Information Services Corp

TSX:ISV

Earnings Call Transcript 2021-Q2

[Operator]

Good morning, ladies and gentlemen, and welcome to the ISC Second Quarter 2021 Earnings Conference Call and Webcast Call. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Jonathan Hackshaw, Senior Director, Investor Relations and Capital Markets. You may begin.

[Jonathan Hackshaw, Director of Investor Relations & Capital Markets]

Thank you, Jerome, and good morning, everyone. Welcome to ISC's conference call for the quarter ended June 30, 2021. On the call with me today are Jeff Stusek, President and CEO; and Shawn Peters, Executive Vice President and Chief Financial Officer. Jeff will start us off by providing some opening comments about the quarter, followed by Shawn, who will take us through the highlights of the operational and financial results for the quarter. Jeff will then make some closing remarks before we open up the call to -- for the question-and-answer session. Before we begin, we would like to remind everyone that we will only be summarizing results today. ISC's unaudited condensed consolidated interim financial statements and notes and management's discussion and analysis for the period ended June 30, 2021, have been filed on SEDAR and are also available in the Investors section on our website under Financial Reports. We encourage you to review those reports in their entirety. I would also like to remind you that any statements made today that are not historical facts are considered to be forward-looking statements within the meaning of applicable securities laws. The statements may involve a number of risks and uncertainties that are described in detail in the company's SEDAR filings, in particular in ISC's annual information form for the year ended December 31, 2020, and ISC's unaudited condensed consolidated interim financial statements and notes and management's discussion and analysis for the 3 and 6 months ended June 30, 2021. Those risks and uncertainties may cause actual results to differ materially from those stated. Today's comments are made as of today's date and will not be updated except as required under applicable securities legislation. Today's conference call is being broadcast live over the Internet and will be archived for replay shortly after the call on the Investors section of our website. With that, I would now like to hand the call over to Jeff Stusek.

[Jeff Stusek, President & CEO]

Thank you, Jonathan, and good morning to everyone joining us for today's call. To date, 2021 has been an exceptional year for ISC. Our financial performance for the second quarter of 2021 is well above the previous year, where the impact of the COVID-19 pandemic was evident in our second quarter last year. Hence, the increase in the quarter this year is partly due to some recovery against the COVID-impacted quarter but, more importantly, it is also a result of strong growth over and above that in both our Registry Operations and Services segments. For more details on the quarter, I'll now ask Shawn to summarize our financial and operating performance for the quarter.

[Shawn B. Peters, Executive VP & CFO]

Thank you, Jeff, and good morning, everyone. I'll provide you with some of the highlights of the quarter on a consolidated basis and then provide some further commentary about each of our reporting segments and their performance for the reporting period. As Jeff said, our second quarter results were extremely strong driven by a number of factors, including the ongoing economic recovery as well as the addition of our Recovery Solutions business in our Services segment. More specifically, on a consolidated basis, revenue for the quarter was $44.6 million, an increase of 44% compared to the second quarter of 2020 driven by higher transaction volumes in both our Registry Operations and our Services segments. Our consolidated expenses were $34.6 million, an increase of $10 million compared to the same quarter last year primarily from expenses from our new Recovery Solutions business and increased share-based compensation expenses from the strong performance of our share price. EBITDA was $13.6 million compared to $9.2 million in the same quarter last year. And our EBITDA margin for the second quarter was 30.5% compared to 29.5% in the same quarter in 2020. Adjusted EBITDA which, among other things, removes the impact of the share-based compensation expenses was $18.6 million for the quarter compared to $10.4 million in the same quarter last year, with an adjusted EBITDA margin of 41.6% compared to 33.5% in the second quarter of 2020. As a result, net income was $6.5 million or $0.37 per basic share and $0.36 per diluted share compared to $4.5 million or $0.26 per basic and diluted share in the second quarter of 2020. Turning to our business segments. Overall revenue in Registry Operations was $24 million for the quarter, up $7.8 million or 48% compared to the same period in 2020 and was $43.2 million year-to-date compared to $31.7 million last year. Registry Operations volumes in the second quarter of 2021 were propelled by the activity in the Saskatchewan real estate sector. In the first quarter, we experienced reasonably consistent transaction growth across all property value ranges. We again saw increases across all property value ranges in the second quarter but with more significant increases in the higher-value property ranges. This, combined with an increase in specific high-value transactions, which I'll touch on in a minute, led to a large increase in revenue in the second quarter. To the specific registries, revenue for the Land Registry increased to $17.9 million in the quarter, up by $6.7 million compared to Q2 2020. The increase in revenue is due to the exceptional results in the Land Titles Registry, which continued to benefit from the activity in the real estate sector. High-value property registration revenue was robust in the second quarter at $1.7 million, more than 3x the $0.5 million received during the pandemic-impacted second quarter of 2020. Each high-value registration generates revenue of $10,000 or more and are typically seen in both commercial and large agricultural transactions. Turning to the Personal Property Registry. Revenue was $3.1 million for the quarter, up $0.7 million or 28% from the same quarter in 2020. Volume largely returned to levels similar to those seen prior to the pandemic, up 19% during the quarter compared to the same period in 2020. Revenue grew at a greater rate than volumes due to pricing changes made in August of 2020. Registration revenue in the second quarter grew by 30% from 2020 due to volume growth of over 16%, coupled with pricing changes. Average term length for personal property security registration setups, which impacts revenues, also improved modestly compared to the same quarter in 2020. Search revenue increased by 39% for the second quarter of 2021, a record quarter as a result of strong activity during the period, where search volumes grew by 25% compared to the same period in 2020. Pricing changes contributed to maintenance revenue improving by 3% compared to the same quarter in 2020. However, volume declined by 4% in the second quarter. Revenue for the Corporate Registry for the quarter was $2.7 million, up 8% compared to the same period in 2020, with an 8% growth in overall transaction volumes. Registration, search and maintenance revenue grew by 20%, 13% and 3%, respectively, during the quarter compared to 2020. A strong second quarter for the incorporation and registration of new business entities, along with search activity, drove the registration revenue growth. While annual returns and renewals saw a slight decline during the second quarter, increases in entity amendments drove maintenance revenue growth. The net result is that EBITDA for Registry Operations for the quarter was $13.2 million, up 76% compared to $7.5 million for the same period last year. In Services, revenue for the second quarter was $20.1 million, an increase of $7.7 million or 62% compared to the same period in 2020 and was $36.3 million year-to-date compared to $24.2 million last year, up 50% or $12.1 million. Revenue was higher in the second quarter of 2021 compared to the pandemic-impacted same period last year due to a return to prepandemic levels in certain transactions combined with continued organic growth in Regulatory and Corporate Solutions as well as the inclusion of new revenue from Recovery Solutions. Turning to the specific divisions within Services. Revenue in Regulatory Solutions for the second quarter was $15.5 million, an increase of 36% compared to $11.4 million for the same period in 2020. Revenue for this division grew in the quarter as a result of renewed level of transactions in automotive financing and KYC, combined with organic growth in equipment financing, strong new legal customer acquisitions supported by our registry complete software as well as continued organic growth in new KYC customer verification transactions and other existing customer contracts. Revenue in Recovery Solutions in the second quarter was $3.2 million, representing an improvement over the first quarter of 2021. We've seen a steady increase in assignments from our bank partners. However, levels of recovery assignments continue to be impacted by last year's loan deferral programs and the ongoing stimulus provided by the federal government in response to COVID-19. Corporate solutions revenue for the quarter was $1.4 million, a jump of 42% compared to the second quarter of 2020. Revenue improved during -- due to increased corporate filings as well as the overall economy was more robust in the second quarter of 2021 compared to 2020, which was impacted by COVID-19, as well as organic growth from new customers onboarded since last year. EBITDA for Services was $4.7 million for the quarter compared to $2.3 million for the same period last year, an increase of nearly 100%. Finally, Technology Solutions saw revenue of $3 million for the quarter, a decrease of $1.9 million compared to the second quarter in 2020. Revenue from external parties for the quarter decreased $1.8 million compared to the second quarter of 2020 and decreased $0.3 million year-to-date compared to the same period in 2020. The decrease was due to the timing of solution implementation projects, which impacts the timing of revenue recognition in the quarter and year-to-date as compared to the same period last year. Revenue in our solution implementation projects will continue to be recognized in the quarters in which deliverables and milestones are achieved. As a result, EBITDA for Technology Solutions decreased $1.9 million for the quarter from the decreased revenue. On to other items. Our capital expenditures were $1 million for the quarter compared to $0.3 million for the same period in 2020. Capital expenditures in the current year were primarily related to system development work across our business segments, whereas last year, they included costs for systems supporting our corporate activities. With respect to our debt, at June 30, 2021, the company had $71.3 million of total debt outstanding compared to $76.3 million at December 31, 2020. Further details on our debt and our credit facilities can be found in our MD&A and financial statements. From a liquidity perspective, as at June 30, 2021, we held $49.6 million in cash compared to $33.9 million at December 31, 2020. At June 30, working capital was $35.2 million compared to $28.1 million at the end of last year. Consolidated free cash flow for the quarter was $8.9 million compared to $7.8 million for the same period in 2020. The increase was due to higher cash flow as provided by our operations, partially offset by an increase to current income taxes associated with the higher earnings and higher capital expenditures for the year. Finally, we also announced yesterday that our Board of Directors approved our quarterly cash dividend of $0.20 per share. The dividend will be payable on or before October 15, 2021, to shareholders of record as of September 30, 2021. I'll now turn the call back over to Jeff for some concluding remarks.

[Jeff Stusek, President & CEO]

Thanks, Shawn. Both our Registry Operations and Services segments have benefited from the strong positive economic conditions in the sectors in which we operate. Registry Operations has realized excellent results over the past 12 months despite pandemic conditions driven by robust activity in Saskatchewan, particularly in the real estate sector. At present, we expect volumes to continue to show strength and stability in the near term, although the potential impact from COVID-19 and its related variants for the balance of the year continues to be unknown. Services volumes are also expected to remain robust in Regulatory and Corporate Solutions, while volumes in Recovery Solutions are expected to remain unchanged so long as federal or other pandemic subsidy programs are in place. At present, we expect those subsidy programs to end in the fourth quarter of 2021. For the balance of the business, our new technology, combined with our focus on our customers, continues to drive new customer acquisition. In Technology Solutions, project implementation and product development work continues, although with some delays. While this work is planned to be completed in the latter part of the year, we expect overall activity in this segment to be lower as new sales continue to be delayed due to government worldwide focus on COVID-19 over the past year. We continue to look for additional opportunities with existing customers, but some of the larger new opportunities are notably delayed. While our confidence in ISC's strength and long-term potential endures, we recognize that uncertainty remains for the last half of the year from the potential outcomes of COVID-19 and its variants. As such, we will not be providing formal guidance -- financial guidance for the year. Overall, ISC has performed extremely well in the first half of 2021 and remains an extremely robust business that is poised to continue to thrive and grow in a postpandemic world. With that, I'll hand the call back to Jonathan.

[Jonathan Hackshaw, Director of Investor Relations & Capital Markets]

Thanks, Jeff. Jerome, we'd now like to begin the question-and-answer session, please.

[Operator]

[Operator Instructions] And your first question comes from Stephanie Price with CIBC.

[Stephanie Doris Price]

Registry Operations has been obviously strong for several quarters. Just curious about what you're seeing in Q3 and your comfort level and kind of sustainability at these higher levels.

[Shawn B. Peters, Executive VP & CFO]

Stephanie, it's Shawn. Thanks for the question. Our outlook sort of sets that out. We have seen extremely strong transaction levels, as you noted, in Q1 and Q2. And our current outlook is that we expect to see that continue with some strength for Q3 and for the balance of the year, with probably some expectation of a return to more normal seasonality, which, as you know, Q2 and Q3 are usually our stronger quarters, with Q4 and Q1 being a bit slower. So that's our current outlook.

[Stephanie Doris Price]

Okay. That's helpful. And then just kind of sticking with the outlook. In terms of Paragon and the Recovery Solutions division, you mentioned that federal subsidy programs you think could end in Q4. Just curious around your comfort level with that timing and how to kind of think about that Paragon business post the expiry of those subsidies. Just given that it's a new acquisition, just trying to understand, is there potentially a spike in revenue? Or is it more of a measured increase over several quarters that kind of works through the backlog?

[Shawn B. Peters, Executive VP & CFO]

Yes. It's Shawn again. So our comfort with -- to the first part of the question, our comfort with that coming off in Q4, that's our current expectation based on as good of information as we have, probably the same that you're hearing. That could be extended, we don't really have control over that. The business has performed pretty stable, pretty steady through this COVID pandemic. We bought it during COVID. We knew what the levels were like and they've remained pretty consistent. We also know that it performed really well in a strong economy prior to COVID. So our expectation is that once those federal programs come off, it would probably be over a few quarters, and I'm not sure what a few is, a couple for sure, as defaults start to occur, as people start to get into defaults and the banks start to act on that. I don't think it's an immediate spike, the sort of the month or the quarter that the federal programs come off. I think there'll be some time as that works through the bank's normal recovery processes and then on to us.

[Stephanie Doris Price]

That's helpful. And then just finally for me. The Regulatory Solutions division obviously also had a very strong organic growth in the quarter. Just wonder if you can break down kind of the main drivers of the growth in terms of new customer wins and additional KYC sales versus maybe a COVID recovery from last year.

[Shawn B. Peters, Executive VP & CFO]

Yes. From a percentage basis, we don't disclose that. But I would say that if you look at prior years, you could sort of equate what we saw in 2021 here was a return to what we would call sort of 2019 and roughly what 2020 would have been without COVID. Everything sort of above that, which is meaningful, is a result of customer acquisition. We've been acquiring customers throughout the COVID period. And now as the economy starts to recover, that's going to really help our results. But from a straight percentage, we don't have that broken out. But we can tell what a normal sort of level of activity from financial institutions or captives are, and that we expect is a recovery from COVID and then the rest is all new customers as well as just organic growth with existing customers.

[Operator]

And our next question comes from Paul Treiber with RBC Capital.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

Just on Technology Solutions. Technology Solutions, what's -- I understand the implementation delays, but how should we think about new customer activity, the sales pipeline? Are you still seeing interest from customers in terms of making new deployments and new investments in solutions there?

[Jeff Stusek, President & CEO]

Yes. Great question, Paul. It's Jeff. As most folks that are dealing with government as a client base, the larger sort of projects that governments would have undertaken certainly are delayed. I think the silver lining in this, from a government and COVID perspective, is governments realize they need to be more online and more available for different service channels than they certainly currently are. We remain optimistic about the Technology Solutions business. But where we are at right now is seeing that sort of impact of COVID and the distraction, I would say, of governments on economy and health initiatives appropriately. So -- and so we looked for that to come back with some strength, possibly even stronger than pre-COVID levels at some point. Again, we do have active projects underway that are really exciting. The IAA project that we have announced and we continue to work through, we think, is substantial and we're excited about. We do have current customers that we continue to support their technology solutions piece, but that's what we're seeing in the sort of short term and then sort of how it looks going forward.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

Okay. That's helpful. Turning to regulatory solutions. You mentioned in the MD&A, the soft launch of Registry Complete. Now just hoping that you can provide some measures or commentary in terms of like the uptake, where you see the uptake going, how quickly you plan to ramp that from a soft launch to more of a broader launch.

[Shawn B. Peters, Executive VP & CFO]

Thanks, Paul. So we did a soft launch in August of last year. And I would say that we probably are considered fully launched now and won't do much more of a formal splash on that. The uptake has been very, very positive. So we did develop that in conjunction with some of our largest customers. So it serves the needs that they're looking for. It's also a great platform to be able to onboard smaller customers. And so we're seeing uptake both from our existing customers as we move them over onto that new platform as well as a great deal of interest from new customers who are smaller and maybe didn't have access to the same sort of technology before. So we think it will continue to be strong and it's well-known in the market right now.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

And just lastly, with -- I know it's a fluid environment, but with restrictions being lifted in Saskatchewan and reopening in general, how do we think about the return of expenses related to travel and entertainment? I mean how quickly or not are you planning on ramping that back up?

[Shawn B. Peters, Executive VP & CFO]

Good question, and something that we're working through sort of continuously. While the use of Zoom and Teams and all of that has been very effective during COVID, there's certainly no substitute for some of the things that we do that would be better in person. Our current view, of course, is impacted by whatever the provincial and federal health guidelines are. But for the balance of 2021, we don't expect that any return to travel or in-person will be material to our results. We might see, as we get into third or even early fourth quarter, some return to travel, but the numbers are not going to be significant to 2021 results. As we move into 2022, we would hope to see a bit more of a return to normal. And as Jeff was talking about in the Technology Solutions, a lot of that business is done in-person, meeting with governments, and so we would expect to see some return to normal, hopefully, in 2022.

[Operator]

And your next question comes from Jesse Pytlak with Cormark Securities.

[Jesse Pytlak, Analyst of Institutional Equity Research]

Just on the Services business, you continue to highlight the new customer relationships that you're winning. I'm just wondering if you can kind of speak to the sustainability of the ability to continue to add more clients here. And then have you noticed just any competitor response to the success that you've been seeing?

[Jeff Stusek, President & CEO]

Thanks for the question, Jesse. Yes, so we're really proud of the tool. As Shawn mentioned, the Registry Complete platform was built in conjunction with a large law firm and sort of they defined the requirements and we built it. It is a fantastic tool that has scalability. It's really easy to onboard clients. We believe that our service proposition, our fair approach to pricing really is a sustainable sort of model. And our customers -- we continue to strive for customer -- high levels of customer satisfaction and that retention. We always say, "We've got to win that on a day-by-day basis," and we are, not just with new customer acquisitions but the retention of others. So we're really comfortable in the space. I wouldn't comment on sort of competitor reaction per se, but there's nothing of significance that is affecting us. And I remain really pleased with the new customer acquisition and the customer retention in our Services business.

[Jesse Pytlak, Analyst of Institutional Equity Research]

Okay. Helpful. And then just kind of coming back to Technology Solutions. You've been very forward about some of the challenges in the business because of the pandemic. But can you just elaborate a little bit more on the extent of some of these delays and how maybe that's changed from what you're expecting 3 or 6 months ago?

[Shawn B. Peters, Executive VP & CFO]

I think I got -- you broke up for us a little bit there, Jesse, but I think you're asking further about the delays in -- versus what we were thinking 6 months ago. Is that right?

[Jesse Pytlak, Analyst of Institutional Equity Research]

Yes, or even just relative to just 3 months ago. It just sounds, some of the wording that you use, it sounds like, like you maybe becoming a bit more -- things just continue to be prolonged maybe more than you expected just 1 or 2 quarters ago. And I'm wondering if that's the case.

[Shawn B. Peters, Executive VP & CFO]

Yes. Yes, I think it is the case. I think we did see some impact from COVID early on. So we were in a couple of projects when COVID hit, and there was an immediate impact then and immediate delay as our government clients or jurisdictional clients had to figure out how to work from home, which meant they also had to figure out how to test if we're putting in new systems and project-manage from home. So we saw an initial delay there. As that technology sort of got set up and people were used to working from home, we did see through the course of the fall more of a return to sort of normal cadence, normal being now online. But as the pandemic has gone on, I think more and more distractions have just caused -- as Jeff was talking about in governments, have caused governments to start focusing on other things and so we've seen delays. I wouldn't call them specifically COVID- or technology-related, just delays, which are actually fairly normal for us in these government contracts. There's quite often unexpected delays or scope changes or those types of things. So I think just in the last 3 or 4 months, those have become a bit more for us, and that's why we see that in the second quarter here.

[Operator]

Your next question comes from Stephen Boland with Raymond James.

[Stephen Boland, MD & Equity Research Analyst]

Again, I just want to thank you for the disclosure in your package. It's very comprehensive. Makes things very much -- very easy to update. I guess the only question I have now is, is your balance sheet, I think it's a record cash balance. Your debt is on a manageable level. Your free cash flow is very strong compared to your dividend. What would you say is your capital allocation plans? And then I have a short follow-up.

[Jeff Stusek, President & CEO]

Thanks for the question, Jeff here. Yes, I think you're very accurate, the stability and the strength of the balance sheet continues to shine through. We're a strong, robust free cash flow business, which we are not upset with, that's a good place to be. I think that continues to create potential opportunities for us and the Board to talk about differences in capital allocation and some changes there. We believe in the growth of the company. But we also, as Shawn and I said right from the beginning of the IPO, that we want to grow the business and look for ways to reward shareholders along the way as well. So I think this quarter was just yet another example of the resiliency of the business and the strength of the business which just gives us some options. We have -- we don't have a change in strategy around capital allocation, but I think this gives us some opportunities to think about that more directly and certainly have that dialogue with the Board on a regular basis. But no change at this point.

[Stephen Boland, MD & Equity Research Analyst]

Okay. And then just the second question. We've seen a lot of M&A activity, not just in registry but real estate conveyance, some here in Canada, but certainly, internationally. And it seems like the multiples that are getting paid inflated quite rapidly. Is that something that you've seen? I presume you evaluate a lot of potential targets, but has it become untenable actually to transact at certain multiples now?

[Jeff Stusek, President & CEO]

It's probably somewhat -- I'd say that's a somewhat accurate sort of depiction of what we're seeing in the acquisition market space. We have a particular strategy around acquisition, which is we look at the right business at the right time for us at the right price, and we're willing to not pull the trigger on an acquisition if we can't fulfill all of those. Our acquisition track record, I would say we're batting 1,000 on that as good acquisitions that have been successful additives for us in the business and we don't plan to change that. And if multiples become, in your words but I would also share it, untenable, we're not going to overpay for a business just because it's shiny, it's in a shiny new bubble. It needs to make sense for us financially. So we're okay if we go a few number of quarters not acquiring something because it didn't fit our criteria, because when we do bring one to market, we do want to land it and we do want it to be successful. So yes, I just -- that's a long answer to, yes, I think you're seeing -- we're seeing some of that in the marketplace. I don't know if this is a short-term trend or this is a long-term. We'll have to get our heads around that. But for now, that's where we're sitting with it.

[Operator]

And your next question comes from Trevor Reynolds with Acumen Capital.

[Trevor Reynolds, VP of Research & Equity Research Analyst]

A couple of questions here. Just on the Saskatchewan market. Obviously, the housing market has been very strong. Just curious if there's any potential headwinds given the dry weather and crops potentially being impacted.

[Jeff Stusek, President & CEO]

Sure. I think there's always that potential. I think it's really important to remember that Saskatchewan's economy is pretty diversified and agriculture, although important, isn't the only driver in the economy. So I think the agricultural sector is likely to get hit a little bit from the dry crop conditions and the like. That might be offset with an increase in things like oil price and activity in the fields that way. So it's hard to speculate. I'm not going to say there isn't going to be headwinds, but we do see strength in this marketplace. And as we alluded to in the comments, we do see a continued robustness in the Saskatchewan business. And so there's potential headwinds, but I'd say they -- that's -- that'd be an isolated view without looking at the entire picture, including potash and other sort of activities that drive the economy, manufacturing and the like.

[Trevor Reynolds, VP of Research & Equity Research Analyst]

Got it. And then on the Registry Complete side, are you actively marketing that? Or is it basically just word of mouth that's driving the increase on that side of things?

[Jeff Stusek, President & CEO]

It's -- we're actively marketing it. We're -- I'll tell you, the number of new customer acquisitions, we don't need to spend a lot of money on marketing because it is sort of marketing itself in many ways. But it isn't in a quiet corner and hopefully, people will come. We have sales teams that are dedicated on selling that. And so that's front and center for us with that space.

[Trevor Reynolds, VP of Research & Equity Research Analyst]

Got it. So you expect the growth to continue on that side of things?

[Jeff Stusek, President & CEO]

Yes. We're really excited about the business, and it's a winner from a customer standpoint. So there's no reason to believe that shan't continue, so.

[Trevor Reynolds, VP of Research & Equity Research Analyst]

Got it. Last one, just current cost structure. Are you comfortable with everything, employment levels? And just maybe touch on that.

[Shawn B. Peters, Executive VP & CFO]

Yes. I think generally we are. We've done fairly well through the pandemic in terms of staff levels. I think we commented last quarter, and the same would hold true this quarter, that we're probably a little light in a couple of areas. And as we see the economy return, we'll probably add a few staff. But again, nothing significant. We've retained most of our staff through the pandemic. And so just need to add a few more in a few select areas to support the growth.

[Operator]

And your next question, we have follow-up from Stephanie Price with CIBC.

[Stephanie Doris Price]

Just one follow-up. When you kind of discussed the delays in government spending in the Technology Solutions division, just curious if you're seeing that more broadly across larger potential government land privatization and things like that.

[Jeff Stusek, President & CEO]

Welcome back, Stephanie. Yes, it's -- yes, there's sort of 2 ways to look at this. And so I think it's accurate to say -- and I have said that the government's focus has been on the economy and health. What COVID has done, though, is really brought to light the -- some of the technology deficiencies that governments are seeing, are facing, and COVID forced that and some governments weren't able to effectively deliver registry operations during COVID with staff at home, which just speaks to having a world-class operator like ISC available. And we actually think in the long term this will accelerate this market, not slow it down. It will probably accelerate in the long term. Just in the short term, as governments are finding their feet, we're seeing some challenges. But I actually think in this role of having a world-class private sector operator running your registries for governments is more logical than ever. And so I actually see this as an emerging marketplace, and it's going to accelerate, not decelerate.

[Operator]

All right. Thank you. There are no further questions at this time. I'll hand the call back to Jonathan Hackshaw.

[Jonathan Hackshaw, Director of Investor Relations & Capital Markets]

Thank you, Jerome. With no further questions, we'd like to once again thank all of you for joining us on today's call and for all your questions. And we look forward to speaking with you again when we report our third quarter. Thanks, and have a good day.

[Operator]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.