlomo Rosenbaum from Stifel. Shlomo please go ahead, your line is open.

Page 9 of 11