Sangita Jain: Great. Thank you so much. And if I can follow-up with one. You mentioned software subscriptions in your prepared remarks, becoming a bigger part of the portfolio. Should we hear – should we expect to hear more on that in a couple of weeks? Will you quantify that for us in terms of revenue and margin targets?
Dan Batrack: Yes. Yes. In fact, one item I’ll comment just to put it in context, and we’ll provide more details on where we are, what the growth rates are, what we expect the margins to be. But it is a little different approach that we’re taking here. Many think of software sales a recurring revenue as, I guess, in the old days, you’d say, on a CD disk in a cellophane wrapper that you would sell to somebody. This is really being done highly in tandem with the consulting services where we have well over 20,000 clients that we do significant work for. They represent the largest government agencies around the world, certainly in the English-speaking Commonwealth countries and the United States. The largest Fortune-100 clients, and putting these software programs in place to add value to our clients as part of the consulting work that we’re providing to them, gives us trusted relationship, the value that it provides, the cost savings to our clients.
We’ll speak in detail about that in our Investors Day. But it is a different approach. We’re coming at it as a domain expert that can actually identify the value and the savings from not only the consulting service fees, that can be more effective. But the use of the software can make faster real-time decisions that have better outcomes from them when there’s done in tandem with our consulting services. So this is not a sales force that we’re giving suitcases full of disks in cellophane and saying how many can you sell? We’re actually going to our clients, and we’ve already placed with existing clients that we have, 2,000 licenses in one instances – one instant that we have currently, and we’ll give more details on what we have today and how we see that progressing.
And so I welcome you and all others on this call and further to dial in, so to speak, to our Investor Day on the 14th of May.
Sangita Jain: Excellent. Thank you so much.
Dan Batrack: Thanks, Sangita.
Operator: Thank you. Our next question comes from the line of Sabahat Khan with RBC Capital Markets. Please proceed with your question.
Sabahat Khan: Great, thanks. Thanks and good afternoon. Obviously, a strong growth year this year. We’re seeing some margin improvement, I guess. So maybe if you could just help us think through the medium term a little bit as you head into calendar 2025 and onwards, maybe just some of the bigger picture growth drivers. I’m not sure if that’s some of the stuff you’re saving for Investor Day, but would love to get a bit of perspective on you’re going to have a bit of difficult comps here from the good growth last couple of years. How should we think about the medium-term growth algo, perhaps? Thank you.
Dan Batrack: Well, I don’t want to give too big a preview or you won’t show up on May 14, but I’ll give you – but I think one of the things that we want to approach on our Investor Day, and I’ll touch on it here, is we really do want to look beyond just what is 2025. So for fiscal year 2025, which amazingly is about 4.5 months away. It’s amazingly not that far away for us because we are on a federal government calendar. So I will say that once we complete fiscal year 2024, we’ll provide you specific details on our guidance for the first quarter and for fiscal year 2025. So I’ll try to stay away from that. But our goal, and we’ve been very clear for many years that our overall goal is to be between 10% and 15% top line growth.
We – a portion of that has been acquisitive with respect to adding new clients, rounding out certain critical scale, and geographies that we think is important to be a market leader in and to add technology. In the very strong environment that we’ve seen today economically, we see the acquisitive portion being a smaller component of our growth and the organic being larger. And of course, we do have the flexibility when things slowdown in the events of economic cycles, high and low. When things do get slower, we would see the acquisitive portion to be a larger part of our growth. So I think from a growth standpoint, if you sort of take half of the 15% organic, you sort of see in the middle, I would say, beginning to wonder if there is a new normal and it being more than mid to upper single digits and maybe a bit higher.
But that’s what we would look at from a longer standpoint, and that’s nothing new that we haven’t communicated in the past, and we expect that to continue. I do think with the mix of the work we have and the advent and the addition of software services from a reoccurring basis, margins are substantially higher. And it has caused us to relook at what the upper limits could be even on the government side. The value being contributed to our clients can actually yield higher margins for ourselves but most importantly, even better value for our government clients. So they’re going to get more for each dollar that they contract with Tetra Tech. So it is a win-win. But we will provide more details on what we expect over the next five years, roughly.
So between now and 2030, we’ll provide targeted margin ranges at that time, and we’ll actually provide specific drivers, which we think, and I’ll repeat what we’ve said in the past, including today, we think the focus on clean water, clean environment, mitigation of impacts to climate change and actually resiliency to protect the structures that we have. And the structures are not just man-made, concrete or steel or other physical structures is to protect the natural environment for degradation of biodiversity and the natural environment as it should exist without unusual impairment from these events. So we are engaged in all of those, every one of those have tailwinds that are not measured in five years, they’re not even measured in a decade.
We’re just beginning, and these are really generationally long priorities for certainly the United States, Canada, Australia, UK and frankly, the world. So those are what we’re focused on. Those are our tailwinds, and we’ll look forward to giving a lot more detail in a couple of weeks.
