There and open the floor for a quick background on the company. Sure. Thanks, John. Yeah, I'll give you a quick background on HireRight. I've been with the company for nine years, so I've seen quite a bit of the evolution of the company. HireRight is in the background screening space in the broader HCM supply chain, I would say. We're one of three public companies in the space. It's roughly a $7 billion-$ 8 billion global TAM. And basically what that means, you know, maybe why we're sitting here at a TMT conference, is because we are very much a technology-driven solution, and really an integrated partner with a lot of the major HCM, you know, companies out there. So we're partners with UKG and Workday and Oracle and SAP, and so forth and so on, and it's truly an integration, and we're really excited. We recently announced two even deeper partnerships, one with Oracle and one with UKG, where we're truly embedded in their solutions. So really part of the overall HCM, you know, value and supply chain, big growing market. I think some of the, you know, questions people have is what does it actually involve? Besides the technology platform that we provide to our clients and integrate with the big HCM companies, at the end of the day, what our customers are consuming from us is a background screening report, and that means anything from getting your fingerprints checked to your criminal background history, to verifying you went to school where you said you went to school, or worked where you worked, or, you know, if you're a nurse, that you have the licenses that are required to be validated on an annual basis. So kind of runs the gamut. There's probably, you know, a couple hundred different products that we sell our customers, roughly a $700 million-$800 million company, one of the big three players in the space, and we're a global company. That's great, color. Thank you. Yeah. Maybe just double-clicking on the differentiation, I believe it's known as the Pepsi Challenge. Mm. The depth of screen, especially with for HireRight, is greater than the other two large kind of public competitors, but in the long tail as well. Could you just explain how you capture more than most traditional background checks and what makes yours differentiated? Yeah, sure. And I, and I think it stems from kind of, you know, how the company grew up, right, and the type of industries and verticals we focus on. We talk about our core four verticals being transportation, healthcare, financial services, and technology. And three out of the four of those big four, which make up almost 60% of our revenue, industries are very regulated and compliance-centric businesses. Mm-hmm. Again, I gave the example of a nurse who has to have their, you know, healthcare credentials reverified on an annual basis, or they get severely penalized by the state sanction agencies. So that is the reason, you know, that is in our DNA and our pedigree, and why we go to that extra length to make sure that we're double and triple-checking the quality of the searches we're doing on our candidates and our customers' employees. And part of the reason, the way we can do that is the long tenure of this business and the fact that we have built up data assets over 20+ years. And transportation's a perfect example. We've got a trucking database that goes with drivers in it, that goes back 25, 30+ years, right? Because we've been doing this forever. And so we've got a very extensive database that allows us to provide a more comprehensive background check. And I think the other part of the algorithm that goes into, you know, double-checking, and providing the most thorough background check is really the identity, the development of an identity of person. It's one thing to say, "Hey, I'm going to do a background check on Tom Spaeth, and he lives in Orange County." I can check Tom, Spaeth, Orange County, and be done. Mm-hmm. Our algorithm and our process is much more encompassing than that. And when developing an identity, using third-party data assets, whether it's some of the big credit bureau header information, and finding out, well, geez, you know, Tom also went by Thomas or Tommy or something else and/or he changed his last name, or if it was a maiden name or whatever the case may be, and oh, by the way, he lived in these four other states that he didn't report in these jurisdictions. So we go above and beyond in terms of developing that identity to get a complete picture of the individual, to make sure we're checking all the necessary data sources out there that are required to make sure we're doing a thorough screen. Just in criminal jurisdictions alone in the U.S., there's over 3,000 jurisdictions, right? So, and then you add on top of that all the state depositories with, you know, sanction data and NSOR data and fingerprint data. I mean, it's thousands and thousands of data sites out there that we have to make sure we're checking the right ones every time. So when I develop that identity, I develop an encompassing view of that person and know where to look. That's great. Then could you just also touch on why you focus on these kind of more regulated industries, as well as your, perhaps exposure to TMT? I believe the comments around the, kind of, stabilization in TMT were last quarter-over-quarter, and- Yeah. ... so that we haven't seen as much of a drop-off as some people might have expected. Yeah. So, but I would say the reason why we focus on these industries, and I would even put technology, even though technology is not necessarily a regulated industry, our customers and our big customers in technology are the who's who. They're the Googles and Workdays, and Microsofts, and Dell, and so forth and so on. They are very, maybe not regulated, but compliance-driven companies because of their ethics and standards. So they take what we do for them very seriously, and that's why we take pride in that. So that is why we focus on doing that extra quality screen. And when you talk about the technology industry in particular. Mm-hmm. You know, coming out of the pandemic, obviously there was a mass hiring, the Great Resignation. The velocity we all saw in the labor market was pretty extensive. At the end of 2021, going into the first half of 2022, we saw a dramatic ramp. It actually became our number one vertical in the first half of 2022. I think it approached 20% of our total business at that time. And subsequently, it's been well documented that we've seen a pretty dramatic pullback from the big techs. And, you know, if you go back 6-9 months ago, it was every week there was somebody else announcing another layoff or a reduction in force or whatever it may be. You know, you can see the data, whether you're looking at JOLTS or whether you're looking at the LinkedIn workforce reports. You can see year-on-year, the tech hiring is down somewhere in that 20%-30% range, depending on which metric you're looking at, which is pretty consistent with what we've seen in our business. Again, we don't tend to focus on kind of VC-backed startup companies. These are more established companies that I rattled off a minute ago, and they felt the same pullback as many of the other tech companies have. Absolutely. That's great color. Thank you. And then maybe going back to the velocity, has there been any structural change in the way that people are quitting their jobs and the quit rates, as well as perhaps some of the discussions around the Great Resignation, which hasn't been as much of a topic, but could there be still elevated quit rates relative to history, and what are you really seeing, and what's the view that we have for the kind of longer term? Yeah, we definitely saw a spike in the quits, you know, probably nine months to a year ago, which was all the talk was the Great Resignation, right? And so there's always the great next thing. It's not the Great Resignation now, it's... Then it was Quiet Quitting, then it was, you know, quiet firing, right? So there's always a new catchphrase going on. But what we fundamentally believe, and although we've seen that quits rate, you know, pull back from peaks, it's still slightly elevated from where it was, maybe pre-pandemic. Mm-hmm. I do think the fundamental secular changes in the labor market are gonna continue to have an elevated quits rate going forward. You know, part of that's driven by a younger generation who feels less obligated to stay with the company for five, seven, 10 years. You know, I've got kids who are in their twenties and getting jobs and, you know, they view a year or two at a company as a long enough tenure to move on somewhere else. So I think that's just inherent in the next generation, which there's nothing wrong with that, and a lot of people are being encouraged to do that. And then I think you also have the advent of what we call the freelance economy, the gig economy, the contractor economy, whatever you wanna call it. This is something that's here to stay. We know it's here to stay, and this creates more velocity in the workforce and people changing jobs. And I'm not even talking about just Uber, Lyft, and DoorDash. I'm talking about IT contractors. You know, my son's got friends who are IT contractors, and they do a job for six months, and they take a month off, and you go do another job for six months. And that's becoming... This freelance economy is becoming much more a mainstay part of the business, of the workforce out there, and I think that's my opinion is that's here to stay, but we'll see. Yeah. I think that's a great way to characterize it, and it does seem like it's been a more recurring trend. Right. Especially as the generational dynamics shift- Yeah. We've definitely moved toward a more kind of, not Gig Economy, but more of a flexible economy but- Right. To touch on another space, I believe you have this, self-service, portal and kind of the SMBs and SMEs, and I believe it's mostly unique to kind of, HireRight. Could you talk about that and what you're seeing in this space as well? Yeah. So we do have a platform, an e-commerce platform, if you will, called Backgroundchecks.com, which is we're trying to make it as simple as possible for somebody, for a small pizza company, tow truck company, local hair salon, who's got, you know, less than, you know, 50, less than maybe five employees, but they still wanna do a background check on somebody that they're hiring. You know, it's pretty self-service. You can log in. It's a, you know, good, better, best model, put on a credit card, put in some information, and get a background check within a matter of a couple of days. So we do think the SMB portion of this industry is an important part of the market to go after. We don't think anybody's really cracked the code perfectly on that one yet. I think there's a lot of opportunity there. Mm-hmm. I do think of the big three, we're the only one who has an active program going after that. Would I say it's where we want it to be? Absolutely not. But it, we've got a head start on it, and, I think with some investment, we can continue to grow that business. Yeah, that's great. And then maybe, again, going back to the competitive landscape, you have kind of the big three, but also a long tail. How do you think about just the kind of secular tailwind of, not only winning but also potentially- Share. ... doing M&A, kind of, yeah, win share? Yeah. So I, I think that the rough stats that we all throw out there is that the big three, who are all public, have about 10% market share each. So we have roughly a third of the market between the three of us. There's a handful of companies that I would say are in that, you know, middle market space, kind of north of $100 million, less than $300 million of revenue. Not a big handful of companies in that space. And then you've got a pretty long tail of companies, sub $100 million, probably sub $50 million, actually. Mm-hmm. We're starting to see a lot more of the smaller companies come to market, right? I think with a little bit of a pullback in hiring, we've seen this year and some of the struggles. We've seen them, you know, come to market. You know, our philosophy on that is we're not interested in buying share. We're winning share from, you know, smaller down-market companies today. We don't think we need to pay a multiple of revenue or a multiple of EBITDA to take that business. We'll continue to win that business. It's increasingly becoming difficult for smaller companies to play, at least at the enterprise level, right? If you're an enterprise company and are deploying Oracle or UKG or SAP or Workday, you need a background screening provider who, one, can support you from a technology perspective. I mean, I guarantee you that the three big guys here probably spend more on technology than most background, you know, screening companies have in revenue in a year, right? We're spending that much money on our technology platform and our integrations and keeping those up to date. So it's increasingly difficult for them to compete with us, and certainly from a global perspective, they just can't do it. Yeah, that segues very nicely into the single global platform. Could you just touch on how you kind of go to market more internationally, and how an enterprise customer kind of makes that decision? Yeah, it really does come down to the technology and the integration. That's very much a piece of it. What we've seen, you know, over the last, you know, number of years is more and more enterprise companies choosing a single HCM global solution. Again, all the companies I just rattled off, Workday, SAP, Oracle, UKG, so forth and so on. We are the only company, and we stand by this, that can do a one-step integration with these companies and support a customer globally. Unfortunately, some of our competitors have to do multiple integrations, but they have disparate systems. Like, they have a separate system in Asia, a separate system in the U.K., a separate system in the U.S. So it requires multiple integration points, which makes it a little bit clunky from an API perspective. We spent a lot of time and effort and money over, you know, back in 2018 and 2019, getting it down to a point where we can build a single integration with Oracle or UKG or whoever it may be, and have that global support across the organization. And, you know, I think that's a testament to, you know, what we just saw recently, where Oracle selected us as their only core integrated partner for their systems, as well as UKG announced a partnership with us, where we're gonna be the sole background screening provider in their solution, integrated in their solution. Yeah, and I think that's a testament to the solution itself- Yeah. ... as well as kind of what the place is within the HCM landscape. Maybe just shifting gears to kind of another point. I believe in the first quarter, you announced some kind of cost reductions- Yep. ... and you're going to basically, again, just kind of rightsize the labor force as well as some other kind of target buckets. Could you walk us through those buckets? And at a high level, how we thought margins and kind of normalized margin expansion going forward outside of maybe a cycle we're going through right now? Yeah. We've publicly been out there since the time we went public back in 2019, talking about a long-term target of driving EBITDA margins to 30%. You know, our guidance range gets us in that 24%-25% this year, so we still have, you know, 500-600 basis points to go. We continue to invest in our back office automation, so it's really a combination of two things. It's one, making sure our SG&A and our operating overhead is right size for, you know, the growth in the business. We're building adequate operating leverage. But even more importantly to me is making sure that we're creating efficiencies and automation at that back office fulfillment, so in our direct costs, right? So we've spent a lot of time this year and over the last year automating some of our processes, introducing new technologies, and optimizing our geographical footprint of our offshore labor. That's great color. Yeah, and it, it just seems like that back office fulfillment, especially with 500-600 basis points, does give you- Yeah. ... more of a kind of what to chop in a sense. But on the topic of just revenue growth and kind of the algorithm at a high level, I believe there was always kind of a base growth of a few%- Yeah. ... and then we have kind of pricing, new logos, cross sell, upsell, bridging kind of to that mid to high single digits. Could you just talk about some of those different areas and really where you're kind of maybe over... I wouldn't say, like, if you're over indexed, but are you kind of leaning on pricing if there is going to be less a kind of upsell or cross sell, or is there really more of a focus on this kind of new logo side? Yeah, I would say that the biggest driver of growth right now for us is our new logo growth. We've had a very, probably have been with the company for nine years, it's probably the strongest new business revenue year we've had, and we feel very good about going into 2024 as well. We're very bullish on our ability to win new logos. Mm-hmm. We traditionally say that that is contributes, you know, roughly 5%-6%, maybe even higher in a good year this year, growth to the overall growth algorithm. The base level growth, which is really kind of your macro growth, is the hardest one to forecast year to year, right? I would say in a normal cycle, you know, the cycle we saw from the Great Financial Crisis up until the pandemic, that, that number was about 4%. Obviously, it's been very choppy since, since then and, and is negative this year. And, and that's the, the million dollar question, is what's it gonna be for next year? But we feel... Although we can't control that base level growth, we feel very good about our ability to add new logos, maintain our existing customers, and not only maintain our existing customers, expand our footprint within our existing customers. So we're always targeting upsell and expansion within the existing account base. Got it. It just seems like there is ample room for growth, especially as that kind of long tail continues to face pressures, so- Yeah. ... maybe thinking, again, just switching gears to capital allocation. Right now, your leverage ratio is a bit on the kind of higher end of that range. Could you just remind us on the target? I believe it's between 2 and 3 turns in the long term? Yeah, I'd say we're sitting, you know, somewhere in that 3.6 range right now. Again, this is really a longer term question. We think the business will naturally delever because of our ability to generate cash. We've had some really good, you know, cash generative quarters recently. So we feel, you know, very comfortable with our ability to naturally delever over time. We have spent some capital over the last year, about a little over $125 million on share repurchases. We did, you know, articulate on our last call that we've probably kind of reached a point of diminishing returns there because, you know, the public float, we don't wanna, you know, dip too low on the public float. So, you know, when it comes to use of cash, I mean, the next course of action clearly seems to indicate, you know, attacking the debt. Right, of course. Maybe just moving to kind of the public float, could you just remind investors who may be new to the story, just about kind of what the float is and maybe what the longer term aspiration is to do to kind of remediate some of those kind of near-term trading issues? Yeah. I mean, our public float right now is just under $200 million. So a bit on the low side, obviously, for a public company. That's something, you know, we recognize we need to address. But I would also say that, you know, part of the reason why we've been participating in the share repurchase program is because we think the shares offer an extreme, you know, return on investment. Trading at a 7x forward number, which is basically less than staffing companies at this point, which just doesn't make sense when the company is trending at, you know, mid-20s margins and has long-term cash generative ability, so. Of course. And the natural kind of flywheel of the company and a lot of these different companies will kind of naturally delever as well. Yeah. You're getting these free cash flow that kind of feeds into M&A, and you also kind of can use that to delever, but also, again, buy back the shares- Right. - in time. I think one of the other big questions is really the international expansion and different markets. I believe you kind of announced a kind of more aggressive expansion into Latin America. Yep. Could you just touch that, on that? Yeah. So our, our M&A, you know, mantra and, and strategy over the years has really not been to go out and buy share, but to be very strategic and very, very judicious in how we spend our capital on M&A targets, and one of those has been international expansion. Now, we are a global company today. We service clients. You know, and if you include territories, you know, over 200 countries and territories around the world. We're pretty much global. That doesn't mean we have a footprint in every location, but we have access to data in every country and jurisdiction around the world. Sometimes we have to use partners to do that. Now, in jurisdictions, in countries where we think it merits, we will go in with boots on the ground and build a presence there, and we can either do that greenfield or we can do that through an acquisition. We found doing that through acquisitions, where there are, you know, relatively small companies we can buy for, you know, single-digit million price tags, it's been very, you know, economical for us to do that. We've done that in Latin America recently. We're consolidating our footprint, building some of our own data sources in Latin America, and thus making us more of an independent, you know, data gatherer in those countries. Our strategy also is to get closer and closer there to the data, the source data, right? We do not wanna be reliant on third-party data where we don't have to be. That's always very nicely. Are you building any other kind of... Again, some of your competitors have their own proprietary data assets that they will basically use. Are there plans to build out more of that, or how do you see data kind of as a competitive advantage going forward? Yeah, we think it's very important. You know, we are confident we've got the world's largest amongst the background screening players, criminal database, history database. It's. I'm pretty sure it's over a billion records now. So it is massive and growing, and that is a key asset for us. But, you know, I gave you the example about the transportation database that, you know, we've built up over 25 years. You can't just come in and do that, you know, overnight. So, wherever we can, we're trying to create unique data assets. Sometimes people say: "Well, isn't all that data public?" You know, most of the data is public, but it's not just getting access to the data, and then it's how do you enhance the data, and then how do you use the data, right? That is where the real secret sauce is, if you will. Is there also different attributes, like if you have a kind of transportation data or if you're going to be applying for this kind of, I would just say, like a job that would have, like a commercial driver's license, are there certain things that you look for that are unique to that specific side or? Yeah. Yeah, definitely. I mean, every industry has its kind of unique, whether your healthcare verifications or driving records, DOT records, you know, there's a litany of different types of data sources. Like I said, there are literally thousands and thousands of data sources out there, that if you really wanna be thorough, you have to have a connection or be able to pull data from all those records or those databases around the world, and that's something we pride ourselves on. Yeah, so build it once, sell it many times, it seems- Yeah. like, as well. Yeah. How much customization is usually asked for by the customers themselves? Like, will maybe a large shipper, such as like a FedEx or UPS, might want a specific set of attributes, or is it mostly everyone gets the same type of- No, we let our customers... I wouldn't say customize. We let them, you know, build packages, right? So we let them configure the type of screen, and every customer can be different. Some customers can be very uniform and say: "We're gonna screen these five things for every employee, and we've got one customer who has. It's a global company, so they have different screens by country, by state, by position, and we have over 200 packages for them, right? Oh, wow! I mean, imagine, okay, the background screen you're doing on a surgeon who lives in New Jersey but went to school in India, versus a, you know, cafeteria worker. Yeah. Right? You know, who works in the cafeteria. You're gonna do two completely different screens on those people and look for different data. So, but we run the gamut in looking at those types of screens. Absolutely. And then maybe you could just remind us. I know this was in your slide deck, and it might still be in there, but just the way that the kind of new wins flow through over several years. It seems like there's more of this expansion post-landing. Yeah. Yeah, it typically depends. On a large enterprise deal, obviously, the bigger the deal, the more complicated the deal, the longer it takes it to close the deal, and then the longer it takes to implement. Because, again, I can't overemphasize enough that these are technology projects at the outset, right? We are doing an integration with most of our customers. So if in the example I gave you, with the customer who has 200 packages on a global basis, rolling that customer out to all of their regions and divisions around the world took us over a year to do that, right? Now, that's an extreme case. That's a very large multinational company. Your typical customer, if it's domestic only, is gonna take a month or so to implement and roll out, fully, within the program. But then it takes time for them to get through their workflow and their processes to ramp that to full scale, and while we're doing that, we're always trying to upsell them into other products as well. Of course. And can you also remind us on your typical, retention or- Yeah. ... as your tenure of customers, it seems like they stick with you, as these are very embedded workflows. Yeah. It seems like you also have kind of a unique system where once it's in kind of embedded or integrated, you don't have to really worry too much about kind of... Yeah. Typically, our contracts are three-year agreements. Our average tenure of a customer is, you know, about nine years, so we're doing at least, you know, two extensions on average with our customers. Some of those customers I rattled off earlier, like Oracle and Cisco and others, have been customers for 15, 20, 25 years. And like I said, we've got trucking company customers who've been with us for 25+ years. So we've got a really good track record of retaining customers. Our average retention amongst our enterprise accounts is 95+%, so we're really proud of that. Yeah, it's great. It just seems like it does lend itself to, again, these recurring nature- Yep. ... as well as that. Then just as that contract is typically a three-year agreement, does it have minimums and maximums, and how does the kind of- Typically not. Yeah. Okay. Typically not. There, there's not necessarily a guaranteed minimum or maximum. Mm-hmm. Again, people ask: "Well, geez, aren't the switching costs low then?" Well, the reason why switching costs aren't low is because of the integration work that goes on the front end. Once you're integrated into their system, integrated into their workflow, not to say they couldn't change, but it's another project for them to change. It is not without cost. Understood. And then, again, this made bigger headlines a few years ago, but one of the kind of large verifiers of income and employment- Mm-hmm. ... has been passing through large price increases. Are there any comments there or anything about kind of that side? We know it's a pass-through, and generally, it's not going to be kind of impacting HireRight. But when it comes to the customer trying to manage that relationship, what's been the kind of evolution? Yeah, I mean, I think customers are well aware of the situation now. I don't wanna say they're used to it. They're still not happy with it. And customers' buying patterns can change in certain circumstances because the pricing has gotten pretty aggressive. But again, it, it's a pass-through. Our customers realize it's not us, it's this particular vendor, and I can tell you, it's creating competition. There's others coming after that business right now. Okay. Not against us, against that- Yeah. ... vendor. Yeah. Other potential- Yeah. ... new entrants within the- Yeah. ... verification of income and employment. Exactly. And as we're looking at offering our clients alternative solutions as well. Those alternative solutions, are they manual? Do you do it yourself? Do you outsource it? It's all the above. Okay. Yep, exactly. There's no one silver bullet answer for it. There's the basic manual process: pick up the phone, call HR department. "Can I get the confirmation that Tom worked here between X and Y?" All the way to working with banking records, to payroll records, to IRS records, to third-party companies. There's a litany of sources out there. Yeah. Interesting. Yeah. Mm-hmm. It seems like there are ways to basically solve this problem, but... Yeah, everybody's, everybody's trying to tackle and solve that problem right now. Yeah. It's definitely very interesting. I think there's been some outspoken customers on that side. Very much. Maybe just, going back into kind of knowing we have about five minutes left and before we close it out, what do you think is the number one thing that you would want investors to know about HireRight, and what do you think is perhaps misunderstood today in the marketplace? Yeah, I think it's, you know, clear that investors don't really understand kind of where we fit in the overall HCM value chain and frankly, the overall investing universe. I think we have, you know, an attractive end market that's got a multibillion-dollar TAM, plenty of runway to grow this business. Yes, there are gonna be some cycles. We don't deny there are some cycles to this business, but the long-term secular changes in this industry are fundamentally positive. And we're a business that can grow and grow margins, you know, when we're already at 24%-25%, you know, EBITDA margin company. We think it's a pretty attractive area to invest in. ... Absolutely. Yeah, I think maybe from our seat, it doesn't seem like investors really understand a lot of the- Right. kind of nascency of the background screeners, as well as some of the kind of evolution that went into them. Yeah. One of the things that I think that we really do like and do pay attention to is just this kind of, long tail of potential- Yeah. -manual kind of verifications or perhaps these ones that can be just share kind of gains within the top three. But it seems with, even within the top three, you have a very unique, value proposition, not only the Pepsi Challenge- Yep. the depth of screening, and the ability to really attack into these regulated verticals, but it's also with the kind of leading technology and maybe at a technology conference, that's kind of a great closing question or Right. Closing remark. What would you really say, kind of, that technology that sets apart, and in what inning are you in in terms of what you need to do in terms of the kind of technological lift? Well, I think there's two elements to that. I mean, there's the kind of the front-end technology that our customer sees and that our partners see, and that's, you know, we get very high marks, and again, the reason why we're chosen by Oracle, the reason why we're chosen as exclusive partner by UKG is because they viewed our technology as a strength and benefit. That's on the front-end side of things. On the back-end side of things, we start to get into the areas like automation and the fulfillment area, using the latest and greatest, not to drop the AI word, and I don't even use AI. I call it natural language processing or data matching, right? I mean, you can call it AI, some people call it AI, but it's fundamentally what we do in our back office operations is matching data elements. Customer gave you a requirement to look for X, the data source came by and said, "Y, does X equal Y or not?" And I have a human being, in many cases, making that decision, whereas there are technologies we're continuing to deploy that will automate more and more of that as the future goes on. So we're really excited about that opportunity. That's great. Thank you so much for taking the time today and coming here to speak with us. Thanks.