Perficient Inc

NASDAQ:PRFT

Earnings Call Transcript 2022-Q1

[Operator]

Good day, and thank you for standing by. Welcome to the Q1 2022 Perficient Earnings Conference Call. Later, we will conduct a question-and-answer session, and [Operator Instructions]

I would now like to turn the conference over to your host, Chairman and CEO, Jeff Davis. Please go ahead, sir.

[Jeff Davis, CEO]

Thank you, and good morning, everyone. With me on the call today is Paul Martin, our CFO; and Tom Hogan, our President and COO. We got, as typical, about 10 to 15 minutes of prepared comments, after which we will open up the call for questions. But before we proceed, Paul, would you please read the safe harbor statement.

[Paul Martin, CFO]

Thanks, Jeff, and good morning, everyone. Some of the things we will discuss in today's call concerning future company performance will be forward-looking statements within the meaning of the security laws. Actual results may materially differ from those discussed in these forward-looking statements, and we encourage you to refer to the additional information contained in our SEC filings concerning factors that could cause those results to be different than contemplated in today's discussions.

At times during this call, we will refer to adjusted EPS and adjusted EBITDA. Our earnings press release, including a reconciliation of certain non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with generally accepted accounting principles or GAAP, is posted on our website at www.perficient.com. We have also posted a slide deck, which includes a reconciliation of certain non-GAAP guidance to the most directly comparable financial measures prepared in accordance with GAAP on our website under Investor Relations. Jeff?

[Jeff Davis, CEO]

Thanks, Paul. Well, once again, good morning. We're excited to be with you this morning to discuss our first quarter performance and provide some thoughts on the second quarter and beyond. '22 has begun as 2021 ended strongly.

Revenue was up 31%, and adjusted earnings were up 38% during the period. North American average bill rates reached an all-time high. Utilization was strong and on the heels of setting a quarterly large wind bookings record in Q4, we again set a record in Q1. In fact, the overall bookings were up sequentially as well as annually.

And the success extends beyond sales. Our delivery teams are doing amazing work and customer satisfaction remains very high. In fact, just 2 weeks ago, a customer I had not previously interacted with much, reached out to me directly to share how wonderful our team is performing on behalf of our organization. We routinely received positive feedback through our client insights program, which solicits real-time feedback at various stages throughout the project life cycle.

But when a CEO proactively reaches out directly to complement our team and offer to serve as a reference, that really underscores the value we're delivering. So as our brand grows and word spreads within accounts and between accounts and with end markets and between markets, current customers are offering us more opportunities and new clients are asking us to propose on more work than ever before.

Organic offshore revenue grew 49% in the quarter, and offshore revenue overall grew 111%. Our fully integrated global delivery model continues to resonate with clients who value the combination of our local and global approach. In fact, it's that fully integrated global delivery model that is the primary catalyst behind our performance.

You may recall a few years back, we began to articulate our intentions to transform Perficient into a truly global entity to bring the world's best technology talent to the strong client relationships we've forged via a longstanding and ubiquitous domestic presence. We've done just that, and it's paying real dividends.

Our clients now benefit from a seamless, blended experience where skilled colleagues a world away, support them collaboratively with other proficient experts for just atmosphere. It's driving portfolio expansion of current accounts and enabling us to land new clients. and our customers are increasingly willing to pay more for both our domestic and our global resources.

I mentioned the record North American bill rates earlier. Offshore ABR gains were impressive as well, up 3% sequentially and 13% versus the prior year period. We believe we've built a true competitive advantage and one that's sustainable because it's difficult to replicate.

Remarkably, even in the midst of tremendous booking success, our pipeline continues to replenish. And in fact, right now, we're pursuing nearly 200 7-figure deals. Our talent acquisition function continues to shine, rapidly hiring talent into new roles to support our aggressive growth. And our scale, coupled with increasing ABR, is enabling us to offset wage increases despite the tight labor market. So on all fronts, a great quarter and a great start to 2022. And with that, I'll turn things over to Paul.

[Paul Martin, CFO]

Thanks, Jeff. Services revenue, excluding reimbursed expenses, were $219.5 million for the first quarter of '22, a 31.8% increase over the prior year. Services gross margin, excluding reimbursable expenses and stock compensation, remain constant at 38.9%. SG&A expense was $42.3 million for the first quarter of '22 compared to $34 million in the prior year. SG&A expense as a percent of revenues decreased to 19% from 20.1% in the first quarter of '21.

Adjusted EBITDA for the first quarter of 2022 was $47.2 million or 21.3% of revenues, compared to $34.6 million or 20.4% of revenues in the first quarter of 2021. The first quarter of 2022 includes amortization of $6 million compared to $7.1 million in the prior year period. The decrease in amortization is primarily due to certain intangibles from our acquisitions becoming fully amortized.

Net interest expense for the first quarter of 2022 decreased to $0.9 million from $3.3 million in the prior year, primarily as a result of adopting the new accounting standard for convertible debt in the first quarter of 2022. Net income nearly doubled to $27.1 million for the first quarter of 2022 from $13.6 million in the first quarter of 2021, primarily as a result of the higher revenues and gross margin.

Diluted GAAP earnings per share increased to $0.75 a share for the first quarter of 2022 compared to $0.41 a share in the first quarter of 2021. Adjusted earnings per share increased to $0.98 a share for the first quarter of 2022 from $0.75 in the first quarter of 2021. And please see our press release for a full reconciliation to GAAP earnings.

Our ending billable headcount at March 31, 2022, was 5,833, including 5,420 billable consultants and 413 subcontractors. Ending SG&A headcount was 984. Our outstanding debt net of deferred issuance costs as of March 31, 2022, was $392.9 million. We also had $24.2 million in cash and cash equivalents as of March 31, and $199.8 million of availability on our credit facility.

Our balance sheet continues to leave us very well positioned to execute against our strategic plan. Days sales outstanding on accounts receivable increased to 68 days at the end of the first quarter of 2022 compared to 66 days at the end of the first quarter of 2021.

I'll now turn the call over to Tom Hogan for a little more commentary behind the metrics. Tom?

[Tom Hogan, COO]

Thanks, Paul. Good morning, everybody. As Jeff mentioned, after a record-setting quarter bookings to close 2021, our large deal win volume grew again and substantially. We booked 124 deals greater than $500,000 during the first quarter of 2022, which compares to the prior record of 98 set in the fourth quarter of 2021 and 92 from the year ago period. I'd just like to take a minute and highlight some of the type of work we're winning.

We continue to be a proven leader in the health care vertical. As an example, this past quarter, we closed one of the largest deals in company history with a large private health insurance company. We've had a 12-year relationship with this client, and our team has demonstrated true partnership as we digitally transform their product offerings.

This 2-year extension of services includes agile, rapid development, fully digital teams. Our structure enables projects to efficiently scale up and down based on business needs. Our U.S.-based industry leaders coupled with multi-shore engineering teams will support digital development, testing and support for the company's member experience and mobile applications.

As you know, we're a proven digital partner within many industries, not just health care, obviously. As an example, we also recently secured a 3-year agreement to provide website and content support for an international holding company that operates as the owner of a leading brand of trucks and diesel engines. Through this agreement, our multi-shore delivery teams will support the company's 30 public-facing web properties and work closely with our digital marketing team to provide content updates across the organizations portfolio.

Our U.S.-based DevOps teams will also conduct extensive integration work to ensure operations are keeping up with their customers' evolving needs. We continue to remain well diversified from a customer, industry and platform perspective. And excitingly, our colleagues have recently begun returning to our offices. We're always going to ensure we're providing the flexibility and work-life balance we all need, but it's really been invigorating to see our teams return, collaborate in person and see smiles replacing masks.

I'm also excited that during the quarter, we launched 2 more of our Bright Paths programs in key markets. We've already fully trained and hired 67 colleagues to this innovative program, which is providing new futures for deserving and ambitious members of under-represented constituencies and communities. As we scale and continue to increase our influence and impact on behalf of the world's biggest enterprises, we also remain focused on growing the positive change we can make in the world around us.

And with that, I'll turn things over to Jeff to discuss the second quarter and the remainder of 2022.

[Jeff Davis, CEO]

Thanks, Tom. Perficient expects its second quarter 2022 revenue to be in the range of $224 million to $230 million. Second quarter GAAP earnings per share is expected to be in the range of $0.71 to $0.74, and second quarter adjusted earnings per share is expected to be in the range of $1.04 to $1.07.

Perficient is raising its full year 2022 revenue guidance to the range of $917 million to $942 million, raising 2022 GAAP earnings per share guidance to the range of $3.08 to $3.19 and raising 2022 adjusted earnings per share guidance to the range of $4.24 and to $4.36.

So with that, operator, we can open up the call for questions.

[Operator]

[Operator Instructions] We have your first question coming from the line of Mayank Tandon from Needham.

[Mayank Tandon, Needham]

Congrats, Jeff, on a strong start to 2022. I wanted to first start with just a housekeeping item in terms of organic growth. Could you give us a sense of what the organic growth was in the first quarter? And what's embedded in your expectations for 2Q and the full year?

[Jeff Davis, CEO]

Yes. It was 23% in the first quarter. And for the second quarter, the midpoint, I want to say, is around 17%. So the high end is just below 20%. And then the same for the year, it's about 17% at the mid and just below 20% at the high.

[Mayank Tandon, Needham]

Got it. And then I know demand sounds really good. So I'm going to ask the supply side question. Could you just give us a sense of your ability to recruit to be able to meet the strong demand climate? And are you exploring other delivery hubs. You've done a great job of scaling in Latin America and India. I'm just curious on your supply side initiatives to be able to meet the strong demand curve.

[Jeff Davis, CEO]

Yes. Actually, and I'm going to ask Tom to add some color to this, but the team has done a remarkable job, our talent acquisition team. They've scaled that team itself. And they've done a great job of recruiting against the really just kind of unprecedented demand.

And what obviously is a pretty tight market as our ABR increases sort of reflect. In terms of kind of hedging, if you will, we're really focused on still Latin America as well as South Asia, primarily India. But within India, we have a decent presence, but very little, nothing close to saturation.

So we're actually looking at expanding more within India and within Latin America. We're still exploring acquisitions also that might be able to contribute in that regard. Europe is a possibility. But given the uncertainty there right now, we're kind of holding on that. But Tom, do you want to add some color to that?

[Tom Hogan, COO]

Mayank, we definitely have increased the capacity of our talent acquisition team globally, not just in the United States, but in Latin America. And in India, as Jeff mentioned, we're looking at additional cities. We were pretty strategic in the last couple of years of hiring individuals in cities outside of where we are and building more of a presence beyond the 3 major hubs we have in India.

So we see a lot of organic growth potential in the year, as Jeff mentioned, we're relatively small in the big scheme of things in the India marketplace. So plenty of room for growth, and our team continues to differentiate ourselves in the marketplace and become the employer of choice. So it's been able to continue to meet demand and proactively hire along the way as well, which is really exciting.

[Mayank Tandon, Needham]

Got it. And then just finally, given the strong demand, is the pricing leverage strong enough to be able to offset the wage inflation impact? Just any comments around that, that would be helpful.

[Jeff Davis, CEO]

Yes. We have actually -- I mentioned that North American ABR is at an all-time record, and the increase reflects -- is actually higher, more than the wage increase.

Actually, the differential there is about 90 bps. So we actually have rates up about 90 bps more than average wages. That's in the U.S. and it's even better offshore. I mentioned a 13% increase offshore, that's certainly outpacing wage increases. And so we're pretty optimistic we're going to be able to maintain that again, as the market is contracted on the supply side, customers see that and our competitors see that. So I think we're going to be able to at least offset our cost increases.

[Operator]

And we have your next question from the line of Brian Kinstlinger from Alliance Global Partners.

[Brian Kinstlinger, Alliance Global Partners]

Great quarter. Can you talk about the 2 verticals we don't hear as much about, automotive and business services. While these aren't your largest verticals, they've enjoyed some of the strongest growth rates back-of-the-envelope on what you provide in the presentation. So if you can provide some details there, whether it's a large client addition or 2, if those industries are related to digital transformation or something else you're able to call out? And then I have 1 follow-up.

[Jeff Davis, CEO]

Yes. Automotive, we've got a couple of phenomenal anchor accounts there. And one is actually one of our largest, might be currently running is our largest account at the moment. So we've been able to move up the ladder there. It's a long-standing client that we've had for, gosh, I think it's been 20 years. And we're now one of, I want to say, 5 or 6 global suppliers there. So that continues to grow.

But we have a lot of other clients beyond that within automotive manufacturing, similar story, big, big anchor account there, long-standing relationship is going very, very well and expanding. And then actually, we didn't -- we talked about this some, but it's worth mentioning again, really starting to see some great traction in tech within fin serv.

We've always had a great strategy practice, business consulting practice. But I always have been really underrepresented on the tech side, and that's changed and the team has really worked hard on that, and we're seeing some real dividends there as well.

[Brian Kinstlinger, Alliance Global Partners]

Great. And then maybe one to Paul, just to dig into the numbers. The gross margin you mentioned was flat at 38.9% on services. You have about 9% more work being delivered offshore, which obviously is fantastic. But generally, we think of those as higher margin delivery, and you talked about a 90-point improvement on the spreads for labor. So is that lower utilization that's offsetting that potential margin improvement? Or if not, can you help us bridge that gap?

[Paul Martin, CFO]

Sure. Yes. So utilization is modestly lower year-over-year, but certainly in line with our expectations and see that strengthening in Q2. And I don't know, Tom Hogan, if you want to add anything from that perspective?

[Tom Hogan, COO]

Yes, a couple of things, Brian, contribute there as well as we also, as I mentioned, the Bright Paths program. So we had 67 people joined through there. We had a big college program come on and all of those individuals start coming online here as we go into hiring hedge trading, building out the bottom of the pyramid, great utilization here in Q1 by also adding capacity for the second quarter and beyond.

[Brian Kinstlinger, Alliance Global Partners]

So essentially, just to make sure I understand, utilization is only down modestly but some of the people you've hired are not yet counting in utilization as you're preparing for growth. So maybe that's why the margin is flat despite other metrics, suggesting on the other one. Is that right?

[Jeff Davis, CEO]

Yes, they're mostly actually included annualization, that would be a very small differentiator. Yes, utilization is about 81% last year. And by the way, you might recall that Q1 and Q4 typically are kind of lower seasonally. So it's actually 81%, which was quite good.

But last year was about 83%. So on a year-over-year basis, it's down, as Paul mentioned, slightly. We still had a gross margin expansion of about 30 bps, I think. So of that 90, we're seeing about 30 of it. And yes, the rest probably got absorbed in that differential.

[Operator]

And your next question comes from the line of Jonathan Lee from Morgan Stanley.

[Jonathan Lee, Morgan Stanley]

It looks like sequential headcount growth saw a slight deceleration. Can you provide some color around that and how you're thinking about headcount growth over the remainder of the year? What do you see as the appropriate number of net billable headcount additions that you'd be able to add on a quarterly basis?

[Jeff Davis, CEO]

Oh, gosh, it's well into the hundreds. And actually, we have added -- you'll see in Q2, we've had kind of a surge here. So that was by design. We sort of held back a little bit. Again, we're going to let that utilization rise. But then also, we've had a large influx from both Bright Paths as well as campus recruits that you'll see revealed in the numbers when we report Q2.

So I'd hesitate to put a fixed number on how many people we can recruit in a given quarter. But -- and actually, Tom might have a comment on that, but it's well into the high hundreds that we've done in the past, actually. Tom, do you want to add anything to that?

[Tom Hogan, COO]

You hit it off. Some numbers every month.

[Jonathan Lee, Morgan Stanley]

Got it. That's helpful. And then a follow-up on acquisitions. How are you thinking about your acquisition strategy for the remainder of the year? What's the pipeline like? And have you seen private market valuations compress in the same way that we're seeing public market valuation compress? And does that -- if so, does that make things a little more palatable? .

[Jeff Davis, CEO]

It's a good question. So we're still very, very active. We've got some deals in the hopper now. We got some deals we were close on and didn't get done.

Actually, the -- what we're seeing is the opposite in terms of valuation, at least right now. I'd love to see it come down. But if anything, it's gone up, there's a lot of -- as I mentioned, there's a lot of competition out there at the moment and valuations remain pretty high. We're undeterred based on that. That's not really the issue with a couple of exceptions, by the way, that really just kind of got nutty from my perspective.

So -- but we're still on the hunt. We've got a good pipeline. There's still a lot of opportunities. And -- but directly on the valuation question, I would say we're not seeing it come down, to your point, like we've seen in the public market.

[Operator]

And your next question comes from the line of Maggie Nolan from William Blair.

[Maggie Nolan, William Blair]

Am I interpreting your commentary right, that maybe you're seeing more in the way of unsolicited client inbounds? And if that's the case, when did you kind of start noting this inflection? And do you think there are beyond just kind of pandemic effects that we've seen for the last couple of years, any specific recent drivers of any kind of uptick in inbounds?

[Jeff Davis, CEO]

Yes. I think -- so I wasn't specifically alluding to more inbound. We are seeing more of that than we have in the past. And I think the reason for that is simply brand awareness as we continue to build the brand, word-of-mouth, et cetera, that does happen. But a lot of that is really a result of the increased capacity that we've driven in sales. So it's not so much unsolicited as much as it is getting those otherwise cold relationships and getting a foot in the door. It's difficult to do where clients are sort of entrenching existing relationships, and kind of trying your way in there is hard to do. We're getting really, really good success with that.

Our win rates, it's interesting. Our win rates against our competition, the typical household names, have not gone down. It's still in the kind of mid-60s, around 60% to 65%. And we expect it, as we increase capacity in sales, that you would naturally expect that to come down as we got more at that. But the reality is, once we get our incredible talent out in front of clients and the sales process, the win rates stay high. So which again, is an encouraging sign about the sustainability of our current growth rates, if not acceleration.

[Maggie Nolan, William Blair]

Okay. Great. And then years ago, you used to kind of talk in the context of your solution area. So can you give us some insight into what you feel are some of your largest solution areas currently or maybe the fastest-growing solution areas for the business. And it's important, things like analytics consulting, custom product development, kind of those types of buckets.

[Jeff Davis, CEO]

Yes. It's interesting. The mix has stayed fairly stable. So there's not any particular sort of runaway or even necessarily decline. Far and away, custom app dev remains #1. Keep in mind that the vast majority of the time when we're delivering for a client, it's really a multitude of solutions. So when we're doing custom app development, in almost every engagement, there's analytics involved, there's integration involved. And those are -- we sort of measure those as separate services, but in reality, they all fit together.

So the mix stayed pretty similar again, on a relative basis. Custom app dev again continues to remain very, very strong. We are seeing more opportunities with some newer technologies, maybe what would have considered a little more niche in the past, and newer platforms. But I still think custom app dev remains kind of our bread and butter. And like I said, the things around that are more complementary probably to that than anything, maybe someone standalone, but it all really fits together like a puzzle.

[Operator]

And we have a question from the line of Puneet Jain from JPMorgan.

[Puneet Jain, JPMorgan]

Nice quarter. So you talked about signing a lot of clients, 100-plus clients this quarter, then bookings are -- sorry, pipeline is strong. You're seeing price increases. You raised your guidance. Is it fair to say that you are not seeing any adverse impact from potential macro slowdown in your business at all? Maybe in the sales cycle or anywhere, any vertical. Are you seeing any signs of slowdown at all in the business?

[Jeff Davis, CEO]

I would say no, not at the moment. And obviously, we're aware of the macro environment and always nervous about that. But gosh, if you look at our metrics, when you look at our pipeline, it's -- there's no indication there. The year-over-year weighted pipeline deals at 50% and above is phenomenal.

I mean, it's the best it's ever been and I'm talking about the year-over-year comp is probably the best it's ever been, both obviously in absolute dollars, but also as a percentage. So at the moment, we're not seeing that.

Clients ebb and flow in terms of their budgets. Some clients, and I don't think it's a broad macro thing, I think it's more of, again, an individual client-by-client basis. But in a broad sense, knock on wood, we're not seeing that, at least not yet.

[Puneet Jain, JPMorgan]

Understood. No, that's good to hear. That's very good, actually. And then your subcontractor mix slowed on sequential basis a little bit, ending headcount was about the same as average headcount. Am I reading too much into it? Or should we expect some sort of slowdown in subcontractor mix over the near term? And what does that mean for margins?

[Jeff Davis, CEO]

Yes, we would like to drive the sub-number down by design. We prefer to have full-time employees, and we leverage subcontractors and very valuable assets, but we leverage them when we have a unique skill set that we don't necessarily have a long-term need for or responsible capacity.

But yes, I mean, we feel very confident right now. So our preference would be to hire full-time employees and reduce the number of subcontractors, both absolutely on a relative basis.

[Puneet Jain, JPMorgan]

But is market environment, hiring environment at a point that you can achieve that, reduce that subcontractor mix, hire more people on your own instead of relying on subcontractors?

[Jeff Davis, CEO]

Yes, I think you'll see that. And as I mentioned earlier, what's not showing up in those numbers is the large groups that we're bringing in, in Q2, particularly the May graduates that we'll be bringing in.

So yes, I feel confident that the market will allow us to do that. We're having really, really good success differentiating the business beyond compensation and benefits. We're attractive employer, employees like a deal, it's a good culture. I think we're very collegial and there's the greatest free-to-core provision.

[Operator]

And your next question comes from the line of Vincent Colicchio from Barrington Research.

[Vincent Colicchio, Barrington Research]

Yes. Jeff, you had mentioned in your prepared remarks some large deals you're going after, and I missed the size. If you could clarify that. And also, I'm curious if the average deal size is increasing in your pipeline.

[Jeff Davis, CEO]

The answer to the second question is yes, definitely. It does it not like dramatic quarter-over-quarter, but we definitely add a few percent, if not maybe 10 plus to that number pretty much every quarter.

And yes, what I said was that we have 200 deals, over 200 deals that are 7 figures plus, so $1 million plus.

[Vincent Colicchio, Barrington Research]

That's in the pipeline or business you're working on?

[Jeff Davis, CEO]

In pursuit. Yes, in pursuit. Fairly above.

[Vincent Colicchio, Barrington Research]

Okay. And if we take out the relatively large health care deal that Tom has spoken about, I'm curious how's the overall health of the health care business? The mix has declined. And I heard from some that due to burnout of employees, some health care providers are looking to minimize change. I'm wondering if that's impacting you at all. .

[Jeff Davis, CEO]

Yes, it's a good question. I actually think our health care business is really, really healthy. Keep in mind that we've had a long-standing large relationship there that we're still in the process of winding down. So that's having a little bit of an impact on that.

But we're actually seeing a sort of turnaround. Now if you look at bookings in Q1, the bookings were substantially higher than revenue growth in Q1. So I think we're going to see that trend reverse.

And yes, I can understand on the provider side the challenge. But these folks, both provider and payer, are still so far behind the curve in terms of technology that I still think there's a kind of a must spend and maybe even more pressure on the provider side than on the payer. And we're seeing certainly, digital transformation is in most industries and health care is no exception as being a top priority. So even where they may be reducing budgets elsewhere, they're still spending on that. And in some cases, interesting, your observation about the employee burnout or employee health and middle health maybe. A lot of the digital transformation work that we're doing is actually designed to make their lives better.

So I feel pretty good that there's going to be a good stable base of demand there first for at least the foreseeable future.

[Operator]

[Operator Instructions] Your next question comes from the line of Jack Vander Aarde from Maxim Group.

[Jack Vander Aarde, Maxim Group]

Great. Congrats on the continued execution. Maybe a question for Jeff and Paul. You touched on gross margin and ABR, both onshore and offshore, are increasing. Do you see a similar gross margin and ABR profile across all your various onshore, offshore teams? Or are there differences? And then are these recent increase of linear across the groups? Or are any growing faster than the others and for whatever reasons?

[Jeff Davis, CEO]

Yes. Good question. In terms of the margins, yes, the rates and associated costs are lower in India than in Latin America, but the margins are fairly consistent within 5%, 5 points, so maybe it's somewhere around the 50 to 55 range.

We are seeing an increase in ABR, particularly standing out in some of the more recent acquisitions that we've done in Latin America, where we've been able to introduce different types of accounts there with different [trends] and relationships, I would say, and have actually driven. So a lot of that -- some of that 13% is skewed.

And some of it's not even really in our organic number yet because a couple of these haven't anniversaried yet. But we managed to drive rates there up in the kind of 15% to 20% range.

So I would say, as Latin America is leading the way, they were probably a little bit underpricing when we did those acquisitions, and that's rapidly changing.

[Jack Vander Aarde, Maxim Group]

That's great color. Appreciate that. And then I'm sorry, this has been mentioned like twice. Could you remind me of the number of 7-figure deals you're pursuing currently?

[Jeff Davis, CEO]

It's over 200 7-figure plus, yes.

[Jack Vander Aarde, Maxim Group]

Okay. Okay. And then just one last question is on the win rates. You mentioned those are remaining strong around 60%, 65% overall. Can you maybe just talk about the win rates across the size of deals? So whether it's not considered a large deal and then there are deals over $500,000 and now these 7-figure deals, is there any sort of variance across win deal or win rates and what your expectation for win rates are?

[Jeff Davis, CEO]

Yes, we do look at that. I don't have it in front of me now. But when we do sales analysis, that's one of the metrics we look at. I would say there's a lot of variability there, right? And a lot of our relationships, particularly those new ones that I was alluding to, where we're actually able to open up doors, a lot of them do start small.

Again, an opportunity to get a foot in the door and shine is what we do. At the same time, we have more and more these days than ever before. We do -- we are able to get into deals that are sometimes multiple 7 figures. We talk about back during, I think it was 2020, we initiated with a client at around $25 million. So there are those occasionally. But it still is a good mix. I would say there's not -- I can't sit here and say, "Gosh, a $750,000 deal closes 80% of the time," or our win rates are 80% versus 40% somewhere else.

[Operator]

I am showing no further questions at this time. I would like to turn the call back to Jeff Davis for further comments.

[Jeff Davis, CEO]

All right. Well, that obviously concludes our call. We really appreciate everybody's time today. As always, and as you could see, more momentum than ever. Really, really great quarter, a great start to the year. And super optimistic about not just the rest of this year, but the outlook behind that.

So appreciate your time and look forward to seeing you all again in 90 days. Thank you.

[Operator]

Thank you. And this concludes today's conference call. Thank you all for joining. You may now disconnect.