Converge Technology Solutions Corp

TSX:CTS

Earnings Call Transcript 2019-Q4

[Operator]

Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Converge Technology Solutions Corp. Fourth Quarter Results Conference Call. [Operator Instructions] Thank you. Mr. Carl Smith, CFO, you may begin your conference.

[Carl Smith, Chief Financial Officer]

Good morning, everyone, and thank you for joining Shaun Maine, our CEO; and myself, Carl Smith, the CFO, as we discuss our fourth quarter and annual results. Today's conference call may contain forward-looking statements, including those related to the industry, market, partnerships and customer opportunities as well as a discussion on COVID-19. The company cautions that these statements are based on current expectations that are subject to risks and uncertainties. Actual results could differ materially from the conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing conclusions or making a forecast or a projection as reflected in the forward-looking information. Additional information about material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and material factors or assumptions that are applied in drawing a conclusion or making a forecast or a projection reflected in the forward-looking information are contained in our filings with the Canadian and provincial security regulators. Converge does not undertake to update any forward-looking statements. Such statements only speak as of the date made. Additionally, today's discussion also refers to EBITDA and adjusted EBITDA, which are both non-IFRS measures and have no standardized meaning. Please refer to Converge's filings with the Canadian provincial securities regulators for an explanation and reconciliation to IFRS. I will now turn the call over to Shaun Maine, CEO of Converge.

[Shaun Peter Maine, CEO & Director]

Thanks, Carl, and good morning, everyone, and thank you for taking the time to participate on today's call. First, let me welcome Carl Smith to his first Converge earnings call and thank Mary Anne Palangio for providing such great support throughout the transition, including the preparation of our Q4 and year-end results. I'm really proud to share with you today our 2019 financial results and other insights into what lies ahead for Converge in 2020. As we can see in the numbers, 2019 shows the success of our strategy of acquiring traditional ITSPs and converting them into software-led hybrid IT service providers, delivering multi-cloud solutions to our customers. Our story has remained consistent since Converge was formed in late 2017 and our commitment to stick with our strategy, focusing on acquiring ITSPs with high-value midtier customers and constantly seeking to create cross-selling opportunity has been crucial to our success. As many of you have heard me say over the past 2.5 years, our goal was to have a footprint in every NFL city. While this might seem elementary to some, it was actually a highly strategic decision to acquire companies that will allow us to build a presence in the largest markets in North America. I am pleased to share that we have come very close to achieving this goal and expect it to be completed in 2020. As a result of this approach, we have now achieved close to $1 billion in revenue on an annual run rate basis, giving us the capacity and scope to provide top-tier services throughout the U.S. and Canada. This $1 billion footprint puts us in a unique position to leverage our size as an advantage in terms of geography, people and capabilities in order to service our clients throughout North America. All of this is evident in our Q4 and full year 2019 figures and truly highlights the progress we have made as a company. The year-over-year figures illustrate how we've been able to leverage our 12 acquisitions to date, with 3 in the fourth quarter of 2019 alone, to generate significant cross-selling capabilities throughout the Converge family of companies. Our gross margin of 24.9% in Q4 and 23.5% for all of 2019 is among the highest of our peer group and reflects our commitment to guiding small and medium-sized businesses through their cloud journey. Furthermore, I am exceptionally pleased to see that we have grown gross profit by 80% and our adjusted EBITDA by 92% year-on-year. As well, our annualized recurring revenue continues to grow at a healthy rate and now totals over $140 million. Approximately 35% of this revenue is driven by monthly recurring revenue for private cloud and managed services, 25% from monthly recurring revenue from public cloud and 40% from annual recurring revenue from software subscription and services. All of these metrics continue to define our success story, and we are very optimistic about how this projects into future growth. Part of our success this past year has been derived from the partnerships and vendor relationships we have established over the past several years. As many of you know, our relationship with IBM and, in particular, Red Hat, has been very important to our success. We are often viewed as foot troop soldiers for IBM that are on the front lines, working directly with SMBs that are still early in their cloud journey and helping them begin and/or transition into a cloud environment. This has served us extremely well, and we are now currently the second largest reseller of Red Hat and IBM solutions in North America.Part of our marketing strategy with IBM and Red Hat is to create road shows that customers attend to learn more about Red Hat's solutions. I had mentioned this in our Q3 conference call as a strategy that we were pursuing, but still relatively early in the early phases. I am pleased to share that this strategy has yielded results that far exceeded our high expectations. From October 2019 to the beginning of March this year, we have held 8 road shows in U.S. cities to highlight Ansible, Red Hat's management platform. At these events from Irvine, California to Fort Lauderdale, Florida, we have had 40 to 70 customers attend each workshop and engage Converge in a way our customers had never done before. This strategy has been extremely effective to add net new logos in the mid-range customer space. Whereas the companies we acquire used to invite customers to happy hours, we now invite them to training on the latest cloud platforms, branding us in a much more appropriate way as the partner to guide them through their cloud journey. This approach has been incredible for both Converge and Red Hat. These type of events illustrate that there is an active demand for these type of solutions Converge and Red Hat offer and companies are actively seeking opportunities to learn how to leverage these cloud services. This has been a key driver of growth, and we anticipate these type of presales roadshows to attract new clients in the future, be it that some of them now will be online. We have also implemented this model with VMware and have witnessed similar levels of success. At our ConvergeUP national sales meeting in Dallas, Texas in January, Bill Swales, Head of Channels for VMware Americas told Converge's sales force that out of their 40,000 partners, Converge is ranked #3 by VMware in terms of capabilities. In a new approach, VMware said that it would discriminate towards partners by capabilities, given that partners like Converge have extensive VMware expertise and are capable of selling more valuable VMware offerings into the midtier customer segments. Our acquisition of PCD in January, one of Canada's top VMware partners, further enhances these capabilities. The support of our vendor partners has been key to our progress, and both our interests are aligned. In 2019 alone, we received $10 million in volume rebates and $3 million in market development funds, or MDF, from companies like Ingram, IBM Red Hat, Cisco and VMware. The MDF capital has been used to support our presales roadshow strategy and to help drive growth. These type of symbolic relationships are encouraging to not just our sales team but to our clients. Knowing that Converge family of companies has the full support of large technical institutions like IBM, Dell, Cisco and Ingram among others is one of the most powerful messages we can communicate. Our national footprint and the scope of our capabilities across all our vendors gives our clients confidence that we will be the right partner for them in helping them in their cloud journey. We had stated that our goal was to acquire 4 to 6 companies per year, and we executed that with 5 acquisitions in 2019, 3 of them being in Q4. In October of 2019, we acquired Datatrend based out of Minneapolis. Datatrend adds integration capabilities that we previously only had through Northern Micro Canada as well as some scale clients in the finance sector. These capabilities allow us to offer logistics, configuration and warehousing services to our U.S. customers. In November, we acquired -- also acquired VSS based out of New York, the epicenter of our financial clients. VSS has an outstanding sales team and has a very strong managed service offering of which we believe combining with the tools and sales teams from Lighthouse and Essex, both also in New York, will further our strategy of capturing more market share of the financial services industry. I've previously spoken of the financial services industry as a key vertical for us. That remains true to this day, and the acquisition of VSS will be a key driver of continued success in this area. As we move into 2020 and in line with our vision we first set out over 2 years ago, we will continue to focus on growth as well as focusing on integrating the back offices of our companies to optimize and support our operations. We are streamlining operations by leveraging common back office systems and centralizing capabilities across our organization. We believe that this strategy of acquiring companies with their immediate focus of cross-selling and giving them top-tier certifications, followed by the integration of back office results in minimizing disruption and maximizing growth amongst our operating companies. We believe our 2019 results demonstrate success in this strategy. And as we increase focus on back office integration, we can further increase EBITDA as well as support continued growth. Next, I would like to address the situation on everyone's mind, the current state of affairs related to COVID-19 pandemic. Let me begin by saying that this is an unprecedented time, and we are working hard to make sure our employees remain safe. Like most organizations, we've implemented a work from home policy across our business units as well as restricting all nonessential work-related travel. Since 75% of our services were already delivered remotely to our customers, this has not provided the disruption it has to many others. For many companies, having remote workers at this scale poses a logistics challenge. While work from home policies have been growing in popularity in recent years, the swing from the past trajectory to where we are now has been a shock. From concerns about accessing key network infrastructure to cybersecurity to even having the appropriate devices available to workers, organizations are working tirelessly to ensure that there are minimal disruptions to business as possible. Converge has been identified as a provider of essential services, and we are proud to continue to provide services that allow government and health care workers to do their jobs in the front line, protecting all of us as well as many businesses that support the economy. For Converge, remote worker enablement tools have always been part of our key offerings, both directly and as a managed service. Our partnerships with companies like VMware, Cisco, Microsoft and IBM Red Hat, amongst others, our large IT vendors, gives us a suite of tools and services that empowers companies to handle remote workers as if they were in the office. We have seen a notable uptick in demand for remote working tools and capabilities for our clients that have allowed them to seamlessly transition into this new world of having workers outside the office walls. In fact, I wouldn't be surprised to see these type of policies continue as remote work becomes even more frequent. In this challenging economic environment for most, support for remote workers such as infrastructure and capabilities has been a key driver for growth in Q1 2020 for Converge. In government, where standard practice has not included work from home, we have been assisting government organizations build out the required infrastructure to work at home through Northern Micro in Canada and offer government services to citizens through Becker-Carroll's partnership with Vivvo, SecureKey and Red Hat. Our health care vertical demonstrates exactly how our offerings can be leveraged. I'm sure everyone listening is familiar with the stress and challenges faced by health care workers resulting from COVID-19. With the number of patients coming in and out of hospitals that require care, COVID-related or not, medical professionals are unable to tend to all of them. Our introduction of virtual care technology enables medical professionals to monitor patients from remote locations in a secure and timely manner. While this is only one example, it is a microcosm of the number of products and solutions we offer that contribute to safe working environments. As we look ahead to Q1 2020 and beyond and consider the market challenges ahead for many businesses, we believe our solutions will be vital for customers navigating such issues. As I stated, demand for our remote worker solutions has surged in the past few months, and we believe the changing nature of the working environment is a trend that will continue for the foreseeable future. As far as acquisitions go, while we remain confident that we will be able to continue our pace in the longer term, we are going to take a step back in the very short term to attain further clarity on the implications of coronavirus on IT service providers. Our current pipeline is as robust as ever, and we are confident that we will be able to continue adding companies to the Converge family once the economy starts to stabilize. However, we want to be prudent in our acquisition process, given we have limited insight into how COVID-19 will impact potential targets and the economy in general. With that in mind, I'd like to pass the call over to our Chief Financial Officer, Carl Smith, to discuss our financials from the quarter.

[Carl Smith, Chief Financial Officer]

Thanks, Shaun. As we announced last evening, revenues for the 3 months ended December 31, 2019, were $215 million compared to revenue of $136 million for the same period last year, an increase of 58%. Revenue for the 12 months ended December 31, 2019, totaled $688 million compared to $459 million last year, an increase of 50%. We attribute this increase to both the successful integration of our 5 acquisitions in 2019 as well as organic growth resulting from cross-selling strategy among our subsidiaries. Gross profit for Q4 was $53.4 million compared to $30.3 million in Q4 last year. As a percentage of revenues, gross margin increased to 24.9% from 22.3%. Gross margin (sic) [ profit ] for the 12 months ended December 31, 2019, was $161.6 million compared to $90 million last year. As a percentage of revenue, gross margin was $23.5 million -- sorry, 23.5% in 2019 compared to 19.6% last year. The increase in gross margin as a percentage of sales is primarily due to increased sales from higher margin solutions, such as public cloud, private cloud and managed services. Selling, general and administration expense for the fourth quarter of 2019 were $44.2 million compared to $25.1 million last year. For the 12-month period, SG&A was $137 million compared to $75.7 million last year. The increases are related to the acquisitions we completed throughout 2019. Adjusted EBITDA, a non-IFRS measure for Q4 2019 was income of $11.8 million compared to income last year of $5.8 million, an increase of 105%. Adjusted EBITDA margin for Q4 was 5.6% compared to 4.2% last year. Adjusted EBITDA for the 12-month period ended December 31, 2019, was $31.6 million compared to $16.5 million for the same period last year. Adjusted EBITDA margin for the 12-month period was 4.6% compared to 3.6% last year. In 2020, we will continue to focus on generating additional operating leverage and efficiencies and working towards further increasing our adjusted EBITDA margin. As of December 31, 2019, the outstanding balance of our loan facility was $125.1 million compared to $73.3 million last year, backed by a 71% increase in our accounts receivable. At the end of the year, we had $20.6 million in cash compared to $10.5 million last year. I'll turn the call back over to Shaun. Operator, I think we will open it up for questions.

[Operator]

[Operator Instructions] The first question comes from Kevin Krishnaratne from Eight Capital (sic) [ Paradigm Capital ].

[Kevin Krishnaratne, Former Equity Analyst of Technology]

Question for you. What are some of the solutions, you alluded to seeing some strength from remote, from home initiatives. I mean, immediately, things like data center spending and cloud computing come to mind. You did allude on the script to some of the virtual health care technology. I'm just wondering if you could dig in a little bit deeper, what about cybersecurity. Any thoughts on the specific applications that might be driving an increase in data center and cloud computing purchases?

[Shaun Peter Maine, CEO & Director]

Okay. So it's really interesting, it's very different by sector. So if -- we're fortunate that we don't really have a lot of exposure to oil and gas or hospitality, they're just stopping spend. You're seeing some of the providers in the financial services sector buying early because they were concerned about disruption to their supply chains. And then you're seeing other -- a lot of midtier companies just need support and they need it right away for remote workers. And there's kind of 2 phases to that. First, they need a Band-Aid of I just need access. And a lot of the problems they face is that the security for some applications, people will say, well, I don't want to expose that to at-home workers, so it's not available unless you're in the office. So people are quickly having to open up networks. And that's providing a lot of security risks. And so much better solutions are the type of managed services. We've always had these managed services, disaster recovery managed services to allow people to access the same environments they have remotely. So really leveraging things like VMware's Workspace ONE or VDI, which is virtual desktop infrastructure, which provide for a security framework to allow them. So you're seeing people, just get my workers up and running, and then they're moving to, okay, now I want them to work more effectively. The other part is government, as I mentioned in my script, is really not equipped to work from home. It's just not a business model that government has been used to. So we're seeing a tremendous surge in, especially Northern Micro, supporting remote workers up in Canada as well. Does that give you enough flavor, Kevin, for the kind of things we're doing?

[Kevin Krishnaratne, Former Equity Analyst of Technology]

Yes, it does. And you sort of touched on a little bit in -- on my second question, just with regards to sort of maybe the shifting around of IT budget from some of your customers from future quarters into the current quarter, say, Q1. How do you think about what you're seeing from -- you're starting the beginning of the year and you sort of have a view of the spend that you're expecting from your clients. And can you just talk about what you're seeing in terms of maybe programs that -- from a customer that might have been earmarked for Q2 or Q3 even that are being pulled in, even at an accelerated pace? How do you think about the shifting in from future quarters into more near term?

[Shaun Peter Maine, CEO & Director]

So we have had, like as I mentioned, certain exposure to sectors that demand has dried up as they're very cautious until things go, but that has been more than replaced by increased demand. And we're seeing that there's the infrastructure piece, but then the more common piece is this support for remote workers. And a lot of them had it on their road map for 2020 spend to, I've got a cloud road map. Some of those things are just being accelerated to provide a better level of service. So things like, again, VMware's SD-WAN at home. A lot of people are struggling for bandwidth as their kids are on Netflix, and they're trying to get their applications running. So providing first the work, but then they need to work more effectively. So we're seeing, there is a mix. And as I mentioned, it is sector dependent. So again, we don't have really any exposure to oil and gas, but I understand that's kind of off or the hospitality space or just -- or say, airlines, those are just -- they're done. And then you're seeing a mixed bag in the financial sector. Hospital, demand is -- all the hospital groups are -- there is extremely strong demand. And government, there's just more of a, hey, we really need solutions that I mentioned, even providing services remotely. So in Canada, our Becker-Carroll Group has the solutionware to offer citizens. So municipalities who are doing most of these things face to face can't do that anymore. And they're -- even Shared Services Canada can't offer services like they did. So providing solutions to be able to offer the same services to citizens remotely, there's just been a real surge of demand. And it's like people want, they need to solve it now. So it's been a very -- again, I can't see how -- like this has all happened very quickly, so I can speak the kind of what we've seen in Q1. We have strong demand going into Q2. But what does the end of Q2 or going into Q3 look like we just don't know, but these trends that we're seeing so far have meant that we've had very solid demand so far this year.

[Kevin Krishnaratne, Former Equity Analyst of Technology]

And so -- I mean great to hear the strong demand, clearly. Maybe more of an industry question, maybe you can help us better understand the supply side of things. If you could talk about the supplier and even the distributor ecosystem, the levels of inventory or product that they have versus the demand side of things. I'm just wondering how you -- how that is managed? And how do you just think about the supply side of the equation?

[Shaun Peter Maine, CEO & Director]

Well, in Q1, the toilet paper of the IT industry was endpoint devices. Everybody was hoarding, right? So this is where size matters. So being a large partner and also having multiple vendors, we were able to supply endpoint devices to people that just couldn't find supply. And even network gear, there was a surge of network gear. There just weren't the access points to allow to work from home. So we went to Cisco and went to their refurbed group who -- it's certified by Cisco, but to provide other solutions that we would come up with for our customers to meet that initial demand. And so the supply chain, originally, in Q1, we were concerned by the slowdown of the Chinese sites and manufacturing plants. They were operating at about 33%. But Q1 is traditionally a lower demand in the U.S. economy, and the distributors had a lot of product on hand. So we really didn't see that. It was more of surge buying, especially around supporting of end users where, again, being a top-tier partner with our main distribution partners and vendors, we were able to get supply where other people didn't. We also had the foresight to order in certain quantities of devices that we knew would be in short supply. So we just finished the Canadian federal government's year-end, and we did a super job of -- with Microsoft and Dell of getting a lot of endpoint devices to support, say, a lot of the government's remote working. So some of these initiatives being large, having the foresight to realize what demand would be there, really helping our supply chain, and it continues on into April.

[Operator]

[Operator Instructions] At this time, I'm showing no further questions -- I'm sorry, you do have a question now from Melissa Prusky from Hampton Securities.

[Unknown]

I was on mute, sorry. Two different screens, all this technology. I hope you guys are staying safe. The call sounded great. The only question I really had, you've been on a wonderful trajectory and you really met all your goals, which makes me happy. And I never doubted you guys for a minute. But because of coronavirus and what's coming ahead, and since none of us really know what's coming ahead, how do you feel you're going to do with the new acquisitions because it's so hard to meet companies and do the things that are necessary, mainly because of social distancing and stuff, to stay on this path of 4 to 5 a year?

[Shaun Peter Maine, CEO & Director]

Yes. So definitely -- so we've acquired one so far this year. We are putting a pause. So we have a very healthy pipeline. But as I mentioned in my script, we're putting a pause on acquisitions until we can see better of kind of where these things go. The labor force in the U.S. is changing dramatically. Certain sectors are being impacted. And so we think it's much more prudent to wait. Again, we did 3 last year in Q4. So again, we have a very healthy pipeline. And with all the stimulus going into the economy, we could definitely pick up the pace towards the end of the year. But we think for now being prudent and really focusing in really our energies on our integration. So this was always the year that we were going to be doing a lot of integration of our back offices and centralizing some functions. So we're really focused on that. I mean PCD in January was a great acquisition for us out of Montreal, a top VMware partner. But we'll wait to do more acquisitions until we get more clarity.

[Unknown]

How long do you think that might be? Or is that just a dumb question? And it's fair it's such a dumb question to ask, to be honest with you.

[Shaun Peter Maine, CEO & Director]

I'd be on CNN, if I do that. So right now, we are absolutely watching, watching what the future holds. So we just don't know. And so my crystal ball, I just go by what IDC is saying. And I look -- like, if you've got Goldman who's being much more pessimistic, but a lot of them are thinking that by the time we get to Q3, there will be a pickup, but we'll wait to see that. So again, we've been fortunate that demand has been very strong for our solutions and services because a lot of what we do, we can deliver remotely. If I was someone who was doing a lot of on-site to large enterprise, I think you'd be more impacted, but we've been just very fortunate that the majority of things that we do in configuring and services for customers can be delivered remotely. And I got to say how proud I am of our team to show the strength resilience. And really, it pays off to have this platform in that when you have -- New York and California are shut down, and yet, we're continuing to be able to deliver to customers. It's amazing by leveraging people in different locations, this great footprint we have, and our teams have just come together so well. It's great to have a strong management team and to have the options of, oh, I can deliver from here. We've got 4 logistic centers that have been just cranking through things, and it's been -- and supplying people like hospital groups that need the support and government. So I think the team's done a tremendous job. But saying, where do we come out of it? I look to the experts, and IDC seems to think that by Q3, there'll be an uptick due to the stimulus, but what we'll do is we will -- until we see it actually happening, we're not -- we're going to be cautious about doing further acquisitions.

[Unknown]

One last question, and then I'll turn it over if someone else does. You think that you have an advantage because basically everything you do is in the cloud, so remote. Nothing -- it's not like there's been somebody death, you think you have an advantage to being able to get to help more companies and get more deals done to get the software -- different softwares out there at this point in time because you are so cloud-based?

[Shaun Peter Maine, CEO & Director]

100%. So if this is really those solutions, which, as in my call, I talked about having $140 million of those, we're trying to get that to be over 20% of our sales. These are all high-margin private cloud sales that our small and medium-sized customer base, and they can be up to 10,000 seats, are all accelerating their cloud journey. Large enterprise was already kind of 25% to 30% through that. The midtier guys were struggling, and this is forcing them because of remote workers to accelerate. Because -- I mean this is exactly what our offering is, our critical DR offerings means you can access your work applications from another location, which is exactly what people are doing. So it's accelerating what we've always done. So it absolutely is a great boost to our managed services.

[Operator]

The next question comes from Jim Kennedy from Marathon Capital.

[James G. Kennedy, President]

Congratulations on the nice numbers. Quick question on the balance sheet. Shaun, you mentioned that you will be slowing down on the acquisition front in the near term. Can you comment on the balance sheet need for capital? And let's keep it the near term, maybe over the next 3 to 6 months, are you adequately funded?

[Shaun Peter Maine, CEO & Director]

So we're really fortunate in that we have our AR backed facility, and we have plenty of room on that facility. So that hasn't been a thing. One of the interesting dynamics I've seen in the industry is a lot of smaller players who are regionally based, like I'm only in California or only in New York, have been struggling, and there's been a lot of programs that have been put up by the distributors. So Ingram Micro is our largest distributor. They're $50 billion in size with a great balance sheet. They've been offering programs to people to say, we won't charge you late fees in Q2. Now we don't need those programs because we've been very fortunate with our national platform not to need that. But I've also seen the vendors like IBM reach out to the channel as well offering help and assistance. So we haven't required any of that, but it's -- the vendors are stepping up to provide help for those who need it. We haven't needed it so far.

[Operator]

And the next question is from [ Mitchell McLean ], an investor.

[Unknown Attendee]

I was just wondering quickly on maybe what the organic revenue growth would have looked like for the business in 2018 versus 2019, as well as if you wouldn't mind touching on the cumulative retention rates, that would be helpful.

[Shaun Peter Maine, CEO & Director]

So the 2 things -- 2 key concepts here is we're not looking for revenue growth. We pride ourselves on gross profit growth. So the key parts for us is growing because we're changing the mix from companies that sell more hardware-based to more software and services based. So we target between 15% and 25% organic growth in our companies. We've seen us achieve those rates more closely in the East, where we have more of the service areas that were based at the Lighthouse and Essex being delivered on the East. We've had uptick in the center. And then the West has been not as quick to uptake those growth rates of those services, but that's where we've been spending all of our time on enablement. You hear about our roadshows with Red Hat, which have been incredibly successful around Ansible and OpenShift and our cybersecurity roadshows. So these enablements have helped this growth, but you invest first. There is a longer sales cycle. I think we saw 1,000 customers in Q3 and Q4 last year in these roadshows. And when you're selling -- when you go from selling hardware to selling applications or containers or application focused software, then you tend to be a longer sales cycle, but then you are kind of the provider, the trusted adviser as they go to make infrastructure decisions, which might be on-premise or could be in a private cloud, public cloud or a managed service. So we've seen that uptick, and that continues to grow. So you don't see that as much in year 1 when you're making the investments, it's kind of a 6 to 9-month lag. Does that answer your question?

[Unknown Attendee]

Yes, I think it does. And then maybe just on -- do you guys track retention rates?

[Shaun Peter Maine, CEO & Director]

We have very high retention rates. Again, most of the companies that we acquire, they were -- so they had to swim against the current. They weren't the big guys. So someone bigger was getting all of the best pricings and certifications and had better capabilities. Along comes Converge and they get to swim with the current. They get to be the big dog with the top-tier certifications and capabilities, like what we have around cybersecurity and DevOps and our private and public cloud offerings is unique in our tier into midtier customers. So the reason we have such great retention rates is because people are able to sell more and make more money, and our engineers are able to work on more cool technologies and products as being part of a larger company while maintaining that nimbleness of a small company. So we have not had problems with losing employees doing acquisitions.

[Operator]

There are no further questions. You may proceed.

[Shaun Peter Maine, CEO & Director]

Thank you. Well, thank you all for taking the time to listen today. As always, we remain incredibly excited about what the future holds for Converge. We continue to have an extremely robust pipeline of acquisitions. And now they're positioned in key regions, we have the ability to go after much more larger acquisitions in the future when things get better. Converge has built more than just a collection of companies. We truly are a platform that is able to provide the most comprehensive and top-tier IT solutions available in the market for our clients. So thank you very much for joining today.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.