Good day, everyone, and welcome to the i3 Verticals Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Today's call is being recorded, and a replay will be available starting today through May 18. The number for the replay is 412-317-0088, and the code is 10155829. The replay may also be accessed for 30 days at the Company’s website. At this time, for opening remarks, I would like to turn the call over to Scott Meriwether, Chief Operating Officer. Please go ahead.

Good morning. And welcome to the Second Quarter 2021 Conference call for i3 Verticals. Joining me on this call are Greg Daily, our Chairman and CEO; Clay Whitson, our CFO; and Rick Stanford our President. To the extent any non-GAAP financial measures discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by reviewing yesterday's earnings release. The Company’s intent is to provide non-GAAP financial information to enhance understanding of its consolidated financial information prepared in accordance with GAAP. This non-GAAP information should be considered by each individual in addition to, but not in lieu of, the financial statements prepared in accordance with GAAP. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including statements among others regarding the Company’s expected financial and operating performance and the expected and potential impact of the COVID-19 pandemic. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. You are hereby cautioned that these forward-looking statements may be affected by the important factors among others set forth in the Company’s earnings release and in reports that are filed or furnished to the SEC including risks and uncertainties associated with the COVID-19 pandemic. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. Finally, the information shared on this call is valid as of today’s date and the Company undertakes no obligation to update it except as may be required under applicable law. I’ll now turn the call over to the Company’s Chairman and CEO, Greg Daily.

Thanks, Scott. And good morning to all of you. We are pleased to report our second quarter 2021 results, as we set new record highs across the board. Our net revenue, adjusted EBITDA, software revenue, payment volume, and integrated volume were all at new highs. We exited the quarter with incredible momentum and are excited about what the future holds. Despite facing a more difficult year-over-year comparison as the pandemic did not affect our business until mid-March 2020, we demonstrated substantial growth in 2020. We could not be more pleased with what we delivered in the second quarter as our adjusted net revenue increased 26% to $49.4 million in the second quarter and our adjusted EBITDA increased 25% to $12.4 million when compared to the second quarter of 2020. Year-to-date, our software-related revenue has increased to 36% of our net revenue, and our recurring software revenue has more than doubled since the second quarter of 2020. Sixty-nine percent of our payment volume in the second quarter was integrated. Recurring revenues represent more than 80% of our net revenues. This is the first quarter that our adjusted EBITDA from the proprietary software segment exceeded the adjusted EBITDA from our Merchant Services segment. We are delivering on our software-based focused strategy and this quarter is a major milestone in our company's development. Our long-term vision is to be a leader in software and payments, and we have been making major advancements in achieving our vision. In particular, the Public Sector vertical delivered record growth. This vertical now represents around half of our company. I feel like we hit the nail on the head by betting big on this vertical. Our acquisitions in this space have been phenomenal and I'm continually impressed by the talent we have on our team. The Public Sector vertical has tremendous opportunities for expansion both in technological spending and in payments. And we're in the right place at the right time. We expect the federal stimulus under the American Rescue Plan Act will accelerate software advancements within the Public Sector vertical and will provide significant opportunities for us to partner with our customers over the next few years. The $350 billion available under this plan is available for both state and local governments, and our software meets many of the needs the rescue plan was intended to help local governments address. We have a solid pipeline of projects to deliver to our customers and we anticipate that the pipeline will continue to grow as our customers access the funds available to them under the rescue plan. We've seen an increased cross-selling of products within public sector, as our product teams and sales teams begin to converge. For example, one of our Texas-based products has over 200 court customers in Texas. During 2021, this product has now been sold in Arkansas, Georgia, and Ohio. This momentum in new states opens up hundreds of new court opportunities for this product. Additionally, one of our court case management systems has a significant presence in Georgia. During the past quarter, this software expanded into Alabama, Mississippi, and has opened up new markets for us in that territory. We have also significantly expanded our geographic footprint within the public sector. We now have statewide agency or court agreements in California, Texas, Michigan, Florida, Delaware, Alaska, Minnesota, Wyoming, Arizona, Kansas, North Carolina, and Tennessee. Our public sector product teams have made great advancements and integrated many of our products such as law enforcement and paperless court products within our court platforms. We expect continued growth, as we increase our distribution of these integrated products. We've been very busy on the M&A front this year, as we pursue our vertical-focused strategy. This quarter included two months of BIS, our largest acquisition to date, and the first full quarter of ImageSoft. In April, we announced two acquisitions in the healthcare software space. We have now made three healthcare acquisitions. We're confident in our current product suite, which we will continue to develop, and we are looking forward to expanding our presence in that vertical. We most recently completed an acquisition of software in the utility space. This company serves Tier 1 sized customers and will marry nicely with our existing utility billing platform. Rick will provide more details on the most recent acquisition in a moment. We're excited about what we can achieve in that market going forward. Across the rest of the company, we saw continued improvement and reason for optimism. Our non-profit vertical continues to outperform expectations as it continues to grow within the Text-to-Give product. Our Merchant Services sector continues its improvement sequentially quarter-over-quarter. Our Education vertical saw an uptick as more schools begin in-person scheduling, although this vertical remains suppressed. Within the hospitality sector, we are the number one reseller in the NCR channel and recently have completed the largest Aloha Essentials installation in the history of that product. Overall, we saw a significant payment volume rebound in March and it continued in April and the first part of May. The progress in vaccinations and reduction in government-mandated restrictions had a direct effect on our customer base. As the restrictions continue to ease nationwide, we expect a continued recovery in our payments volume and revenue. We also anticipate software sales to accelerate from more in-person demos and trade shows. I cannot be more excited about the momentum that we carry into the close of our fiscal year. Now, I'll turn the call over to Clay, and he will provide some more details on our second quarter fiscal performance, and then Clay will turn the call over to Rick for an M&A update.

Thanks, Greg. The following pertains to the second quarter of fiscal 2021 which is the three-month period ended March 31, 2021. Please refer to the press release and slide presentation titled Supplemental Information on our website for reference with this discussion. We had a great quarter with record adjusted net revenues and adjusted EBITDA. For the second quarter ended in March, adjusted net revenues increased 26% to $49.4 million from $39.3 million for Q2 2020, reflecting organic growth and acquisitions. It feels great to cite a number like 26% again and to return to somewhat normal economic activity. Like most of our peers, we experienced a weak January and February with strong March and April. Almost all of our metrics we track are headed in the right direction. For companies we've owned for at least two years, we have recently been comparing our monthly payment volumes to 2019 periods because 2020 comparisons have distortions stemming from the pandemic. For March and April, these companies increased volumes in the mid-20%. Our integrated payments percentage hit a new high of 59%, helping our adjusted net revenue yield improved to 116 basis points for the quarter from 110 basis points for Q2 2020. Adjusted net revenue yield is defined as adjusted net revenues divided by payment volume. Software and related services continued strong growth, representing 36% percent of adjusted net revenues for the first half compared to 23% for the first half of fiscal 2020, reflecting the heavy software weighting of recent acquisitions. This percentage gained despite the beginnings of a rebound in payments. Acquisitions almost exclusively in the Proprietary Software segment contributed $11 million to growth and adjusted net revenues for the second quarter. i3 or IPOS declined $1 million, reflecting not only the COVID impact on California, but also our ongoing transition to a SaaS offering. The purchased portfolios declined $0.3 million. Adjusted EBITDA increased 25%, in line with adjusted net revenues to $12.4 million for Q2 2021 from $10 million for Q2 2020. The March quarter marked a milestone in our history when the adjusted EBITDA from our Proprietary Software segment surpassed the contribution from the Merchant Services segment. Our Proprietary segment continues to be the growth engine for the future. Corporate expenses increased about $500,000 in Q2 2021 compared to Q2 2020, reflecting higher compensation costs, but increased at a slower pace than adjusted net revenues, leading to a decline in the expense ratio from 8.2% for Q2 2020 to 7.5% for Q2 2021. We had a one-time gain of $2.4 million we recognized in Q2 from a minority investment in a company named AxiaMed. We invested $100,000 in 2016 and received cash from the sale of $2.5 million in early April. We have excluded this gain from adjusted revenues, adjusted EBITDA, and pro forma adjusted diluted EPS. Pro forma adjusted diluted earnings per share increased to $0.23 for Q2 2021 from $0.20 for Q2 2020. Again, please refer to the press release and supplemental slide presentation for a full description and reconciliation. Segment performance: In our Proprietary Software and Payments segment, adjusted net revenues increased 70% to $24 million for Q2 2021 from $14.1 million for Q2 2020, principally reflecting growth in our flagship public sector vertical. The results included ImageSoft for a full quarter and BIS, our largest acquisition to date for two months. Our non-profit vertical continued to outperform expectations with its text-to-give technology and healthcare turned in a solid performance. Adjusted EBITDA increased 47% to $8.6 million for Q2 2021 from $5.8 million for Q2 2020 reflecting mainly public sector growth, but also the non-profit and healthcare acquisitions. For Q2, Public Sector represented over 90% of adjusted EBITDA in the segment. The adjusted EBITDA margin fell to 36% for Q2 2021 from 41% for Q2 2020 reflecting a drop in education profitability and the inclusion of ImageSoft, which carries a margin below 20%. As expected, the margin did improve sequentially from 30% in Q1 with the inclusion of BIS, which carries a margin close to 50%. The one laggard in the segment remains education, although schools are beginning to return to the classroom. The USDA has extended its free lunch program for all students through next year. Going forward, we will need to rely more on software revenues and non-lunch fee payments, but we believe education will return as a high-growth vertical. Fortunately, public sector is by far our largest vertical and is over-performing sufficiently to overshadow any weakness in education. With the resumption of trade shows and in-person demos we think every vertical in our Proprietary segment has room to run. Net revenues for our Merchant Services segment increased 1% to $26 million for Q2 2021 from $25.7 million for Q2 2020. The numbers for Merchant Services were muted for the quarter, but they masked an underlying trend. January and February were weak, while March and April have been strong. Vaccination progress and less government-mandated restrictions have favorably impacted our customer base. Beginning in March, California resumed permitting indoor dining with a phased occupancy approach. Our SaaS transition in hospitality is progressing more successfully than expected. We think the transition will ultimately lead to a better business model with more favorable competitive positioning and better profit margins. Our B2B vertical has been resilient during the pandemic and benefited in March and April from higher activity in its customer base. Adjusted EBITDA for our Merchant Services segment increased 3% to $7.6 million for Q2 2021 from $7.3 million for Q2 2020. The adjusted EBITDA margin was 29% for Q2 2021 versus 28.5% for Q2 2020, reflecting higher revenues in relation to fixed costs. Balance sheet: Our strong balance sheet has allowed us to continue to execute our acquisition strategy. On March 31, we had $83 million net of cash borrowed under our revolver which is a $275 million facility. The face value of our convertible notes are $117 million. Our total leverage ratio at quarter-end which includes the convertible notes was 3.8 times, while the current constraint is 5 times. After quarter-end, we have paid approximately $37 million for three acquisitions. The multiple paid on the three acquisitions conformed to less than 10 times adjusted EBITDA. We expect our total leverage ratio to remain below 4x for fiscal Q3 our June quarter. The interest rate for the convertible notes is 1%, while the interest rate for the revolver is currently less than 4%. Over time, we expect to convert roughly two-thirds of adjusted EBITDA into free cash flow which can either be used for more acquisitions or debt repayment. Outlook: Looking forward, we have increased our outlook for fiscal 2021. It excludes future acquisitions and transaction-related costs and adjusts for write-downs of deferred software revenues in connection with purchase accounting. Adjusted net revenues are projected to be $204 million to $220 million; adjusted EBITDA $52 million to $58 million; depreciation and internally developed software amortization $4.25 to $4.5 million; cash interest expense $4.75 million to $5.25 million; pro forma adjusted diluted shares $33 million to $34 million; and pro forma adjusted diluted EPS $0.98 to $1.08. From a vertical standpoint, we have not updated our percentages this quarter. But I want to highlight that our Public Sector vertical remains the clear leader representing roughly half of our current business and over half of our acquisition pipeline. Healthcare has become our second largest vertical resulting from three acquisitions during the past year that all lead with software. Changes to our presentation: In response to the pandemic and discontinuing guidance last spring, our supplemental presentations included monthly charts of payment volume and software revenues. We've now resumed guidance and feel like the economy is more stable and predictable now, so we have discontinued the monthly data. We have one more change that will commence next quarter our fiscal Q3 ending in June. We have historically always included in our reported adjusted net revenue adjusted EBITDA and pro forma adjusted diluted EPS and adds back to reverse the effect of purchase accounting write-downs of deferred revenue in connection with software acquisitions. We have also always included an estimate of this same adjustment excluding future acquisitions in our guidance for adjusted net revenue adjusted EBITDA and pro forma adjusted diluted EPS. The earnings release we issued last night which includes the guidance I just mentioned includes this adjustment to these metrics consistent with our historical approach. Our historical practice has been based on a belief that such an adjustment was necessary for investors to understand an acquisition's performance in the first year and its true growth in the second year. The adjustment is consistent with the treatment and the financial covenants of our senior secured credit facility, as well as adjustments made by some of our peer companies and their disclosures. However, as part of ordinary course SEC compliance process we have agreed with the SEC to discontinue adjusting net revenue EBITDA and pro forma diluted EPS to remove the effect of purchase accounting write-downs of deferred revenue beginning with our third fiscal quarter ending June 30. As a result of this change in the third quarter earnings release we will present adjusted net revenue, adjusted EBITDA and pro forma adjusted diluted EPS without the impact of this add-back for the three months and nine months ended. As we believe the adjustment continues to represent material information to investors, we will continue to provide it separately. As part of our earnings release, the non-GAAP revenue of mid-end as a result of the purchase accounting write-down of deferred revenue. We will also continue to provide an estimate of this amount for the remainder of the fiscal year along with our outlook. Please refer to the final slide in the presentation titled Supplemental Information on our website for an illustration of how the presentation will change in the third quarter. I'll now turn the call over to Rick for an update on the company and M&A activity.

Thank you, Clay. Good morning, everyone. I'll start this morning with an update on a few operational items including updates on things I've addressed on previous calls. We continue to make steady progress on our unified product offering or UPO in our Public Sector vertical. We have recently designed a cohesive product category marketing package for use across all public sector entities. This marketing package will assist with client education and cross-selling efforts. There are three levels of cross-selling. One, our direct sales team marketing to and coordinating solution sales across entities; Two, key product category additions by unit ensuring new product categories are embraced at the unit level and are supported across all multiple entities. For example, kiosks that came with the BIS acquisition are being deployed across multiple product categories by multiple entities. And three, embedded proprietary software. We are embedding i3 Verticals proprietary software into core offerings and seamlessly bundling them as part of city county and state solutions. We can already see this working. In the past quarter, we secured contracts in five new states. Contracts in three of the five new states were driven by UPO activity. We are motivated and excited by these early UPO wins and our cross-selling continues to gain momentum. On the ISV front, our total number of signed and integrated ISVs at the end of the second fiscal quarter was 78 with three more in the process of integration. Our pipeline for ISVs continues to grow quarter-over-quarter and we're actively pursuing additional integrations. I'll now speak relative to our M&A efforts. On Monday, April 5, we announced two additional acquisitions in our Healthcare vertical. The first acquisition is of the business based in the upper Midwest that provides software and services in multiple states to healthcare customers. The software improves operational efficiencies, so customers can securely access patient information and streamline the process from admittance to discharge. Their solution accelerators are designed to optimize business processes and drive digital transformation. Their products include accounts payable, accounts receivable, contract management, and human resources. The second acquisition is of a business that offers medical practice management software and other related solutions to its customers. This 30-year-old business is headquartered in the Southeast and serves customers across the country. Their products include a practice management system, revenue cycle management, a patient payment portal, inventory management, and appointment reminders. As you know, many of our recent acquisitions have been in the Public Sector vertical. However, these two April acquisitions with a combined 51 individuals will help us build momentum in our existing Healthcare vertical, which is an extremely large market that we would like to develop further as we move forward. Yesterday, we announced our latest acquisition. This business is located on the East Coast and has customers across the country. This is a public sector deal with a focus on utilities, specifically gas, power, and water. Notably, they have some of the largest utility companies Tier 1 companies across the country in major metropolitan areas. This deal brings with it several additional products to cross-sell into our existing utility line of business. The company is 18 years old and comes with 45 employees and 53 contractors. Their product and services include a deep customer portal for improved customer experience. They specialize in cutting-edge digital engagement. A CSR product that allows for optimization and life extension for utilities' existing CIS or Customer Information System, mobile application development that is device agnostic, CIS data integration between multiple meter vendors, back-end systems and portals, financial balancing and rate case analysis and mobile service order dispatching. We continue to be disciplined in our approach and all three deals were completed within our standard multiple range. Finally, our M&A pipeline is still very healthy and has an emphasis on public sector, healthcare, non-profit, and education, and we look forward to sharing more on the acquisition front in the near term. This concludes my comments. At this time, we'll open the call for Q&A please.

We will now start the question-and-answer session. Our first question will be from John Davis of Raymond James. Please proceed.

Good morning, everyone. I wanted to start by discussing the trends from March and April compared to 2019. If I understood you correctly, Clay, you mentioned mid-20s growth on a two-year stack basis, which suggests a significant acceleration from your historical organic growth in the high-single digits. I'm curious about the source of this strength. How much of it do you believe is driven by stimulus? Additionally, are you anticipating around 10% growth once we move past this period, or any insights on current trends would be appreciated.

It's difficult to determine how much the stimulus contributed to this. This year, when comparing the COVID periods, I believe achieving double-digit growth will not be a challenge. The real question is what growth will look like a year from now when we compare to these current periods. We are aiming for double-digit growth. While our long-term guidance remains at high-single-digit growth, that may change as we approach those timeframes.

Okay. That's helpful. And then just on the net revenue yield. Obviously, you guys are shifting more towards software. I think if I look back at 2020, it was about 105 basis points. It came in at 116 this quarter. I think some volume comes back maybe that normalizes, but is it right to think that that net revenue yield should be higher or potentially creep higher over time maybe not at 116 but maybe 110 to 115 on a normalized basis given all the addition of software revenue?

Yeah. I don't see any reason for it not to; in fact, this quarter we had a fair amount of ACH associated with back-to-school at our university, which would have had a little bit better yield this quarter.

Okay. Greg, you mentioned the American Rescue Plan Act and the funds available. How long do you think it will take for those governments to receive the money and, more importantly, start making the upgrades that could generate revenue? Are we looking at a timeframe of six to 12 months, or 12 to 24? I'm just curious about how soon you expect to start seeing some revenue from it.

I think we'll see some results by the end of the year. We reached out to all our customers when it first came out, and they were unaware of it. That was about seven or eight weeks ago. The increase in activity has been significant over the last three weeks. So, I expect the end of the year to be very busy for us. Additionally, there will likely be a second round starting as early as next spring.

Okay. And then last one for me, guys. Clay, just remind us, I think when you updated education, I think it was 5% EBITDA last quarter. And I think historically you said lunches were maybe 50% of revenue in that sector. So just curious, A, just want to double-check those numbers, and also want to clarify, the free lunch program has been extended through next year or just through the end of this calendar year?

Through the next school year, our education group generated approximately $2.5 million in net revenues with over $600,000 in EBITDA this quarter. This segment has become a relatively small part of our company, less than 5% currently, as government and healthcare revenues have increased. We anticipate this trend to continue over the next several quarters, except during the summer months when schools are not in session. We do not expect significant changes in this trend for the fourth quarter.

The next question comes from Peter Heckmann of D.A. Davidson. Please go ahead.

Hey, good morning. I just wanted to get a little bit more color if you could on signing up new independent software vendors. How does the increase in i3's proprietary software play? Does that increase the attractiveness of integrating for some vendors? And conversely for some vendors, is it a negative point in that they view us as partially competition?

Yeah, Peter, we haven't seen any disruption in our ability to sign up ISVs. They don't see us as a competitor. As a matter of fact, our technology infrastructure is seen as a positive; the thing is that we can bring to the table for them. So we're not getting any pushback if that's what you're meaning to say.

Yeah. That was right. I was trying to figure out if there were some that viewed it as a bit of a conflict or conversely do others view it as an advantage and maybe a better reason to integrate with i3 versus maybe another vendor.

Yeah. Again, it's all about the technology. Our verticals are so large. I'm not on the ground every day, but I haven't heard any pushback from our ISV partners to date.

Great. Great. And then Clay, just on the deferred revenue write-down figure, does that include the three deals that have been announced so far in the fiscal third quarter?

The guidance we provided includes an estimate for the entire year and accounts for the three deals we just announced.

The next question comes from George Mihalos of Cowen. Please go ahead.

Hi, guys. Good morning and congrats on the solid results. Clay, you touched on this, and I think you answered it, but just as a point of clarification, if we just look at the payment volume within Proprietary Software, that increased more than two times sequentially. I understand there's probably some BIS volume in there, but it also sounds like maybe you had a big contribution on the education side from higher education. I'm just curious, can you kind of break that out for us give us a sense of what drove that increase? And it also sounds like sequentially, the revenue yield should go up in the segment as we go into the third quarter. Is that a fair assessment?

Yes. So last quarter or the second quarter of 2020, we only had $44 million of ACH volume in that segment. And for this quarter 2021, we had $196 million in that segment. That’s the back-to-school activity for the university, which happens twice a year. So yes, I think it is fair that revenue yield could go up this coming quarter.

Thank you for that. Regarding the Education sector, Rick mentioned that it ranks third in terms of prospects in the pipeline. I’m curious if you're considering an acquisition in education due to the uncertainty surrounding school lunches next year, or if you’re looking at opportunities that focus more on private schools or higher education. Are you exploring options beyond the core market you have typically served?

Yes, it's a good question, George. As I think about the pipeline and the prospects that are in it, there's no lunch today. Most of it is what I would call marketplace, which is other payments that take place in the school, whether it's K-12 private. Then, there's ancillary products that we wanted to have for several years now like nutritional software and that sort of thing. So, I can't think of one that has lunch today. That doesn't mean we won't talk to them, but I don't see that being an issue with what we've got in our pipeline today.

Okay. That's helpful. And just one last one. Clay, if you can break out for us the percent of revenue today that is non-payments related? So license fee or SaaS? Thank you. And I'll hop off, guys.

Okay. We provided a six-month figure of 36% for software revenues, 57% for payment revenues, and 7% in the other category, which includes equipment and similar items. Is that what you needed, George?

The next question comes from Chris Donat of Piper Sandler. Please go ahead.

Good morning, everyone, and thank you for taking my questions. I would like to discuss the ACH volume from education moving forward. Can I use the $196 million figure from the quarter as a rough estimate, assuming that there will be an additional $200 million increase every other quarter due to tuition-related payments? Is that an appropriate way to approach this, or am I misunderstanding it?

No, that's exactly right. One of them happens in January and one of them happens a little bit in July, but mainly August, so in our fiscal fourth quarter.

Okay. Given the economic recovery and the return to in-person sales and trade shows, do you anticipate a significant increase in sales, or will it be a more gradual process as you engage with customers who may have been reluctant to meet? Is there a substantial shift occurring with your customers?

I feel like the last 30 days have been like a rock concert, and I think that will continue for another six months. There's definitely some pent-up demand. We have also increased our offerings through acquisitions and our internal efforts, such as adding more salespeople. It's been crazy the past 30 days, and I don't expect it to slow down until Thanksgiving.

Okay. Sorry, I'm just trying to convert rock concert into my model, but I'll figure it out.

It's huge.

Yes, it sounds good and it's good to hear. And then, just last question from me, from a modeling perspective, as we look at the GAAP income statement. In the quarter you had a downtick from the fiscal first quarter in other cost of revenues, but an uptick, a pretty meaningful one in SG&A. Just anything to call out there? Is that more of the timing acquisitions and where they're landing on different expense lines or anything else?

BIS is more focused on payments rather than software, which will affect some of the financial figures, and we will report three months in the upcoming quarter instead of two. Regarding the corporate line, we have restarted bonus accruals this quarter and are beginning to reinvest with some selective hires. Some of our companies are worried about keeping up with installations if this trend continues. We want to generate as much revenue as possible. After being very cautious with compensation and hiring during COVID, we are now starting to reinvest.

Okay. These new hires are focused more on implementations rather than sales, as it seems that's where the main activity is happening.

Yes, it's somewhat varied. We laid off 12% of our staff last spring, and some of that was necessary. We've been delaying hiring for a year, and we are finally allowing them to fill the positions they wanted to.

And the next question will come from Josh Beck of KBCM. Please go ahead.

Hey. This is Maddie Schrage on for Josh. First, I was wondering if you guys could talk about the timeline that you expect the American Rescue Plan Act, to provide a tailwind on your government modernization projects? And secondly, I was wondering if you could provide an update on how you expect the vertical mix to evolve this coming year. Thanks.

So, on the stimulus money, we're thinking toward the end of the year, the December quarter, it's hard to really predict exact, but we are seeing more RFPs, more demos, more closed sales that usually take us three to six months to install. So, I think you'll see that quarter pick up. And it should continue for the whole year of 2022. Our software package is very well received with our existing customers, and new customers. So we're optimistic. I think we'll know a lot more by the end of our June quarter.

For the second part of your question, I think, next year you'll see more public sector deals. Over 50% of our pipeline is public sector. We did eight deals in the last eight months, and six of those were public sector and two in healthcare. So I'm looking for that momentum in public sector to continue.

Yeah, I think public sector will be at least 60%, especially until education bounces back, and so that will change a little bit. It's all good.

Super, helpful. Thanks, guys.

This concludes our question-and-answer session. I would like to turn the conference over to, Greg Daily for any closing remarks.

Thank you, guys for joining us this morning. We do feel as if the pandemic is over. We're seeing momentum in all of our verticals, except education. But thank you for your interest. And stay tuned. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.