Welcome to the Converge Technology Solutions Corp. Third Quarter 2021 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. If you'd like to withdraw your question, simply press the pound key. Your main host today are Shaun Maine, Chief Executive Officer, and Matt Smith, Interim Chief Financial Officer. Before we begin, I am required to provide the forward-looking statement respecting forward-looking information, which is made on behalf of Converge and all of its representatives that are on this call. All statements made on this call will contain forward-looking information. The actual results could differ materially from a conclusion, forecast, or projection in the forward-looking information. Certain material factors or assumptions are applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast, or projection in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in Converge's filing with the Canadian Provincial Securities Regulators. Converge does not undertake to update any forward-looking statements. Such statements only speak as of the date made. Today's discussion also refers to adjusted EBITDA, which is a non-IFRS measure and has no standardized meaning. Please refer to the Converge's filing of Canadian Provincial Securities Regulators for an explanation and reconciliation to IFRS measures. Thank you. Mr. Shaun Maine, you may begin your conference. Thank you. Good morning, and thank you for participating on today's Q3 earnings call. Before we begin, I would like to take a moment on Remembrance Day to commemorate the veterans and troops who have dedicated their lives and care for the freedom of our communities. We would also like to extend our gratitude to those within our Converge family who have served. Your bravery, sacrifice, and example are valued each and every day. In what follows, I will provide a business update on the quarter, beginning with commentary on our successful expansion into Europe. We will discuss our continued impressive integration results, as well as detail the leadership of our sales and marketing teams, which drove cross-selling efforts in our higher margin business despite the challenges related to supply chain issues widely experienced. Matt Smith will provide an update on the financials, including a record cash flow generated from operations of CAD 48.1 million, an increase of 86% year-over-year. Beginning with acquisitions, Converge successfully closed four transactions since July 2021, including REDNET AG, Vicom Infinity, and Infinity Systems Software, and LPA. These world-class analytics capabilities built on our already strong team truly differentiate Converge in the mid-market. In Europe, REDNET AG, founded in 2004 and headquartered in Mainz, Germany, is comprised of an established management team operating within key verticals complementary to our customer mix, including education, healthcare, and government, which are poised to witness an acceleration in IT spending. With REDNET AG marking our entry in Europe, it acts as a platform acquisition to expand our solutions portfolio on the global scale, while also leading the way for our ESG outlook. REDNET AG implements a 360-degree holistic approach to increasing IT life cycles through flexible maintenance while being mindful of environmental and sustainable initiatives. Optimized ecological footprints through the reduction of travel, consolidation of infrastructure resources, and visions of healthy IT life cycle are just a few of the initiatives the company has placed on the top of our agenda. Other exemplary initiatives within Converge include our Diversity and Inclusion Council that strives to ensure all of our employees are treated equally and feel valued, as well as a wellness program focused on creating healthier lifestyle choices for our team with tools for mental resiliency and financial literacy. We believe these efforts have contributed overall to employee and individual wellness directly correlating to successful metrics in employee performance. I've often spoke of cross-selling efforts, which we've learned result from a healthy mix of clear vision, education, and leadership and successful integration driven by positive communication between our sales team. I'm incredibly proud of the marketing and sales leadership as our team achieved 97 net new logos throughout the quarter, driven by 44 customer-facing events with approximately 1,240 external attendees. Our teams have done a fantastic job engaging new and existing clients to our events, such as a Q3 co-hosted event with Red Hat and AWS, which attracted over 404 external attendees. Additionally, since the beginning of 2021, we have hosted 603 executive briefings, driving the cross-sell of our higher margin cloud and managed services, alongside our professional services, which we've witnessed increase of spending over the past quarter. Regarding recurring revenue, in Q3 2021, our gross annualized recurring revenue was CAD 338.8 million. This is made up of CAD 81 million of managed services annualized recurring revenue, CAD 72.7 million of gross public cloud annualized recurring revenue, and CAD 185.1 million of software subscription support, which are typically paid annually. One of the key differentiations of Converge is our ability to integrate acquisitions, and we have now integrated 19 of the 24 acquisitions that we have completed. These integrations include not just people, but tools in areas such as project management, professional services, IT, finance, and inside sales. Even though the pace of acquisition has accelerated this year, the integration team has expanded the scope of integration and will be rolling out a common CRM platform in January. In addition, we are now starting to streamline our entities and will start to remove some of the legacy branding of entities in 2022. Our industry has been affected by supply chain disruptions, with some of our vendors being impacted more than others, especially around endpoint devices. Bookings, which is orders received from customers that have not been delivered, stood at approximately CAD 250 million at the end of Q3, compared to approximately CAD 50 million in the previous year. Had there not been supply chain issues, we would have generated an additional CAD 100 million-CAD 150 million in revenue during the quarter. Normally, we see bookings convert into revenue in four to six weeks. As some of you will have heard from vendors like Dell and Apple, these dates are being greatly extended due to manufacturing facilities not being able to run at full capacity, and they expect these issues to continue into 2022. In addition, our operating costs were impacted by a mismatching of our employee cost and configuration, installation, managed services and other service areas who are not able to execute as a result of product delivery date delays. We continue to communicate with our vendors on these issues and believe that the strong demand we are seeing will result in deferred revenue but not lost revenue. We continue to execute on our acquisition strategy as well and have the most robust pipeline we have ever had. Having a strong cash position and generating such strong free cash flow will enable us to execute on the next phase of our expansion in both North America and Europe. On that note, I would like to pass the call to our Interim Chief Financial Officer, Matt Smith, to discuss our financials in further detail. Thank you, Shaun. Third quarter revenue increased 93% to CAD 367.3 million, compared to CAD 189.9 million last year. Product revenue, which includes hardware and software, increased 67% to CAD 289.6 million from CAD 173.4 million over last year, primarily due to the impact of acquisitions completed in the second half of 2020 and those completed 2021 year to date, and the overall strengthening of the IT market as companies begin to increase spending now that COVID vaccines have been rolled out. Managed services, which are long-term contracts, increased 34% to CAD 20.3 million from CAD 15.2 million last year. On an annualized basis, our managed services at the end of the quarter grew to over CAD 81 million, compared to CAD 61 million last year, and has increased sequentially by approximately CAD 14 million since Q2. Professional and other services, which includes the net revenue from public cloud resale and software support, increased 84% to CAD 57.5 million from CAD 31.3 million last year. By industry, our revenue breakdown was approximately 12% from the financial sector, 8% from government, 20% from technology, 24% from manufacturing, and 20% from healthcare. As COVID vaccines have increased, we are beginning to see large projects that require in-person services that had previously been put on hold start to be implemented. We expect to see further growth in higher margin professional and other services as supply chain challenges lessen and backlog is delivered to end users. For the nine months ended September 30, revenue increased 55% to CAD 1.02 billion from CAD 659.2 million in 2020. Product revenue increased 62% to CAD 823.4 million from CAD 509.1 million over last year, primarily due to higher hardware sales to the Canadian government and the impact of acquisitions. Managed services revenue increased 22% to CAD 52 million from CAD 42.6 million last year, and professional and other services revenue increased 37% to CAD 147.5 million from CAD 107.5 million last year. Gross profit for Q3 increased 60% to CAD 83.8 million from CAD 52.4 million for the same period in 2020, and gross profit margin was 22.8% compared to 27.6% last year. For the nine months ended September 30th, gross profit increased 42% to CAD 229.8 million from CAD 162.1 million in 2020, and gross profit margin was 22.5% compared to 24.6%. Last year, our high gross margin illustrated how we've been able to successfully transition the companies we acquire from lower margin businesses that sell primarily hardware to higher margin software and services businesses through cross-sell. For 2021, margins are lower due to the fact that we acquired seven companies in the first nine months that sell mainly hardware. However, as we cross-sell higher margin cloud services and managed services to customers of these companies, and increase sales to our existing customers as they expand their cloud-based IT infrastructure, we expect gross margins to increase. SG&A for the three months ended September 30 was CAD 66.1 million, increasing from CAD 38.9 million in the same period last year. For the nine months ended September 30, SG&A was CAD 173.4 million compared to CAD 128.5 million last year. SG&A for the three and nine-month periods continues to reflect the impact of the CAD 20 million annualized savings that we announced last year. As a percentage of sales, SG&A made up 18% and 17% for the three and nine-month periods respectively, compared to 21% and 19% for the same periods last year, reflecting the integration savings over the last 12 months, which cumulatively have been over CAD 28 million on an annualized basis. Adjusted EBITDA for the three months ended September 30 increased 29% to CAD 18.9 million compared to CAD 14.6 million last year. As a percentage of revenue, adjusted EBITDA was 5.1% compared to 7.7% last year. For the nine months ended September 30, adjusted EBITDA increased 60% to CAD 59.3 million from CAD 37.1 million last year, and was 5.8% of revenue compared to 5.6% for 2020. In the near term, our EBITDA percentage reflects the impact of recent acquisitions, which have lower EBITDA margins when we acquire them, but increase as we integrate operations and cross-sell, as well as higher personnel costs associated with delivering product and managed services for future revenue that we haven't been able to recognize due to supply chain challenges. Interest and finance expense for the quarter was CAD 1.5 million compared to CAD 5.1 million last year. For the nine month period, interest and finance expense was CAD 5.7 million as compared to CAD 15.9 million last year. These significant savings are a direct result of lower interest costs on our ABL, which, as we announced in Q4 last year, have been switched from a specialty lender to a syndicate of Canadian banks, including CIBC, Scotiabank, and Laurentian, as well as interest savings as a result of us paying off higher non-ABL debt. This quarter, we generated record cash flow from operations of CAD 48 million, which is attributable to year-over-year EBITDA growth and strong working capital management. At the end of the quarter, total cash on hand was approximately CAD 210 million, and we had approximately CAD 190 million in borrowing capacity under the ABL. With that, I'll pass the call back over to Shaun. Thank you, Matt. As we continue to produce quality business results and retain satisfied customers, our reputation continues to improve and is reinforced by the four awards achieved throughout Q3, including Ingram Micro's 2021 Blue Series Partner of the Year, CORE Partner of the Year for North America, 2021 North America Microsoft Surface Reseller of the Year, and 2021 Ingram Micro's Microsoft Cloud Reseller Partner of the Year. Additionally, the company achieved AWS Migration Competency status, recognizing the company's ability to provide technology and expertise to help clients successfully move to AWS. The accumulation of industry and Partner of the Year awards has unquestionably advanced Converge's reputation with both our customers and our partners, allowing us to run our business more effectively while delivering solutions to our clients, which will continue to advance on the global scale. As our reach and reputation expand, it creates a strong platform for rolling out new managed services offerings, such as the Google Cloud Marketplace solution, IP4G, we announced subsequent to the quarter. On that note, let me open the floor to questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have any questions, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press the pound key. If you are using a speakerphone, please lift your handset before pressing the keys. One moment for your first question. Our first question comes from Kevin Krishnaratne from Desjardins. Your line is open. Hey there. Good morning, team. Question for you on the strong backlog. Look, I know it's hard to give us sort of the guidance and the timing of the release of that backlog. No one's got a crystal ball. Can you give us maybe some comfort on the nature of the backlog? Other VARs have talked about, you know, the fact that they're not seeing any, you know, any double booking. They talked about confidence in orders not being pulled. I'm just wondering if you could just give us a little bit more color on how the conversations and relationships are with your clients and just, you know, dig into the nature of those contracts and those orders that are being put in. Sure. Let me start off first on the German side. Obviously, REDNET has incredible growth and those contracts are exclusive to them. That's more just making sure as soon as they get them, the DigitalPakt that Germany has with its federated states is, that's where all that growth is coming in. Just fulfilling that demand is really there. In North America, we're seeing, again, endpoint devices are more impacted than, say, data center, but it's really down to by vendor. Like we've seen no issues around our supply of IBM and although we sell a lot of IBM software and services also on the hardware side. I think it does come down to really listening to the vendors. We communicate very openly with them, in order to see that. We haven't seen the pulling of order. The only thing we have seen is, as we talked about on previous calls, when there are supply disruptions, we try to provide alternatives to our customers, in terms of, whether it be, you know, certified refurb or alternative choices that they have for people with stronger supply chains. Say we do believe that this will all be deferred revenue, and not lost, and especially with the largest components of this being really centered around the REDNET acquisition in Germany. REDNET AG, right. You talked about the 100. You could have seen upside of CAD 100 million-CAD 250 million in Q3. Is- Correct. The majority of that is REDNET? They're a big chunk of that, yes. Yeah. You also saw the other vendors being impacted. You've got some on the HPE side, obviously. Our Dasher acquisition is one of the largest HPE partners. Really it's on the, like, Northern Micro increased their inventory levels this year as a mitigation strategy, going from a traditional one month of inventory to four. That's the way they were dealing with the issues that they were seeing coming down the pipe. A lot of it is just communicating with the vendors and working with them as we see their commentary on what they're seeing the next year. Again, Q4 also is a very strong software quarter. Most of our vendors, our customers, we do an incredible amount of business on December 30th and 31st for those software renewals, so that business obviously isn't impacted. We're communicating with our customers because their budget year ends and our OEM year ends are usually here, they get the best discounts. We're encouraging them to not wait until the December, but to act earlier in order to make sure you can get supply. Definitely, you know, working with our vendors, communicating and trying to offer solutions to our customers. Okay. That's good to hear. On, you know, the different vendors, IBM, you're not seeing any issues there, I don't think. You know, you talked about the acquisition of Vicom Infinity. I think that had a strong seasonality in Q4. Can you know, just give us the view on that business? Is everything okay there? Your thoughts on the revenue to be delivered from that unit? Yeah. That's very strong. Q4 is by far the strongest quarter. They tend to be very Q2 and Q4-centric, and we're seeing very strong demand in Q4 for them. Okay, great. You talked, you know, switching over to the OpEx side of things, you talked about a CRM system coming into play early in January and then some removal of legacy systems. Is there any way to quantify what you think the level of savings would be on an annualized basis from all of those initiatives as we think about 2022? Yes. Well, we haven't got that number. We've again spent the last few days going through the management team, all the integrations, and I'd say it's just so impressive the way the team has been able to integrate all of these tools and systems into common platforms. I don't have that annualized number for you, but we'll look for, as we're implementing that in Q4, we'll give you a more of a number to look for. Obviously they've all had their own systems on a CRM side. By replacing those 24 systems with one common platform, there's obviously licensing savings, and obviously increased communication and better able to access resources. The tool set in the suite really enables a lot of our cross-selling, our managed services selling. A lot of initiatives there. On the numbers side, I'll come back to you in Q4 as we're implementing it. Okay. Thanks for that, Shaun. Just one last one. The net new logo is still strong, 97 out of this quarter. I think you were a little bit higher in Q2. Can you just talk about the dynamic there? Were there some wins that are getting pushed out into Q4? Can you talk about the nature of the logos? Are you know, are they the similar size? Are they getting bigger? Just any color you can provide on the logos there? Thanks. That's summertime, July, August. Again, the team has done an amazing job with the events. We did have a very strong Q2 with 120 net new logos. July and August, we actually had some people take some vacation. It was very well deserved after they've been working so hard, especially during the pandemic. Then you really saw this demand pick up again in September. Then Q4 obviously is by far our busiest quarter. We are seeing the strategy's working. The team's ability to sell not just one practice area, but multiple practice area, our analytics, our cybersecurity, our cloud, our managed services into these accounts. Greg and the team have done a great job of that cross-sell. We say we're definitely seeing into our mid-market customers. It's the same sectors, really, that we're seeing, and we're seeing very strong demand. Great. Thanks a lot. I'll hop back in the queue. Thank you. Thank you. Our next question comes from Rob Goff from Echelon. Your line is open. Good morning, and thank you for taking my question. Could you perhaps walk us through Q4 and how you- Expect to see greater visibility on what that Q4 may be. Any mileposts that you anticipate in terms of judging your ability to deliver with the supply side constraints, recognizing December is big, December thirtieth and thirty-first specifically are big. On the 30th and 31st, they tend not to be hardware sales as much as software sales because obviously shipping things, we don't recognize revenue until it reaches the customer. That's where I say the software part, you'll have much better visibility. We're just constantly communicating with our vendors. A large portion of the delays in Q3 were not scheduled. We had commit dates from vendors that they just couldn't meet. Those were surprises. We have increased our communication on a daily basis with our vendors, working through things just to make sure we have that visibility. Our teams are in constant communication with them as well. Really, it's the visibility of it. We're doing everything we can to make sure we can get products to our customers and solutions to our customers. Again, it's when you listen, we would ask you to, you know, see what Apple is saying, see what Dell is saying on their calls as well, and they're seeing some of these challenges going into next year. If you look at the COVID rates of the manufacturing sites, which has really been impacting this, there is some improvements on their operating level. They were down to kind of the 40%-60%, and now they're kind of over 80%. So you're seeing that. Really the best way to look at what we do as well is to listen to what's coming out of our vendors and working with them. Thank you. Recognizing the current environment, could you talk to the growth in the managed services? I believe it was 34% on the quarter, but what would the organic growth have been, and would you believe you are on track for recurring revenues of CAD 100 million exiting the year? Yeah. We are on track. This is part of the ExactlyIT acquisition, which really brings about a lot more of the delivery of these managed services. Talking with our sales teams, we've identified our key sales reps and customers in order to roll out these services too. Yes, we're on track for CAD 100 million is our target by the end of this year. By the end of Q4, and we're on track for that on an annualized basis, and we're looking forward to next year to try to hit that CAD 200 million by the end of the following year. So the acquisition of ExactlyIT, the rollout of these services is going to plan. In terms of the organic growth on the quarter, would 25% be a reasonable approximation versus the 34% reported? It's really tricky to segment like that because what we've done is we've moved. If, let's just say, all the ExactlyIT revenue isn't organic because we acquired it, but those are from our customers. It's not that easy to segment it in that manner. That's why we just give the overall total number and say we're on track to 100, if that makes sense. Cool. Thank you, and good luck. Thank you, Rob. Thank you. Our next question comes from Rob Young from Canaccord Genuity. Your line is open. Hi, good morning. The incremental CAD 200 million of backlog you're talking about that relative to last year, can you give us some sense of the duration of that backlog? Do you expect that to fall entirely into Q4, or is that something that you're expecting that'll take multiple quarters to wind down? The second part of that, of course, is do you expect that backlog to stay that high for the next couple of quarters, or is that gonna normalize quickly? Great question. The backlog obviously has increased from the end of Q3. Normally, we would see a conversion of four to six weeks. With certain vendors, we're seeing those, like, for example, the IBMs of the world, we're seeing that stay like that. That part of any backlog gets delivered. It's with the vendors, especially around endpoint, that there is uncertainty on the timeframe. You're also having some vendors like, say, a Cisco, who are experiencing more supply chain issues, where now they're giving delivery dates, which can be as late as Q2. I think it really is by vendor, but you look at, obviously, our focus is on software and services. Our managed services are not impacted. It's on the hardware side, and what we're seeing is more on the endpoint device. Really, I think you have to look to the vendors and what they're calling out. Like, we have incredible growth, especially in the REDNET business. I mean, that is one of the ones that's most impacted by this in getting that supply. You would expect. What Dell's saying is basically they're seeing this is gonna be an issue throughout 2022. We're seeing some improvements in some areas. I would expect. Like, obviously, Q4 is a busy area for the entire industry. Q1 tends to be less busy. I think what it would mean is normally, their manufacturing facilities would not be on 100% capacity in Q1. I would expect to have more of that backlog normalize in Q1. Again, for those specific vendors, I mean, it's an industry issue. I would look to the guidance being provided by your Apple, by your Dell, on what they are saying, and we're in constant communication with them as well. Okay. There's quite a lot of M&A that falls into Q4. If we assume that all of that is predominantly product or hardware VAR, would that be a good assumption? If there's a way to parse out Q4 as maybe a percentage of software versus hardware, that's probably a hard number to give us. Is 50-50 a good sort of a guess, or you've said software is 50 or more. Should we assume more than 50% in Q4? It's gonna be hard for me to judge what that number is. When you look at those percentages and you look at the revenue that REDNET has in particular, there's such a variance on, you know, what those percentages would be. For them, it's the devices, but then it's the managed services around those devices and the services around them. They're kind of the biggest kind of outlier and wildcard as far as really dramatically different numbers. For most of the rest of the businesses, it's more predictable. I wouldn't say it's 50% software 'cause a third of our revenue is kind of IBM Red Hat. A lot of those are software and services, and those deals tend to happen in Q4. Vicom Infinity Systems, those deals will be Q4. Those ones, you're feeling very good about. I'd say the biggest impact is on the REDNET side, providing great variance and then the conversion of the existing backlog that we have. Okay, thanks for that color. The EBITDA margins, just curious, I mean, the services number is pretty strong, as normally I'd expect, you know, the margins to be strong. I think you gave a couple of reasons. I was hoping you could maybe put some weighting on them for us. The first one, I think, is the buildup of services capacity ahead of the ability to fulfill on the hardware, and so there's some utilization. The second piece was the recent M&A, which typically favors lower margin VAR revenue, and so just the high level of recent M&A. Is there a way? Are those the two key pieces? Maybe you know, is one bigger than the other? First, mix is a big deal. When you buy this many companies, as you know, when we buy them, they're more like 3% EBITDA, and then you saw us walk them last year up to 8% EBITDA. The mix of basically doubling your revenue in a year means that you've got the old percentages mixed in with these new ones, that we then add the rebates, we do the costs, we cross-sell the higher margin services. Mix is absolutely one of the issues. The second thing you're seeing is there will be transition costs as we move to this new structure with ExactlyIT, where you're gonna duplicate costs in a quarter as you migrate them to Mexico. There's that, and then obviously, as you've commented on with REDNET, they're experiencing such dramatic growth. We're increasing the capabilities for them to integrate, manage, scale the devices to meet the incredible demand that they're seeing in Germany. There's a lot of costs associated with that when you don't get product are kind of mistimed in that, you're building up capacity of what you've been told will be delivered, and if they're not, then you're not experiencing the same utilization. You'll continue to see, like, That's by far the fastest growing company that we have in the portfolio, and there's different dynamics around the investments required for that growth, especially with the supply chain disruption. I think you've captured mix, the transition when we buy them to the managed services new cost model, as well as the investments to scale. I think those, you've got those, yes. Okay, great. Then one little just a tiny definition question on your ARR calculation. If I'm trying to back out managed services for the Q3, like should I think of that as just, you know, the ARR divided by four quarters, or is it divided by 12 months based on the last month of the quarter or the last day of the quarter? Like how are you Yeah. How do I get to a managed services number in the quarter from that ARR data? Yeah. It is a month. It's month divided by 12 or month times 12. So we will take the September's number, times that by 12 to get your annualized number. Okay. It's a little less than the straight divide by four. Okay. Thank you. Sure. Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press star and then one. Our next question comes from Christian Sgro from Eight Capital. Your line is open. Hi, Shaun. Good morning. Good morning. This was a very strong free cash flow quarter. I was just wanting to ask on some of the puts and takes you're seeing on the working capital side. You mentioned deferred revenue, you know, maybe inventory's a little bit in flux into the end of the year here, but just wondering what we should be looking out for on the cash flow profile? Yes. We've really done a great job of kind of streamlining those processes, so extending our terms to 75 days this year on the one side, while at the same time, streamlining our collection processes. That's the combination, and you really see this when you buy all these companies and then move their terms to a very strong free cash flow from working capital. You have approximately 70% of your EBITDA goes to free cash flow, and then, I think it was CAD 34 million, CAD 35 million in the quarter came from working capital management. If you look at our receivables versus our payables, it's shown we've done a great job in managing that process. That should continue. I would expect Q4 to be a very strong free cash flow. In comments around what Northern Micro did on inventory, that's a change that they've made from the beginning of the year because of the changes they were seeing on the supply chain. There wouldn't have been an increase for them around that. That would've been the same quarter the same kind of levels quarter on quarter. It's more, REDNET's the new one, so that's adding new variability to their. Very strong free cash flow. I'd expect the same thing to happen in Q4. The inventory balance looks flat Q-over-Q. I was looking for maybe more of a build up on the Northern Micro side. Would you say, well, between there and REDNET, there could be a little bit more capacity built into Q4? Or do you think, you know, this sort of level, maybe as a% of COGS or sales is where the business could trend through the supply chain disruption? Well, the problem you've got with REDNET AG is they just can't get supply. They're growing so quickly, it's a different situation where, I mean, Northern Micro's had robust demand, and they were planned ahead for it. These are new contracts being awarded to REDNET AG on a constant basis that they need to fill demand for. Like, the inventory levels are very low there because of just a lack of supply. As soon as gear comes in, it's being turned around and delivered. I wouldn't think that they would. As soon as we get gear, it's out the door, so I don't think their inventory levels will be higher. Okay, got it. That's really helpful. I was looking for an update on the IBM iSeries, managed offering there. This is an area, you've been a little bit more vocal on for the back half of the year. You know, is this an area you're seeing traction, you know, Europe or North America, and maybe becoming more engaged with Google or other partners, through this stretch here? Absolutely. Thank you for mentioning it. It's a key area for growth for us. It's a differentiated offering, and the fact that now we're part of the Google Marketplace and that they are selling our solution is really expanding that. It's not just in North America, it is in Europe as well. This, by having a differentiated offering in the space, it's introducing customers to us that we can then upsell our other managed services to, such as our service desk, our managed network, our managed security, our managed end user. This is, you know, why we've been focusing so much on the user experience, having a good Net Promoter Score, and then access to customers that we then build this pipeline of managed services. It's an extremely important differentiated offering for us. Now that we have the capabilities to add these other layers of managed services on top of it's rare for a company like us to have other people, like an Infor and a Google, selling our solutions and being available through the Google Marketplace. It's a great initiative that will have material impact next year. Okay, perfect. One more question from my end. When I think of the M&A strategy, maybe something you've been thinking about or talking about is that the valuation landscape could benefit here, if supply chain is a headwind for the sector. You know, maybe you're seeing valuations become more attractive across the space. First, are you finding that quite yet? Is that true or not? Second, you know, is this a dynamic you think could become more pronounced in North America or Europe? I think there's two dynamics that are. We have such a robust pipeline now. There's two factors, I think, in the U.S. There's concerns over capital gain tax increases next year, so people wanting to get the deals done earlier is having an impact. I think the other part is a lot of these smaller companies, again, some of them can be quite large, but in that kind of $100 million-$200 million range, they've made it through COVID and all the challenges it faced, having supply chain as well, they want to become part of something bigger so that someone can help them with these challenges. I think there's definitely a recognition there of being part of a larger entity that can, you know, have greater pull and scale in order to help solve these kind of issues is definitely to our advantage. I think both of those dynamics are helping in the incredible pipeline we have for acquisitions. Perfect. Thanks for taking my questions. Thanks. Thank you. Our next question comes from Divya Goyal from Scotiabank. Your line is open. Hi, Shaun. Hi, Matt. Thanks a lot for providing all the color on the backlog here. That's definitely an important discussion for the day. I would digress a little and get into the M&A side of things, and my question pertains to the European expansion. You've always indicated that you are looking to expand and the bigger synergies come from the cross-sell. Having said that, language tends to be a barrier when you look at North America versus U.S. How are you gonna be using your North American entities to cross-sell across Europe? Would that not happen and both North America and Europe will stay standalone? You know, great question. The practice areas that are global are our cloud and our managed services practice areas. The analytics and cybersecurity are separate for that reason. The playbook in Europe is you put your admin people in Ireland, you put your tech resources in Eastern Europe, and they will support that region. Obviously, when you have the platform acquisition, the next ones we do will help. For REDNET, the geographical reach into the other federated states, you can pick up companies with adjacent geographies that we can then use the REDNET management team to do that local cross-sell. The managed services group does have German language skills out of Mexico, and they are already being used to offer managed services into the German marketplace. We'll continue to expand the footprint of some of the services in Europe. If you look at we're very mature right now in North America. We're in that, more of that growth phase. I can kind of compare it back to the phase one that I had there, the advantage being that we've got such a different kind of relationship from a branding perspective as well as with our vendors. Obviously, having a guy like Thomas Volk and Doris Albiez in the market, they're very well known, has been tremendously helpful as well. As far as, yeah, the areas, there will be some differentiated part of the services. We're definitely one company, though. Common tools, the same CRM systems that are being rolled out in North America are being rolled out as well in Germany. If you made those people cross the pond, they'd quit. That's helpful. Thanks, guys. Thank you, Debbie. Thank you. We do have a follow-up from Rob Goff from Echelon. Your line is open. Thank you very much for taking my follow-up. My question's on the backlog and the supply side issues. To what extent does the weakest link theory apply, i.e., where you have a multi-vendor solution? You know, Aruba may be delivering in four weeks, but if it also has Cisco, and that's not until Q2, is the whole project deferred to Q2, including software? I'm just trying to get a better sense for that linkage. Yeah, that tends to be more of a large enterprise issue than it does for a mid-market issue where we're able to roll out our solutions and especially on the cloud side. We're not seeing that bundling up, whereas if you were delivering such as, let's say, an SAP data center solution, they're all kind of tied together. That's not really our business. What we're doing is those kind of solutions we'd be moving to the cloud. Yeah, so good question, but no, that's more of a large enterprise problem than a mid-market problem. Okay, good. Thank you for the clarification. Thanks. Thank you. There are no further questions at this time. Please proceed. Well, I'd like to thank everyone for participating on today's call, and I look forward to updating our shareholders again when we announce our annual results, and thank you for your continued support. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.