Rimini Street, Inc. Q4 FY2021 Earnings Call

Welcome to the Rimini Street Earnings Call. My name is Daryl, and I’ll be the operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to Dean Pohl, Dean, you may begin.

Thank you, operator. I’d like to welcome everyone to Rimini Street’s Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. On the call with me today is Seth Ravin, our CEO; and Michael Perica, our CFO. Today, we issued our earnings press release for the fourth quarter and fiscal year ended December 31, 2021, a copy of which can be found on our website under Investor Relations. A reconciliation of GAAP to non-GAAP financial measures has been provided in the table following the financial statements in the press release. An explanation of these measures and why we believe they are meaningful is also included in the press release under the heading about non-GAAP financial measures and certain key metrics. As a reminder, today’s discussion will include forward-looking statements that reflect our current outlook. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. We encourage you to review our most recent SEC filings, including our Form 10-K for the fiscal year of 2021 filed earlier today. For a discussion of risks that may affect our future results or stock price. Also, we recently asked results to complete an IR reception survey of Investors and Analysts. And we want to thank all of you who were able to participate and provide valuable feedback. We are evaluating the results and we'll be sure to take all the feedback into consideration as we move forward into our fifth year as a public company. Now before taking questions, we will begin prepared remarks. With that, I'd like to turn the call over to Seth.

Thank you, Dean, and thank you everyone for joining us today to discuss our Q4 and fiscal year 2021 results. For the fourth quarter and full year 2021, we achieved a unique combination of record revenue exceeding our guidance, margin expansion, strong revenue retention and cash flow generation. Also, during 2021, we completed significant capital market transactions that materially reduced outstanding debt, our cost of capital and potential equity dilution and generated significant cash, ending 2021 with record cash of $119.6 million. Taking these additional factors into consideration, today we announced a stock repurchase plan of up to $15 million to further increase shareholder value. Michael will provide more of the plan details in his prepared remarks. From an operations perspective, we significantly expanded our full-year gross margin by delivering innovation that provides cost leverage, and an even more extraordinary client experience. Innovations include proprietary patented and patent-pending AI and machine learning tools and technology. The implementation of just one AI tool alone, for example, has already led to an average 23% improvement in client case resolution time since its introduction in April 2021. Further differentiating ourselves for the extraordinary client experience, we once again in the fourth quarter closed more than 9,700 support cases, delivered more than 31,000 tax legal and regulatory updates for 32 countries and achieved an average client satisfaction rating on the company support delivery and client onboarding services of 4.9 out of 5.0, where 5.0 is excellent. We believe our unique client experience and very high client satisfaction rating will drive increased loyalty, improved retention rates, and higher cross-sales. Since Rimini's inception in 2005, we have signed more than 4,600 clients, including over 180 Fortune 500 and Fortune Global 100 companies and saved our clients more than $5 billion. We added a net of 56 and 362 new clients for the fourth quarter and full year 2021 respectively, a fiscal year-over-year increase of 14.6%. In addition, despite the global challenges with retention and recruitment in 2021 affecting many organizations, we were successful in expanding our global workforce by 16.9%, ending the year with over 1,660 employees. As for the pandemic and geopolitical impacts, so far, we believe we have navigated the pandemic well. And despite some continuing global risks and challenges related to existing and potential new COVID variants, we are taking steps globally to return to some office operations, attend select in-person marketing events and increase our in-person sales activities. With respect to the Russia-Ukraine conflict, while clearly a terrible human tragedy and geopolitical event that could disrupt the global economy, Rimini Street does not have any offices or personnel in either Russia or Ukraine. We do have some clients headquartered in Russia and have multinational clients with operations in both Russia and Ukraine. We expect that we may experience some challenges serving Russian and Ukrainian clients or receiving timely payments from Russian clients due to evolving sanction activity. Rimini Street's current annual revenue from Russian clients is not material. The full extent to which the pandemic and Russia-Ukraine conflict may affect our global business in 2022 and beyond will depend on numerous evolving factors that we cannot reliably predict at this time. Demand and sales execution. Rimini Street already serves many of the largest logos across different industries, and we believe our continued and growing focus on the specific needs of each industry will allow us to further penetrate the total addressable market in each industry with the breadth of our solutions portfolio. Accordingly, we continue to see a strong opportunity for our expanding portfolio of enterprise software support solutions and continue building and maturing our go-to-market capability to launch, sell and deliver our full solutions portfolio to new and existing clients globally. Current sales opportunities and pipeline include more large deals at different stages of the sales process than at any other time in company history. During the fourth quarter, we closed transactions with strategic, local and global brands across diverse industries and geographies and spanning the wider breadth of our solutions portfolio, including support, AMS, security, interoperability, monitoring, and professional services. Transactions were of varying deal sizes, ranging up to our second largest sales deal in company history. We also continued to see growing momentum in cross-sales through existing clients, where we believe, at this time, there's over $1 billion in annual white space sales opportunities. I shared with you during our last earnings call that more than half of our sellers and many within sales management have less than one year of experience in their Rimini Street roles. I'm pleased to note that we are seeing improved sales productivity. The close rates for the fourth quarter exceeded the close rates for the prior year’s fourth quarter, and we expect this trend to continue. In addition, we're seeing an increasing revenue growth rate in the US, where we have focused on building out theater and regional sales leadership and capabilities. To highlight how clients are leveraging Rimini Street services globally to achieve their strategic goals across different industries, I'd like to share a case study from the fourth quarter. DPaschoal, a leading automotive parts and service retail chain in Brazil, signed a seven-year agreement with Rimini Street to support its SAP applications. This move accelerates their digital transformation roadmap strategy by liberating limited resources, time, money, and personnel to focus on innovation projects. To support its business strategy, DPaschoal sought partners that could align with its innovation and business transformation roadmap goals and vision. Their IT group was tasked with evaluating its current SAP system and the ROI of migrating to the next major SAP platform. After analyzing both the costs and risks associated with a complete platform reimplementation, it was determined there was no significant ROI to update or replace its current SAP applications, nor could their IT team discern a benefit to its business transformation goals by doing so. DPaschoal made the switch to Rimini Street because we are fully aligned with the way they want to run their business. DPaschoal saw Rimini Street as the right partner to keep their SAP ERP system running smoothly and assist with their upcoming transformation and innovation projects. As for the Oracle litigation update, Rimini Street and Oracle have been in litigation for more than 12 years. While the US courts have declared long ago that third-party software support is legal, we presently have two active proceedings with Oracle. The Rimini 2.0 and the injunction compliance dispute proceedings, both of which relate to the manner in which Rimini Street provides support services for certain Oracle product lines. Rimini Street versus Oracle, the case Rimini Street filed against Oracle in 2014 and known as Rimini 2.0 remains in a pre-trial stage. We currently believe it is likely that the trial will proceed in 2023. With respect to the dispute, the parties are currently engaged in over a permanent injunction that has been in place since 2018, and is known as the injunction compliance dispute. The court issued an order on January 12, 2022, following an evidentiary hearing in September 2021. The permanent injunction at the center of the dispute defines the manner in which Rimini Street could provide support services for certain Oracle product lines but does not prohibit support of any Oracle products. Despite extensive discovery by Oracle that commenced over two years ago and included millions of pages of documents, only 10 items were ultimately before the court in the evidentiary hearing. In its findings and order from the hearing, the court ruled in favor of Rimini Street on five of the items. With respect to the other five items, the court found the company violated the permanent injunction, awarded $630,000, and ordered that certain computer files be quarantined from use. The court also ordered Oracle may recover its reasonable attorney’s fees. While Rimini Street respects and takes court orders and the law very seriously, and has implemented extensive processes and procedures to comply with both, we respectfully disagree with many of the court's findings. As such, we filed a notice of appeal to the US Ninth Circuit Court of Appeals. In the meantime, we paid $630,000 to Oracle, while preserving our right to be reimbursed for some or all of the payment upon a successful appeal. Following our notice of appeal, the US District Court of Nevada issued a stay on the ordered reimbursement of Oracle's reasonable legal fees. Accordingly, we do not expect a resolution of the court's coming appeal, possible reimbursement of some or all of the $630,000 in sanctions paid, or the amount of Oracle legal fees that may or may not be payable, if any at all, for likely at least a year or more. Please see our disclosures in the annual 10-K filing for additional information on the Oracle litigation. Summary: We continue working to complete our transformation and scaling project to support $1 billion annual revenue operations and a 20% or better operating margin by 2026, focusing on sales, execution, and productivity, exercising disciplined cash generation and management, and bringing our litigation with Oracle to a successful conclusion. Now with that, over to you, Michael.

Thank you, Seth, and good afternoon everyone. Q4 and fiscal year 2021 results: revenue for the fourth quarter was $99.3 million and full-year revenue was $374.4 million, a year-over-year increase of 13% and 14.6%, respectively. Annualized recurring revenue was $393 million, a year-over-year increase of 12.6%. The revenue retention rate for service subscriptions, which makes up 98.7% of our revenue, was 92%, with more than 80% of subscription revenue non-cancelable for at least 12 months on a rolling basis. For the fourth quarter and full year, clients within the United States represented 53% of total revenue, while international clients contributed 47%. Aggregate year-over-year revenue growth in the United States was 7.7% for the fourth quarter and 4.4% for the full year, while growth for international clients was 19.6% for the fourth quarter and 29% for the full year. On a cash flow basis, for the full year 2021, we generated $67 million of operating cash flow, up 59% from the prior year. The increase was driven by strong renewals and by robust multi-year client prepayments. We are quite pleased with our cash flow yield of 17.9% for the year as our focus on maintaining significant operating cash flow generation, combined with our drastically reduced cost of capital provides us with the ability to take advantage of key strategic opportunities that were not previously feasible. Billings for the fourth quarter were $155.9 million compared to $140.5 million for the prior year, an increase of 11%, and full-year billings were $417.8 million compared to $348.2 million, an increase of 20%. Multi-year prepayments for both renewals and new client invoicing were strong throughout the year. Gross margin was 65.1% for the fourth quarter and 63.6% for the full year 2021, which is well above our initial and upwardly revised guidance range of 61.5% to 62.5% compared to 61.8% for the prior year’s fourth quarter and 61.4% for full year 2020. We are pleased with our service delivery throughout 2021 and continue to methodically expand efficiencies and leverage through technology and process control. We expect to continue investing in the global service delivery capability and capacity for our new products, services, and solutions to ensure we can deliver our best-in-class offerings with unparalleled client satisfaction. Therefore, for full year 2022, we are guiding gross margin to be in the range of 62.5% to 63.5% on a GAAP basis, and 63% to 64% on a non-GAAP basis. Operating expenses, like other companies globally, we are experiencing some cost pressures due to increased labor costs and inflation. However, we are successfully mitigating this challenge in part by broadening our hiring practices with an emphasis on recruiting more positions in lower-cost geographies and in part by using innovative technology, such as our recently issued US patent to gain more operating leverage. We plan to continue exploring all options available to ensure we are able to acquire the right talent at the right cost to meet our profitability and growth targets. Sales and marketing expenses as a percentage of revenue were 32.7% for the fourth quarter and 34.3% for full year 2021, below our guidance range compared to 34.5% for the prior year’s fourth quarter and 35.1% for full year 2020. We remain focused on making the appropriate investments needed to support our growth initiatives whereby we expect full year 2022 sales and marketing expenses to be in the range of 34.5% to 35.5% on a GAAP basis, and 34% to 35% on a non-GAAP standpoint. General and administrative expenses as a percentage of revenue, excluding outside litigation costs, was 15.6% for the fourth quarter and 17.1% for full year 2021 at the top end of our upwardly revised guidance compared to 16% for both the prior year’s fourth quarter and full year 2020. Current and expected 2022 spend includes investments in information systems, along with costs for additional personnel to support growth and costs as a public company and to support our continuing global compliance monitoring of our service delivery process, along with incremental professional, legal, audit, and insurance costs. As a result, we expect G&A expenses as a percentage of revenue to be within the range of 16% to 17% for the full year 2022 and 14.5% to 15.5% on a non-GAAP basis. Net outside litigation expense was $2.7 million for the fourth quarter and $16.9 million for full year 2021, at the high end of our guidance range, compared to $4.2 million for the prior year’s fourth quarter and $14.6 million for full year 2020. During the fourth quarter, we received an insurance recovery of $7.1 million for attorney costs related to Oracle litigation. In addition, we paid $630,000 to Oracle for court-ordered sanctions, and we accrued $6.9 million as an estimate for court-ordered reimbursement for reasonable legal fees. However, as Seth noted, we are appealing the district court's ruling. And we do not expect the resolution of our forthcoming appeal, possible reimbursement of some or all of the $630,000 in sanctions paid, or the amount of Oracle legal fees that may or may not be payable, if any at all, for likely at least a year or more. Outside litigation spend is not linear and can fluctuate each quarter, based on the timing and nature of litigation activities. We expect a likely moderate increase in litigation spend in 2022 compared to 2021, due to the noted appeal and preparation for the Rimini II trial, which we expect will more than likely occur in 2023. Accordingly, we expect outside litigation expense to be in the range of $15 million to $20 million for the full year 2022, compared to $16.9 million for full year 2021. For the fourth quarter, net income was $70.1 million or $0.77 per common share and $75.2 million for full year 2021 or $0.51 per common share. This compares to the prior year fourth quarter loss of $4.2 million or negative $0.6 per common share, and for prior full year 2020, a loss of $15.2 million or negative $0.21 per common share. Given the cumulative profitability of recent years and our outlook for continued profitability, we should benefit from our deferred tax assets and therefore recorded deferred income tax gain during the fourth quarter. This gain of $62.3 million, which was offset by current income tax expense, led to a net income tax benefit in the fourth quarter of $60 million and $55.8 million for the full year. Moreover, our EPS was also positively impacted by the redemption in full of the Series A preferred in the third quarter, as a result of which there are no longer any costs associated with this instrument negatively impacting earnings per share. Adjusted EBITDA was $19.3 million or 19.4% of revenue for the fourth quarter and $55.8 million or 14.9% of revenue for full year 2021. Also, I would like to highlight our non-GAAP operating margin, which excludes outside litigation spend and stock-based compensation, was 19.5% for the fourth quarter and 14.7% for full year 2021. That underscores the significant profitability potential and substantial leverage to our operating model such that we remain confident in our ability to achieve our long-term target of operating margins in excess of 20%. Warrant treatment: we realized a non-cash loss of $1.2 million during the fourth quarter and $4.2 million for full year 2021 relating to the $6.1 million private sponsor warrants with an exercise price of $11.50 that expire October 10, 2022. The condition that required liability accounting treatment is no longer in effect, and the settlement of this non-cash charge was applied to additional paid-in capital. Therefore, going forward, there is no longer a requirement for mark-to-market for any class of warrants, such that we do not anticipate any further income statement impact associated with regard to the public or private value of any outstanding warrants. Balance sheet: we ended the fourth quarter with a record cash balance of $119.6 million, compared to $87.6 million for the prior year’s fourth quarter, up 36% year-over-year. This represents a positive swing in net liquidity of more than $100 million as we ended 2021 with a net cash position of $36.3 million versus a $67.3 million net debt position at the end of 2020. Deferred revenue as of December 31, 2021, was approximately $300 million, up 17% from $257 million for the prior year’s fourth quarter. Backlog, which includes the sum of built deferred revenue and non-cancelable future revenue was approximately $593 million as of December 31, 2021, up 7% from $556 million for the prior year’s fourth quarter. Capital market transactions: As Seth noted, today we announced that our Board of Directors has authorized the repurchase of up to $15 million of common stock over the next two years. The common stock repurchases may be effected through open market purchases, including through the use of Rule 10b5-1 trading plans or privately negotiated transactions. The timing and amount of common stock repurchases made pursuant to the repurchase program are subject to various factors, including but not limited to the company's common stock trading price, regulatory requirements, credit agreement covenants, general market conditions and alternate uses of capital. The company is not, however, required to acquire any particular amount of common stock at a specific time or price, and repurchases can be discontinued at any time without notice. With a strong cash position and consistent operating cash flow generation model, we believe the company is able to both continue funding growth while implementing this capital return plan for our shareholders. We plan to continue our methodical focus on improving execution to drive increasing free cash flow generation and improved profitability. Business Outlook: we’re currently providing first quarter 2022 revenue guidance to be in the range of $95 million to $96 million and full year 2022 revenue guidance to be in the range of $400 million to $410 million. This concludes our prepared remarks. Operator, we’ll now take questions.

We will now begin the question-and-answer session. We have a question from Brian Kinstlinger. Go ahead, Brian.

Great, thanks so much. So the revenue guidance for the first quarter implies about a 3% to 4% decline from the December quarter. During the last five years I checked, revenue only declined sequentially during that time period one time. So I'm curious, is that a result of a lost client? Is it lower pricing, or any other details you can provide would be helpful?

Sure, Brian. Seth, I'll take that. We took a look at a couple of things. One, we wanted to be a little more conservative than the guidance we've provided in the past. We did this rebel survey, the perception survey relative to both the analysts and the investors. And we're really trying to get ourselves positioned for a consistent beat and raise model. On top of that, we're looking at world events, obviously, we have some very known issues that are happening between sanctions reverberating around the world with the Ukrainian war, coupled with still having some challenges with COVID around the world, especially in Asia Pacific. So we felt it was just better to be a little conservative, and be in a position to walk up over the course of the year. And you've seen that not only the quarter guidance being conservative, but the annual guidance for 2022. We took a more conservative position as well.

Okay. And then in terms of sales execution, you mentioned, it's already beginning to get better from the fourth quarter to the third quarter. But the biggest sales period, where you see the most demand and opportunity is ahead, I think, two quarters ahead. What gives you the confidence that this team is that much stronger, or that the sales execution will be much stronger when you see the grant of the pipeline addressable?

So I think a few things, Brian. We've got first, as I mentioned in the prepared remarks, we've got more large deals in various stages of the sales process than we've ever had as a company. So that's data point number one. And number two, as we talked about with the third quarter, we had a lot of people out in the field who hadn't had enough experience and had fumbled the ball in terms of being able to bring the deal home. But it wasn't just the sales reps that didn't have experience; we were missing a lot of key sales management to support all those players on the field. And if you look at what we announced in the last couple of days, even this morning, the merger to the Americas Theatre, we added some additional GMs that we had empty positions for we're about to fill, we believe the last of those GM positions. We hired a new CMO. Our transition of marketing to being an inbound marketing organization is proceeding. So, all the data points relative to the challenges of the third quarter, we see those as being remediated, we see improvement. Again, we saw incremental improvement in the sales performance in the fourth quarter in terms of sales productivity. So, we're maturing the team gaining experience, the leaders are gaining experience in closing deals. We closed a lot of great logos all across the world, across the product lines. So, I think all of that is giving us good confidence that we are continuing to move in the right direction of maturing a team that can deliver the kind of numbers that we want to see in 2022.

Great last question. I'll jump back into the queue. The retention rate was still strong at 90% in the fourth quarter, though it's down by 1% to 3%, which is one of the lowest figures we've seen in eight quarters. It's worth considering if you lost a customer or if there was a merger. Would you say that a 90% retention rate is not significantly different compared to the 92% you've maintained for a while?

Well, we actually weren't at 92%. It was over during part of the prepared comments; it was actually 92% for the trailing 12 months ending December 31, 2021, and 2020. So, it was actually on par.

Okay. All right. Thank you.

Sure. Thanks, Brian.

And our next question comes from Jeff Van Rhee. Go ahead, Jeff.

Great, thanks for taking the questions. And love the cash flow and some good progress there on margins as well. I guess on the sales side, I want to revisit the prior question a little bit more, you talked to both recruiting in terms of incremental heads, where you are in an absolute sense and how many you've been able to attract? How's the retention going? We all know it's a very tough market to find sales talent, you're looking for a very unique skill set. You got a lot of moving parts on the leadership side, just what are you seeing in terms of the recruiting and retention? Maybe start there.

Sure, Jeff. Hi. Thought you were going to lead with our capital return program. I think a lot of people will be excited about it. I think the recruiting is tough; there's no doubt about that, everyone is facing that. I do know that across all your checks, I think that we ended the quarter on a sales rep basis around 78, 79 heads compared to the prior 12 months ago period, which was about 69. So, roughly 12%, 13% increase in total heads. But I think that that's not the real measure as much as the quality and the quantitative aspects. We've hired some great people on the sales side. We've been adding in a lot of sales management talent across the world, especially North America, and you saw the numbers come up. And you knew that I was aiming for a 10% exit out of North America, coming out of the year. We came out at 7% at the end of the quarter, so that was good. We're moving in the right direction compared to where we were flat. So, I do think that the metrics are supporting that this management team, the hires are kicking in very nicely in an incremental way as they get better. So, I think the recruiting has been okay; it's tough, but we are getting good people in the door. And we're getting them trained up. And I think that, as we've pointed out in the third quarter, it was really the 10-year level, that we know that people who are with us 18 months or more are generating 90% plus attainment numbers. And that was starkly higher than those less than 18 months in tenure. And it was black and white between the two. And as we've talked about, and as we've mentioned on prior calls, one of our key objectives of sales enablement is to bring down that ramp time that 18 months is a long ramp to get to that sort of 90% plus attainment number. We're trying to get that down below a year, which will allow us to accelerate revenue much faster.

Yes. And that was going to be my follow on, just in terms of the reps. I know you've swapped out a lot of talent, brought a lot of new talent in, Is there any evidence of that yet? Are we still thinking, let's just leave it at 18 months? And we'll see or have you seen some cohorts that are showing signs of faster ramp?

I think we're still in that 16 months to 18 months. I don't think we've seen that come down dramatically yet. But we are seeing that. I think an important data point is, we have seen that our new reps, which we believe are bringing in some great talent, have been closing their first deals faster than we've had in prior times. So, I do think that that's a positive note. And that does bode well for believing that we can bring the ramp down from that 18 months, because once a seller gets a full deal cycle under their belt, they know how to talk to the right people. They know how to get a contract done. They know how to get a closing done with a client. That's a huge step forward. Obviously, the second deal is easier than the first; you're learning procedurally. So I think the fact that we're getting sellers to close those first deals earlier bodes well for bringing down that 18 months.

And anything you can share the S&M numbers, I mean, obviously, wages are up. But also, beyond that, it looks like overall spending is up, can you give us a sense of where you think you're going to end on that hiring front?

For the year, we're targeting between 95 and 100 employees for 2022. We've adjusted our expectations a bit because we're prioritizing productivity per employee. Sales compensation has increased over the past few years, moving from approximately $240,000 OTE to $260,000, then $280,000, and now it's around $300,000 annually for a $2.2 million quota. While it has increased, it's important to note that our compensation is typically split evenly between base and incentive pay, which means that performance plays a crucial role. Therefore, the higher numbers will only be reflected if they are actually meeting that quota.

Yep. Great. And if I could just sneak one other in there. Obviously, again, a lot of new leadership and marketing is another focus area for you. You commented on the large deal pipeline setting records. I wonder if you comment on the overall value of the pipeline. And also in the context of where that organization is, I mean, because they got new leadership, they're going to be in a position where there's not enough getting stuffed in the top of the funnel, even if you have the reps. So maybe just those two questions there.

Yes, I think, Jeff, there isn't anybody who would ever tell you they wouldn't love more pipeline. But I do think the diversity of pipeline, the breadth of the pipeline, it really depends on the region. We strive for ideally a 4x pipeline; a lot of companies strive for a 3x. We like a 4x. I would say some regions are around that; some are a little less than that. It's a little bit lumpy. But I think that with the procedures we're putting in place between marketing in the pipeline management systems and the execution discipline we're putting in, I feel really good that the combination of the changes we're making at marketing, the local regional marketing people we've put in place. We've up-leveled our marketing around the world. I believe the combination of those will get us a nice healthy 4x pipeline across consistently. It's going to take us probably another quarter or two with the new marketing programs by the time you run through, generally six months to a year to pull through a deal from beginning lead all the way through close. So my sense is, yeah, we're going to get to the 4x.

Great. Appreciate it. Thanks.

Sure. Thanks.

And our next question comes from Derrick Wood. Go ahead, Derrick.

Great. Thanks, guys. It's Andrew on for Derrick. Congrats on the strong quarter. Maybe just on the announcement today on the America's theater change, maybe just walk us through that decision and how this is – this should improve performance in the US and the timeframe for achieving that?

Sure. What we've done is we've been taking several steps. And I think you've seen that we, as you know, are focused on a balance between profitability, cash flow, building a strong cash position, and growth. And that's always been a balance. It's always been our goal is to be in between we're not a growth-at-all-cost company. And I think that's paid off as you're seeing in the massive balance sheet switch to really having a net cash position. It's very strong. So I think all of that's been playing out well. We've also been focused on growth and scale. And when we think about as we head towards this billion dollar target and 20% plus operating profit, we're looking at structures and as you would expect. We're looking for economies of scale. And one of those we just took care of in the last couple of months, which was we integrated our Europe, Eastern European, and Israeli theatre with EMEA. So now it's all under just the EMEA umbrella. And we're reducing redundant positions and infrastructure that comes with each theater because each theater has its own operations, their modified P&L. And we took a look at North America. We took a look at Latin America. And like a lot of other companies, they operate with single America's leadership. And we felt that we could again cut costs, we could integrate, get better efficiencies by combining those theatres and be in a position to really offer our clients a far broader regional team of expertise. And that's a really important part, as you know, with our extraordinary client experience goal. So it really is a win-win for us all around. And we're going to continue to look for opportunities to consolidate and bring scale into the organization.

Great. It looks like the international growth slowed a little bit anything to call out there and how should we think about that growth this year?

Yeah. For the fourth quarter, it was down a little bit. I think part of that is really if you break it down when we had some FX components to it, but you're talking about a $4 million difference generally versus what would have been a standard 29%, 30% type number. But we also saw the fact that we had flow-through revenue from the third quarter that we didn't get and that flowed through and, of course, that acted as a deficit against the fourth quarter revenue on a ratable basis. So the combination between those really, we believe, led to that particular number. But we don't see it as...it's not a trend. It's just...it’s a particular quarter.

Okay, great. And then the slip deals from last quarter, it’s kind of like we had a pretty strong big deal quarter. Did those close in the quarter, or if not, are they still in play?

Well, as we mentioned, for the fourth quarter, we closed the second largest deal in our history, and that was in the Americas, by the way, again, just part of America rising again. And on the other side of it, we did have a slip deal of a very large one from the fourth quarter that moved into the first quarter. That's an international deal. And yes, it did close.

Right. That's it for me. Thanks, guys.

Thank you.

And we have no more questions at this time. I'd like to turn it back to the speakers for closing comments.

Well, that's great. Thank you very much there. Appreciate that. And thank you, everybody. Please stay safe out there. If we have additional follow-up questions, please contact our IR team. We'll be happy to follow through with those questions. And we'll look forward to seeing everybody on the first quarter call coming up pretty soon. Thank you very much, everyone. Have a good day.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.