Mastech Digital, Inc. Q1 FY2022 Earnings Call

Greetings. Welcome to Mastech Digital Incorporated First Quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. It is now my pleasure to introduce your host, Jennifer Ford Lacey, Manager of Legal Affairs for Mastech Digital, Inc. Thank you. Ms. Ford Lacey, you may begin.

Thank you, operator. And welcome to Mastech Digital's First Quarter 2022 Conference Call. If you have not yet received a copy of our earnings announcement, it can be obtained from our website at www.mastechdigital.com. With me on the call today are Vivek Gupta, Mastech Digital's Chief Executive Officer, Jack Cronin, our Chief Financial Officer, and Ganesh Venkateshwaran our new Chief Executive Officer of the Data and Analytics services segment. I would like to remind everyone that statements made during this call that are not historical facts are forward-looking statements. These forward-looking statements include our financial growth and liquidity projections, as well as statements about our plans, strategies, intentions, and beliefs concerning the business, cash flow, costs, and the markets in which we operate. Without limiting the foregoing, the words believe, anticipate, plan, expect, and similar expressions are intended to identify certain forward-looking statements. These statements are based on information currently available to us and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements, including those listed in the company's 2021 annual report on Form 10-K, filed with the Securities and Exchange Commission and available on its website at www.sec.gov. Additionally, management has elected to provide certain non-GAAP financial measures to supplement our financial results presented on a GAAP basis. Specifically, we will provide non-GAAP net income and non-GAAP diluted earnings per share data, which we believe will provide greater transparency with respect to the key metrics used by management in operating the business. Reconciliations of these non-GAAP financial measures to the comparable GAAP measures are included in our earnings announcement, which can be obtained from our website. As a reminder, we will not be providing guidance during this call nor will we provide guidance in any subsequent one-on-one meetings or calls. I will now turn the call over to Jack for a review of our first quarter 2022 results.

Thanks, Jen. And good morning, everyone. I'm happy to say that the first quarter of 2022 was a continuation of our strong financial performance achieved in 2021, considering that it has historically been a challenging quarter for us. Reflective of typical high project completions at the end of the previous year and high benefit costs through the repayment of payroll taxes. At the start of the new year for Q1 2022, financial results were very satisfying. Revenues for the first quarter of 2022 totaled $59.8 million and represented an organic increase of 20% over Q1 2021 revenues. This revenue performance was a new record for our company, as both business segments showed sequential revenue growth during the quarter. Our Data and Analytics services segment contributed revenues of $10.2 million, which represented organic growth of 15% over last year's Q1 revenues. Order bookings totaled $11.8 million. Backlog increased from last year, and our pipeline of opportunities continues to show promise. In our IT staffing services segment, revenues of $49.6 million represented a record performance and a year-over-year increase of 21% over Q1 2021 revenues. Activity levels continued to remain elevated during the first quarter as we increased our billable consultant headcount by 3%. Gross profits in the first quarter of 2022 totaled $15.9 million, which was 24% higher than in the corresponding quarter of 2021. Gross profits as a percent of revenue in Q1 2022 was 26.7%, compared to 25.7% in the 2021 first quarter. GAAP net income for Q1 2022 was $2.3 million, or $0.19 per diluted share, compared to $1.2 million, or $0.10 per diluted share in Q1 2021, a year-over-year improvement of approximately 90%. Non-GAAP net income for Q1 2022 was $3.3 million, or $0.28 per diluted share, compared to $2.2 million, or $0.19 per diluted share in Q1 2021, a year-over-year improvement of approximately 48%. SG&A expense items not included in non-GAAP financial measures, net of tax benefits, include the amortization of acquired intangible assets and stock-based compensation. These non-GAAP items are detailed in our First Quarter 2022 earnings release, which is available on our website. Addressing our financial position, on March 31, 2022, we had outstanding bank debt, net of cash balances on hand of $4.8 million, no borrowings under our revolving credit facility, and cash availability of $35.5 million, which excludes $20 million of additional term loan capacity under our current credit facility. I'll now turn the call over to Vivek for his comments.

Good morning, everyone and thank you, Jack for the detailed financial review of our operating results for the first quarter of 2022. Let me start by saying that I am very pleased with our Q1 2022 financial performance. As Jack mentioned, the first quarter has historically and seasonally been a tough quarter for both of our business segments from a financial perspective. However, this quarter was different. Both of our business segments were able to execute at a high level during the quarter. Despite several external challenges, the IT staffing services segment achieved record results in both revenues and gross margins, and our Data Analytics services segment achieved solid revenues and bottom line results. I am particularly proud of our Data Analytics team, who collectively kept the ship sailing smoothly without the benefit of having Chief Executive oversight in this business segment during the quarter. I have a couple of comments to make around the workforce environment that we're facing and about an exciting new service offering that we recently rolled out to the market in our IT staffing services segment. On a macroeconomic basis, we continue to deal with the great resignation and the challenges it presents to all businesses around the globe. At Mastech Digital, we have made it a priority to not only retain our top talent but also to opportunistically seek out new talent that is currently in the market today. Like most services companies, we are squarely in the people business. We see the potential of adding and upgrading our talent base as a positive side of the great resignation, and we will continue to treat this challenge as an opportunity at Mastech Digital. Next, I want to give you an update on our new service offering, offshore staffing. At our last earnings call in February 2022, I said a few words about this new service offering that we introduced to the market in the latter part of Q4 2021. Offshore staffing is largely a step-up variant of our very successful mass remote offering. As you're all aware, COVID-19 forced companies to rethink the advantages of having employees, including their contingent workforce, working remotely and, by doing so, gaining access to the best talent available beyond self-imposed limitations around geographic locations. The adoption rate of the work-from-anywhere model has been tremendous, and we believe the market is now ready to embrace our offshore staffing model that continues to deliver top-notch talent but at price points that will generate material cost savings for our customers over the domestic model. The rollout of this new service offering in late Q4 went very well, and the offering was one of the contributors to the record gross margin performance of our IT staffing services segment in the first quarter of 2022. We believe this model is both scalable and will provide our customers with an enhanced value proposition. And now it gives me immense pleasure to introduce to you our new Chief Executive Officer of the Data and Analytics Services segment, Ganeshan Venkateshwaran. I can tell you that our Board conducted an exhaustive search for this critical role, leaving no stone unturned to find the right leader to take Mastech Info Trellis to the next level in its lifecycle. As our search progressed, it became clear to me and our Board that Ganeshan was the ideal leader to take our Data and Analytics business on its next journey. Generally, our organization is excited to have Ganeshan on board, who has already hit the ground running in his first month with the company. So without further ado, I will now turn the mic over to Ganeshan Venkateshwaran, our new CEO of Mastech Info Trellis.

Thank you, Vivek and good morning, everyone. It's a pleasure to be here today talking to you on my first Mastech Digital Earnings Call. As you are aware, I joined Mastech Info Trellis as the Chief Executive Officer on March 28, so I'm quickly approaching my first full month with the company, and somehow it seems a lot longer than that. Let me start by giving you a bit of my background and experience. Prior to accepting the CEO position at Mastech Info Trellis, I held executive leadership roles at various technology companies. From an academic standpoint, I hold an engineering degree and business management from the Indian Institute of Science and the Wharton School of Business. Throughout my career, I have been involved with advanced technologies and enabling digital transformation for enterprise clients. The pandemic has only accelerated the need for digital enablement, forcing CXOs across enterprises to think of cross-functional and the connected experience value chain for achieving enterprise success. I am a hands-on leader and bring a strong blend of technology, execution, and management experience to drive strong team collaboration while delivering growth and profitable outcomes. I was attracted to Mastech given the background and capabilities that Mastech Info Trellis has built around the data and analytics practice, covering all aspects of end-to-end data, which includes data management, data engineering, and data science, combined with a layer of enabling customer experience, which came as a part of the AmberLeaf acquisition that Mastech Info Trellis made. These positions Mastech Info Trellis to engage with both technology stakeholders and business stakeholders, which is a very strong position to be in. Also, I see the variety in experience that the Board brings, starting from scaling larger businesses, depth in technology, and making successful large acquisitions in the past as an advantage, as well as a leverage for me as I go after opportunities to support hyper-scaling. I believe I have a solid opportunity to make a profound difference at Mastech Info Trellis. Next, I would like to share my views on some of my first impressions of the company. It's almost one month in. You know, when joining a new organization, particularly in a senior leadership role, your first instinct is to find out if anything is broken and needs to be turned around. I'm pleasantly surprised that is not the case at Mastech Info Trellis. I have been very impressed with the people that I have met, the strong work culture and work ethic that they demonstrate, and more importantly, the burning desire to be successful. I found the culture to be very collaborative, open to change, and focused on success and innovation. Also, I have found the competencies of our delivery center in Chennai, India, to be outstanding, which explains the company's track record of near 100% customer retention. However, what needs to be done is to bring together an integrated and holistic view of driving enterprise customer experience. Starting with digital strategy and roadmap, to enabling technology solutions and providing managed services. I will be working closely with my teams to shape this go-to-market approach. What this will essentially mean is a premium positioning at the upstream end of the enterprise value chain and being able to command a premium pricing. In summary, the digital transformation services space is exciting, and I know it very well and have been hands-on. I'm looking forward to leading Mastech Info Trellis in its journey ahead by enabling an industry-leading learning experience for our employees, capturing the growth rate, and creating substantial value for our shareholders. Thank you. And back to you, Vivek.

Thanks, Ganeshan. Operator, this concludes our prepared remarks. We can take questions now.

Thank you. Our first question is from Lisa Thompson with Zacks Investment, please proceed.

Good morning. Nice to see a great Q1 and record revenues. That's pretty exciting. I have to say it seems, I don't know if the word is ironic, that staffing is doing better than data and analytics. Do you expect with a new CEO that might change or is it going to be competition on who can grow faster?

Hi Lisa, nice to hear your voice. I would actually like to have a competition there; that sounds pretty exciting. On a more serious note, I see no reason why we shouldn't see scaling happening on the data analytics side. We're very excited to have Ganesh on board, and he has the right background and experience to take it forward. I believe we will see some healthy competition in the future.

Okay, any prediction on when that might crossover to them growing faster?

Lisa, as you know, we don't make any projections. But I think, as Ganesh mentioned, he has barely been in for a month. We need to give them a bit of time, and I have no doubt as the year progresses we'll start seeing the uptake and the scaling happening on the data analytics side.

Okay. Great. A couple of financial questions. It looks like in Q1, SG&A was a little bit higher than at least I expected. Is there anything odd going on there this quarter? Do you expect that number to come down from the 12.6 or not?

Hi, Lisa. You know what? I think this 12.6 is likely to stay put in Q2 and increase a bit in the second half of the year.

Okay.

I don't think there's anything odd. We had a lot of variable expenses that increased just to support our revenue growth.

All right. In the past, you mentioned that margins benefited because consultants weren't traveling. Are they traveling now? Will that impact gross margins?

Go on, Jack.

I think traveling is going to open up a little bit. And on the D&A side, it could have some impact on gross margins, but I don't anticipate it to be a huge number. As far as SG&A expenses, I think in Q1 we did have some travel costs that exceeded last year's Q1, so that's part of the increase in overall operating expenses that contributed to that $12.6 million.

All right. Just to clarify, when you said that the consultants went up by 3%, you meant that sequentially to like 1305?

It's a 3% increase for the quarter.

Sequentially, right, from Q3?

Yes, right.

All right. And then one last question is, I noticed when reading the 10-K that you went from having like 48% H-1B visa people down to 26%. Can you talk about how that happened and if that's going to stay that way?

Lisa, if talking about, sorry, it wasn't very clear. You're talking about the H-1B percentage?

Yes.

Yeah, I think it's just a sign that we are placing a lot more knowledge worker people right now on billing. And we don't see any reason why that kind of ratio will not continue. It should continue. We should continue to see the H-1B percentage coming down over a period of time, as the other side of the non-H-1B side of the business keeps picking up.

Does that save you any money or how does that change anything?

Probably it does change; it does save us some money. There will always be visa processing fees involved, but I think at a larger level, it just means that we are addressing a larger pool of resources across the country, and the mass remote strategy is helping us as well. So it just helps us address the needs of our customers much better by going after larger pools.

Okay. Great. Thank you. That's all my questions.

Hi Lisa, this is Ganesh here. Nice to have you on this call. And to your earlier question on the D&A business, a couple of points from my side in addition to what Vivek has covered. One, it is always nice to have a healthy competition, so be prepared for it. I first want to commend the team that was holding the fort in the absence of a Chief Executive. I think the teams have done a tremendous job. But coming to the market itself for D&A, the data analytics market is booming. The market is expected to grow at a CAGR of around 13% plus. The demand for data analytics of professional fees is also exploding. Nearly 90% of corporations have predicted that analytics is going to be an essential competency this year. So Mastech Info Trellis is in a very unique position of being able to enable growth and experience for our enterprise clients, given that we're bringing a very holistic view of data. We should expect to capitalize on the market opportunity, and you will see that reflected as we move forward. I'm still early; it's been four weeks since I came on board. But I think the indications look positively great from a market standpoint. I hope I answered your questions.

Yes. I also remembered another thing. I know you have a pile of acquisitions for you to look at. Have you started working on the stack, and do you see that happening anytime soon?

I have not yet started to look into it. I think the first order of priority for me as I joined Mastech Info Trellis was to look at a couple of things. Number one, what is our opportunity for a go-to-market positioning based on what we currently have. Now, when I look at both the data and analytics, as well as the customer experience business, our ability to strongly influence customer acquisition and the growth side of our enterprise clients is very, very high. What I mean by that is the Data and Analytics segment will enable enterprises with a data-driven approach to architecting business intelligence and driving growth. The customer experience enabled by AmberLeaf will enable enterprises with a customer experience-driven approach to sales, service, and marketing transformation. So there is an opportunity for Mastech Info Trellis to operate on both the technology side of the business and the business side of the business. So I see a tremendous opportunity to cross-leverage upsell and influence the enterprise value chain. The second area that I started to look at was the differentiated value proposition to clients from a service offering perspective. I spoke about strategy and roadmap, technology implementation, and then managed services that will position us for engagement with clients upstream and also help us to engage with clients at the CXO level, positioning us for premium pricing and, in that process, create downstream revenue at scale. The third area of focus is around scaling the data and analytics businesses strategically and rhythmically. What I mean by that is from a growth standpoint, how are we focusing on achievability, predictability, repeatability? And I underline repeatability because being able to do more of the same means less stress, less effort required to sustain and grow the business while also looking for opportunities to drive non-linearity. As part of my initiative to drive non-linearity, I will be looking into some of these acquisition candidates downstream. I am not ready for that yet, Lisa. And of course, the last area of focus has been around people and culture, and the leadership coming together as we scale. These have been my areas of focus in the last four weeks, but we will get to some acquisitions pretty soon.

Okay. Great. We'll give you another quarter and I will ask you again. Thank you.

Sure. Thank you.

Our next question is from Timothy Call with The Capital Management Corp, please proceed.

Congratulations on strong bookings and your increased backlog. The cash levels are rising and might exceed long-term debt later this year. Should we expect net interest expense to approach zero?

Jack, will you take that question?

It's clear that our interest expense is going to decrease. Without an acquisition, we are reducing our debt by about $1.1 million each quarter, and that will continue. We're generating cash flows, so if we don't accelerate or prepay our debt, we'll be accumulating cash. Therefore, I believe our interest rates will definitely decrease.

Absent from other effects. Does the IT staffing unit benefit from U.S. wage inflation? Do your revenues and profits grow because of wage inflation in that unit?

Yeah, to some extent, definitely. You get the benefit of it in terms of the bill rates increasing. And also, for the same number of heads, you're able to get more revenue per head as a result of that. There's not that much of gross margin improvement, so that sort of accounts for the higher rates as well.

And do you see a shortage of U.S. skilled labor? Do you think that will lead to increased outsourcing in the United States? And would that eventually increase business at Mastech?

But it's already happening. The demand is way more than supply, and the customers are unable to fill those positions internally. Even the permanent positions that they have online are open, and they are increasingly leaning more and more on organizations like ours to help them find a contingent workforce. We are rising to that challenge, and some of our growth that we've demonstrated over the last few quarters has been as a result of that. Of course, when there is more demand than supply, we also lose people much more. So our focus has been on how do we make sure that we pick up new business, do new placements, and make new starts disproportionately more than the ones that we lose. And we've done a pretty decent job so far.

Well, congratulations again on a great quarter. Thank you.

Thank you, Tim.

Our next question is from Marc Riddick with Sidoti & Company. Please proceed.

Hey, good morning, everyone.

Hi, Marc.

So I wanted to start with, was there anything as far as any shifting of orders or business or any disruptions that we should think about during the course of Q1 that would maybe affect comparability?

No, I don't think so. I don't think there is anything like that to report right now. Jack, is there something that I may have missed?

No. No disruptions that I'm aware of.

Okay. Great.

I wanted to shift the conversation a bit and discuss the acquisition opportunities. First of all, welcome to Ganesh. It's been a month since you've joined us, and I assume the opportunities will still be available tomorrow. Could you provide an update on the general pipeline, including thoughts on valuation and whether there have been any changes in the opportunities over the last three to six months?

Marc, thank you. And is your question around the pipeline for acquisitions or is it around the pipeline for the Data and Analytics business?

Well, the acquisitions first and then you can answer both if you wish, but I was asking about acquisition.

Okay. I would probably turn over to either Vivek or Jack to answer on the acquisitions and then I can take the question around the overall business pipeline.

Yeah. So as far as acquisitions are concerned, we did have a few candidate targets that we were considering towards the end of last year. And I think I mentioned that in my previous earnings calls; we had to put them on the back burner, as it made sense to go ahead with any acquisitions without having a new leader on board. Clearly, we've said before that our acquisitions are going to be in the data analytics area, and that approach is still very much valid. So we're just waiting for Ganesh to settle down and evaluate the targets that we were considering. And also, there could be new injections of ideas from Ganesh, and we will refine our target on the approach that we are taking. We see that in the later half of this year, we should start going back to evaluating what could be the next targets to look at.

Thank you, Vivek. And Marc, to the other question: see what the pandemic has done is influenced the velocity of digital transformations. And as we all know, no industry is spared. But when you look at the sequencing of effective digital transformation initiatives in the market, it all starts with Data and Analytics. In order to get insight into your own enterprise, the real end-user transformation begins with redefining experiences of your products and services. When you look at Mastech Info Trellis, I think we are very uniquely positioned to influence what I'd call the customer acquisition and growth segment of an enterprise, which essentially starts by driving your customer experience initiatives, starting from your product and service journey mapping. Then taking it all the way into implementation and managed services. So Mastech Info Trellis can drive the transformation experience, starting with the business's stakeholders—be it in sales, service, or marketing—and then driving it down the value chain through the technology stakeholders completing your bidding on the data side, application side, or cloud side. I am very optimistic about capturing the market opportunity and being able to grow the business because it is not just the data business which is seeing significant growth in 2022 and beyond, but the ability to drive upstream customer experience. I think we have a significant opportunity to tap into. I hope I answered your question, Marc.

Yes. Absolutely. Thank you. And then a couple more from me. What I was wondering if you could sort of give us an update as to where you are with the real estate strategy. And as far as with your offices, where you think you can get to by the end of the year.

Okay.

You may go ahead, Vivek.

No, I was going to respond to the real estate situation. So, Marc, I think one thing that's happened as a result of this pandemic, as we all know, is that we don't really need everybody to be in the office every day. And what that means is that the office spaces that we have right now can handle a lot more people because we will have the hybrid approach going forward. Having said that, we have large centers that we have: one in Noida, which is in India in the national capital region, one in Chennai, which is the Data and Analytics Center, and of course, the third large one in the U.S. is in Pittsburgh. Then we have smaller offices, quite a few of them, sales offices in different parts of the U.S. and in Europe. That kind of footprint that we already have. We did upgrade our Chennai facility to a much larger facility, almost doubling the number of seats that we had in January because we expect that that part of the business will probably scale on the offshore side of data analytics the fastest and quickest. So I think we're pretty comfortable right now in terms of the real estate footprint that we have for the foreseeable future. I’m hoping that we will get to that point maybe next year when we have to start thinking of what more to add, and that will be a great problem to have. That means we are scalable.

Right? Excellent. And then the last thing for me is right, we talked a little bit about it in your prepared remarks, but maybe put a little more around the timing and what your thoughts are around the offshore staffing launch.

Yes. The offshore staffing, as I mentioned, is basically an extension of what we launched back in June of 2020 in the middle of the pandemic, which was the service called mass remote. The mass remote strategy leveraged the customers' readiness to work from home or work from anywhere. That actually was very well timed. And from that point onwards, all the way until the end of 2021, roughly two-thirds of all placements we did were remote. What we found when we launched this new offering of staffing is that if you think about it, it is just an extension, or a variant of that, where we are having not just people working remotely, but they're working much further out. The logic is this: if you look at the demand for IT people, it's very heavily skewed towards the U.S., followed by Europe, and then the rest of the world, including Asia. But the largest available resources are actually in Asia, followed by Europe, and then the U.S. at this point in time. What we're trying to do is address the discrepancy between demand and supply through this offshore staffing. We've found that customers who have successfully experienced this work-from-home model are now ready and more amenable to having people work offshore. We already know that the offshore model has numerous advantages, such as access to large pools of top-notch talent and considerable cost savings for customers. So we launched this offering in Q4, and it's gaining traction rapidly. We are very excited about it. When you combine that with remote staffing, I think we now have a pretty good set of options in addition to, of course, the traditional on-premise staffing. Our sales team is excited that we now have a much wider complement of offerings to provide.

Thank you very much.

Thanks, Marc.

Our next question is from Brian Kinstlinger with Alliance Global Partners. Please proceed.

Greetings and thank you for taking my question. With the strong bookings you've mentioned for the first quarter, can you share where you're seeing the highest demand for both Mastech staffing and the Analytics business by industry? Are financial services and healthcare leading the way? Please walk us through which industries are experiencing the most demand.

Hi, Brian. Thank you for your question. Actually, right now at this point in time, the demand seems to be evenly distributed across all industries. Even when we look back over the last 1.5 years, we only saw it skewed towards healthcare, followed by financial services, and then retail or manufacturing. But at this point in time, the demand seems to be across all industries. I think I can provide some kind of order there, but actually, I don't think that's relevant at this point in time. All our customers in all our segments are having conversations with them, and this applies to both sides of the business: IT staffing as well as Data Analytics. And maybe I'll ask Ganeshan if he sees a skew on the data. I'm really excited about his analysis that he has done over the last month or so if there is a skew on the industries.

I think Vivek colored it well. Brian, to add to what Vivek said, we are looking at banking, retail, and high-tech as industries where we are seeing a surge of momentum. But coming to the Data and Analytics business, it is industry agnostic. The way I would see this is when I look at it from an industry perspective, it's from two dimensions. One is data; there are certain industries with a high-touch impact on consumers. For example, healthcare, media, high-tech, and retail. What I mean by high-tech is the in-depth feedback loop with the consumers is extremely high. For example, if Apple were to release a phone, you have a feedback loop relating to the adoption and usage of the features very quickly. And these are industries that continue to be on the cutting edge of digital transformation and will continue to grow and adopt faster. On the other side, there are industries that are low-touch. Examples would be the ones that are highly regulated, like insurance or NST. Now, the need for digital transformation and especially data-driven approaches is seen across the board. However, you will see shifts in the velocity of transformation depending on these industry factors, but that does not mean that any of the industries I spoke about are not involved in this process. I think it's cutting across.

Great. My second question is, as demand increases, you touched on the difficulty on the supply side of resources. How long does it take you to find and onboard staffers to meet demand?

We have a highly efficient recruitment process with a large team in India based in Noida, working on U.S. hours. We can often find candidates within hours and connect them for interviews, completing the process in just a few days when urgent requirements arise. Typically, the entire process takes about one to two weeks from identifying needs to selecting the right candidates. We face competition for these roles, but our speed and the number of capable recruiters allow us to stay ahead and fulfill requirements quickly.

From the data and analytics side of the business, I have a significant advantage in leveraging the strengths of what the digital staffing business brings to the table. You are aware of the challenges the technology services industry faces, both in terms of talent acquisition and retention. The opportunity for me to drive hyper-scaling of the Data and Analytics business comes from the fact that I can leverage Mastech's digital staffing capabilities to attract talent quickly and establish a strong base for process maturity, as well as presenting opportunities for scaling.

Great. My last question relates to your bookings. How much higher is the implied pricing on your new business compared to the average rates of 2021?

Brian, let me ask you this question. Is this question about the IT staffing or is it regarding the data analytics piece?

Well, on the staffing side because on the earlier questions you talked about revenues benefiting from higher salaries or higher pay, so I'm just curious as it relates to that. How much higher are prices, 5%, 10% higher than they were last year?

Well, it's actually where you're seeing anything from 0% to 25% as well. It also depends on the type of skills and how difficult or scarce are those skills in the marketplace. You can imagine scarcity drives up pricing. Many of the new positions have come in at around 10% on average more, but there are areas which already have a lot of people, and you are simply adding more. It takes a little while for the overall average for the group to start changing. However, there is definitely some increase happening in general, but it varies from technology to technology.

Hey, Brian. Our average bill rate in the first quarter of 2022 was just under $79 an hour, and in the first quarter of 2021, it was just over $75 an hour, so that's about a 5% increase. Some of that is due to inflationary pressures, and some of it is just the type of skill sets that we've been working with in our new assignments. Clearly, the trend is up.

Great. That's super helpful. Thank you.

Our next question is from Rob Stevenson with Bennington Capital. Please proceed.

Hi, good morning. Thanks for taking my question. I'm interested in the positive outlook we've discussed regarding data analytics and the favorable trends the business is engaging with. Looking back at Q1, a 15% growth rate is impressive, but it seems there's potential for even greater growth. I'm curious if there were specific factors in Q1 that you believe limited that growth. To frame this differently, as you consider future opportunities for capitalizing on these trends, are there particular tactical elements or areas within the business that you think could help boost that growth rate? Thank you.

Thank you, Rob. From a Q1 standpoint, again, I think both Vivek and I commend the team that managed the default in the absence of having executive oversight. From where I see opportunities for scaling, I have identified opportunities between the customer experience side coming from AmberLeaf and the Data and Analytics side, as well as significant opportunities for cross-leveraging and upselling. There were some tactical things, synergies around people alignment, which have already been resolved. So I believe that when it comes to driving customer experience, we are already in a position to deliver a holistic approach to each customer's experience. In fact, I refer to this as a five-dimensional approach to driving customer experience: one that derives from the business development team, driving relationship experience, and driving net new logo acquisition; second, integral digital transformation practices, which is an area that I am shaping as we speak; and once we have that in place, we will be able to drive both the strategy and a roadmap across all of our enterprise clients, establishing a premium positioning at the upstream of the value chain. The third critical element of global delivery is functioning extremely well today, delivering nearly 100% customer retention. The fourth will focus on bringing in specific industry domain expertise in areas where we have a strong positioning with clients, and lastly, considering possibilities of platforms and IPs as we deepen our understanding of the business. That is where you'll start to see a shift happening, both in terms of not just customer acquisition but also the quality of revenue from each of these customers, driving average revenues more uniquely and bringing in some level of nonlinearity through platforms and IPs. Rob, did I answer your question?

Yes, thank you Ganesh. It's really helpful; I appreciate it. And it's great to have you on the team, thank you.

Wonderful. Thank you so much.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Vivek for closing comments.

Thank you, Operator. So if there are no further questions, I would like to thank you for joining our call today. We look forward to sharing our second quarter 2022 results with you in early August. Thank you, all.

Have a wonderful day.

Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.