Good afternoon. My name is Kate and I will be your conference operator today for the SYNNEX 2016 Fourth Quarter and Full Year Earnings Call. All lines have been placed on listen-only mode to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] This conference is being recorded. If you have any objections, you may disconnect. Thank you. At this time I would like to pass the call over to Mike Vaishnav, Senior Vice President Corporate Finance and Treasurer at SYNNEX Corporation. Please go ahead.

Thank you, Kate. Good afternoon and welcome to the SYNNEX Corporation's earnings call for the fiscal 2016 fourth quarter ended November 30, 2016. Joining us on today's call are Kevin Murai, President and CEO; Dennis Polk, COO; Marshall Witt, CFO; and Chris Caldwell, EVP and President of Concentrix Corporation. Please note that some of the information you will hear today consist of forward-looking statements within the meaning of the federal securities laws. Such statements may relate to, without limitation, market, demand, sales, growth, non-GAAP net income and EPS, margin, profit, revenue, cost, expenses, shares, tax rate, seasonality, and integration. Actual results or trends could differ materially from our expectations. For more information, please refer to the risk factors discussed in our Form 10-K for fiscal 2015 and the discussion of forward-looking statements in our earnings release and Form 8-K filed with the SEC today. SYNNEX assumes no obligation to update any forward-looking statements, which speaks as of their respective date. Also during this call, we will reference certain non-GAAP information. Reconciliation of the non-GAAP and GAAP reporting is included in today's earnings release and related Form 8-K available on our website at www.synnex.com. This conference call is the property of SYNNEX Corporation and may not be recorded or rebroadcast without our specific written permission. Now, I would like to turn over the call to Marshall for an update on our financial performance. Marshall?

Thanks, Mike. First I'll review our results of operations and key financial metrics, and then conclude with guidance for the first quarter of fiscal 2017 before turning the call over to Kevin. Our Q4 net income and EPS, both GAAP and non-GAAP, exceeded our expectation while revenue was in line with our expectation. On a consolidated basis, total revenue was $3.9 billion, up 9.5%, compared to $3.5 billion in the same quarter of the prior year. Adjusting for FX of $21.8 million, revenue in constant currency was 8.9% higher compared to the prior year quarter. For the full fiscal year, SYNNEX revenue was $14.1 billion, an increase of 5% from the prior year. Adjusting for FX of $37.3 million, revenue increased 5.7% compared to the prior year. Technology Solutions segment revenues were $3.4 billion, representing an increase of 6.6% compared to the prior year quarter. The TS revenue increase was mainly due to higher seasonal growth than expected from our Hyve Solutions business and growth in consumer and public sector, partially offset by Japan. On a constant currency basis, Technology Solutions segment revenues increased approximately 5.9% year-over-year. Concentrix revenues were $500.4 million, up 33.9% from $373.6 million in the prior year quarter. The Minacs acquisition contributed $120.9 million in revenue. Adjusting for the acquisition and the negative impact of FX of $0.9 million, revenue constant currency increased 1.8%. Now turning to gross profit, our gross profit on Q4 revenues was $378.8 million, or 9.7% of revenues compared to $312.7 million, or 8.8% of revenues in Q4 of 2015. The increase in gross profit dollars was due to higher sales in both our segments and stronger margins in the Technology Solutions segment. In addition to seasonally stronger Hyve performance, commercial and our specialty businesses had solid results. For the full year,…

Thank you, Marshall, and good afternoon to everyone on the call. As you saw in our press release and heard from Marshall, we just completed an incredibly successful year with a very strong fourth quarter finish. So I will begin my comments with our fourth quarter and discuss our full year 2016 results before turning the call over to Chris. For our fourth quarter, although I had high expectations regarding our overall performance, our results exceeded my expectations in both our Technology Solutions and Concentrix segments. Our revenue at $3.9 billion was stronger than the market in most segments. Our Technology Solutions business turned in another strong performance, growing 6.6% from last year. By product and market segment, we experienced growth in consumer, public sector and data center, as well as growth in networking, security and software. Concentrix delivered record adjusted EBITDA of 78 million and achieved non-GAAP operating margin of 12.5%. The Concentrix team has done an outstanding job executing in our seasonally high quarter, as well as implementing operational improvements that will also enhance our margins going forward. And during the quarter, we made good progress integrating the Minacs business. On a consolidated basis, we achieved a record non-GAAP operating margin of 4.02%, representing a 64 basis point improvement from prior year. And we have a lot to celebrate with our full year 2016 performance. Concentrix had a strong year. Record annual revenue of almost $1.6 billion, which is about 14% growth in constant currency, record contract signings of $2 billion with over 30 new logos signed during the year. And Technology Solutions had many successes as well. Solid growth in our Hyve Solutions business and meaningful growth in our SMB and public sector businesses, good execution in cloud offerings, our specialty business units, as well as broad-line products led to market share growth. As a Company we received many accolades from our vendor and customer partners, including Concentrix which received 55 industry awards. As I look back at 2016, there are so many positives to highlight. We are clearly gaining momentum as we head into 2017. Technology Solutions increased market share and margin. Concentrix increased market share and margins, and has assembled a business portfolio complemented by Minacs' capabilities well positioned to reach double-digit adjusted margins as we exit 2017. I want to extend a sincere thank you and congratulations to all our leadership and associates around the world for a terrific year. I'm incredibly proud of what we've all accomplished together. And on that note, I will turn the call over to one of those terrific leaders, Chris Caldwell.

Thanks, Kevin. 2016 continued to be a year of building on a strong foundation while investing for the future. It was topped off by a very strong Q4 with record revenue of over $500 million and a record adjusted operating income of slightly over 12%, as Marshall had mentioned. We are very pleased that many things came together as expected to produce these results. In 2016, we increased our presence in the healthcare, banking and insurance verticals, grew our portfolio of services, adding marketing services to the Minacs acquisition, adding global Fortune 1000 clients, delivery locations and staff around the world to support the organic growth of our business. Our thought leadership was recognized this year with us winning twice the amount of awards and recognition from analysts and clients as we did in 2015, and placing in the top of many analyst reviews of our business. On reflection, we were happy with the execution of the underlying business and strength that we continued to build in partnerships with our clients. Specifically to Q4, we had a lot of initiatives that we executed on that helped deliver the strong quarter. First, I'm very happy to report we came to a successful conclusion to our loss-making contract in the quarter with the finish in mid-October. It was slightly profitable for the quarter, including a all costs for closing the contract early. We look forward to refocusing our efforts on profitable growth now in that region. Our integration efforts for Minacs are essentially complete and the business operates as one under the Concentrix brand now. I'm also happy to say that during this period, we won two new automotive programs that came from our purchase, while also expanding our presence with other accounts, leveraging the new footprint we acquired. We added nine…

Thank you, Chris. We established our strategy and have made investments in growth and new business models long before 2017 arrived, and I believe they have and will continue to differentiate SYNNEX in our performance and in the markets in which we operate. I take a significant amount of pride in the incredible SYNNEX team and their proven ability to adapt to changing environments. We realize that 2017 represents a lot of unknowns. However, I am optimistic about our ability to execute and to continue to drive shareholder value, as we've successfully demonstrated in 2016. In our Technology Solutions business, I am optimistic about our business and I feel positive about the investments we've made in pursuing growth categories related to cloud and mobility. We continue to onboard new partners that have differentiated offerings in this space. Our As-a-Services business platform and our Hyve Solutions business are examples of successful new business models we've created in growth markets. And legacy IT will continue to be a large market in which we compete effectively with our value-add capability. With our strong customer focus and execution excellence, we expect to be in a good position to increase our share in leadership in these markets. Concentrix had another successful year of growth. The key verticals in high growth/high value is spaces such as healthcare, insurance, banking and financial services and technology and automotive performed well in 2016. With our talent and experience combined with the new capabilities brought on with the Minacs acquisition, our expanded global footprint enables us to serve even more customers and provide new offerings to our existing customer base, which now stands at about 450. Over the past five years we've made meaningful progress in evolving our business, which has created significant shareholder value. We are proud of our…

Okay, thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question is from the line of Matt Sheerin of Stifel. Your line is open now.

Yes, thanks and good afternoon and then happy New Year everyone. Just a couple of questions from me. Regarding the Technology Solutions, obviously very strong margins there on revenue that looks like sequentially was below seasonal – seasonality, if you go back and look at the last few years and I know that you had a very strong August quarter, but it looked like the mix certainly helped you in terms of margins and execution there. Could you just give us more color on what drove the margins and was it the more transactional or commodity business that was weaker which is a reason there and was the Hyve Solution business better than expected, was that a big contributor there? Thanks.

Hi, Matt, it’s Kevin. Overall, I mean, in terms of our margin performance, we usually do have a stronger performance on the TS side of the business in fourth quarter as we're able to leverage the seasonally higher revenue in that quarter, but in this quarter really we had a lot come together. Number one, it was just continued focus on profitable business and we had growth in some of the higher value-added components of our business. As I said in my prepared remarks, we continue to see good traction in areas such as network com, security software and of course related to software is cloud. These are higher value product areas where we're able to drive a higher margin component and that was certainly a big contributor to that. In addition to that, as we've said in the past, there are always going to be puts and takes to margin. In the case of fourth quarter, we certainly did have more takes than we had puts.

And just any color on why the non-so-called value-add business was weaker than seasonal? Are there any signs of overall demand weakness or was it just a very strong August quarter and tough comps?

In answering that question, I'd say the overall technology market is pretty solid and stable. You can't paint the overall market with one brush. There are a number of different areas of the market that have very strong growth. Those are markets that we've been investing in for the past number of years. And I think that we're making very good progress there. The overall, say, broad line part of the business that demand is still stable but we're very selective in the business that we take.

Okay, great. And just regarding Concentrix, you talked about seasonality there and it looks like sort backing into your operating profit guidance, it looks like margins there will be back below 10%. And just in terms of the revenue declines there, last year you were down high single-digits. Is that sort of a ballpark, given the Minacs business, trying to figure out the s seasonality there?

Hey, Matt, it’s Chris. The seasonality is relatively in line to what we saw last year, so that would be a correct assumption.

Okay, and then just regarding the profitability there, obviously you came off of record profits in the November quarter and I know you've been targeting 10% plus EBIT and EBITDA margin targets. Do you think you can get there this year if you've got another strong second half as you did last year?

So Matt, just for clarity, we're targeting strong operating income double-digit margins and that is the goal and we continue to execute along that path. And as Kevin mentioned in his prepared remarks, as we exit 2017 that is our focus.

Okay, alright, thanks very much.

Thanks, Matt.

Okay. And our next question is from line of Adam Tindle of Raymond James. Your line is open.

Okay, thank you guys and congrats on a strong year. Just want to build out on the TS question from a revenue standpoint. In particular, on the February guide. Looks like a return to more normal seasonality. Could you comment on trends that you're seeing in December that give you confidence in a return to more normal seasonal patterns, have you seen any change in buying patterns post election or year-end budget flush?

Yeah, I guess the best way to describe it, Adam, is that it's relatively strong. It certainly is stable out there if anything, we've seen I guess slightly enhanced optimism in particular in the U.S. market since the election. And with that, that probably does translate short term into at least a little bit stronger demand. But even some of the broader macro signals that we're seeing out there whether it’d be in public sector spending or in commercial, special spending especially in new technologies, gives us optimism that we're going to continue to see a pretty stable market, especially in the U.S. which is the biggest market for us with closely behind that. Overall, it's positive.

Okay, and I just wanted to ask a question on margins, it looks like guidance implies that total operating margins are going to be down 80 basis points sequentially. That looks like the largest sequential decline in at least a decade. So, the loss making contract is gone from Concentrix and shouldn’t be a headwind to operating profit dollar sequentially like it was in the past. So I'm just trying to get a handle on how much of that abnormal decline is Concentrix versus TS and just more color on the drivers of the sequential margin decline.

Adam, so we don’t view it as abnormal. If anything, we see adjusted margins growing from same period last year in terms of Q1. So in terms of the thoughts and comments that Kevin made about where we plan to be and hitting our margin targets as we exit 2017, we still feel good about those. And Kevin, I don't know if you want to add anything to that.

And Chris had already spoken to the seasonal aspect of Concentrix, which every year is a New Year and if anything our Concentrix business is getting a little more seasonal, in particular with fourth quarter. As you can see, we're able to really leverage that that the seasonally high Q4 where we have investment coming in Q3. But then we have a seasonal reduction in business in Concentrix in Q1. So as we continue to grow that business it becomes a bigger component of our overall results, I think what you're seeing is a bit more of a change Q4 to Q1.

Okay, so maybe just clarifying, so when taking out the loss making contract, doesn't necessarily impact linearity to Concentrix margins. I think the thought was much of what drove the first half to second half swing was losing money on that contract and then making money in the back half of the year. . But what I'm hearing here is that's not – we shouldn't be thinking of a more linear pace of 2017, just because that loss making contract is gone.

In 2016, we did give you the numbers on what’s the impact of the loss making was in Q1, actually every, every quarter. So you know what that impact is. But on top of that, there is seasonality in the Concentrix business. And that’s actually what we’re seeing there. But as Marshall said on a year-on-year basis, we are expecting that our margins are going to be significantly better Q1 in 2017 over a year ago.

Okay, thanks and congrats.

Thank you, Adam.

Thank you. And our next question is from the line of Ananda Baruah from Brean Capital. Your line is open.

Hey, guys, congratulations on another solid quarter. Yeah, happy New Year as well. I hope holidays were great. I guess a few for us, if we could. Start out with Chris and Concentrix. Chris, could you – you talked to some of the dynamics in the prepared remarks but I guess specifically both the top line, which jumped up pretty meaningfully, both Q-over-Q and year-over-year, could you speak to what the most I guess poignant incremental contributors were to the revenue and then same question to the margin. So totally get that the loss making contract, it sounds like you said actually turned positive on – sort of the net basis for the quarter. Can you talk about sort of all the margin dynamics in that business as well? Was it all just loss making contracts going off? And then just more of a clarification, I thought I remembered you guys originally thinking that Feb Q would really be the Q where loss making contract kind of did what it did in the November Q. Am I mistaking – am I misremembering that or did you guys actually kind of get to where you want to be a quarter early? Thanks.

Hey that’s right. I hope I got your list of questions here. From a revenue standpoint, there's a couple he'll things that are driving our revenue growth. Clearly we obviously acquired the new business but we've had very strong organic growth with our existing clients. And to Kevin's point, a lot of our signings, we had record signings this year and a lot of new logos coming to our business this year. We started to see that growth towards the back half of the year as we mentioned in prior calls. A number of dynamics that went into sort of the increase of revenue that we saw within the business. Specific to Q4, we did call out seasonality. We do support a number of clients that have their own seasonality to their businesses where we support them both in North America and China. Where we're able to get – and this ties to your earnings question, were able to get more leverage out of the revenue because we're able to run our centers with more occupancy and more utilization through those periods of time, our technology that we get paid on a per click mechanism, there's more clicks that go through. So we just generally see more leverage within the business, within Q4, driven by those e-commerce consumer electronics types and even service provider types of clients that we have within those spaces. So a number of dynamics went into it. In terms of the loss making contract, just for clarity, we talked about this contract losing money generally for the whole year except for Q4 where we tend to make up a chunk of money but then it would revert back to a loss in Q1 and we called out last quarter that the contract was up in Q1 of 2017 regardless. And really what we did was we forfeited some profit in Q4 to wind up everything in Q4 earlier versus taking a loss in Q1 to be done with it and move on and refocus our resources. So you are right that it does help us in Q1 from not having that drag. But in theory, we've got a lot of other stuff going on in the business that continues to drive to a better margin, better performance and more revenue growth within our business.

Okay, that’s actually really helpful. Congrats on getting that whole thing wrapped up and getting some of the new contracts ramping. And it sounds like Minacs is actually off to a really good start. Actually, I have two follow-ups. Let me stay there for a second. How much potential does Minacs have? It sounds like you guys highlighted new wins off the bat and new contract wins. It sounds like greater penetration in existing contracts. How should we think about the right way you to dimension what the potential there is over time?

So Ananda what we've always talked about, we haven't changed since the Minacs acquisition is that our expectation is to grow twice as fast as the market in the business that we perform at. And with Minacs, there's two components to the business. Some of the business we share with clients and the clients have been very, very happy with the acquisition and have supported it with more business coming into the combined organization which we've been very happy with. And to your point, we've also won expansion of programs from the existing Minacs client base that now are able to leverage the bigger footprint and some expertise that we bring to the table. We don't see wildly changing our growth that we still are focused on sort of growing twice as fast as the marketplace. And continue to drive margin expansion by sort of optimizing the programs and revenue that we have. The Minacs acquisition does bring a lot of automotive expertise to our portfolio which we're able to capitalize on as well as I mentioned the marketing services organization that came with us that's really focused on driving revenue for the automotive industry and our goal is obviously over multiple quarters to extend that into other areas of our business. So we see some good synergies from that perspective as well.

And Chris just to clarify, the 2X market growth comment, so I'm familiar that. Well actually let me actually add this is that specific in Minacs' case to the automotive BPO industry or is that still kind of consistent with the overall SYNNEX target as well?

Yes so Ananda, if you look at the BPO CRM market space, which we track in terms of growth indicators, the analysts will tell you anywhere it’s from 3.5% to 4.5% to some as high as 5% on a blended portfolio of services across multiple different verticals and multiple different geographies. So we kind of take the middle line and say we should be growing double that in terms of our portfolio of services and our geographic diversity within our portfolio of clients.

Well Chris, just to add to that as well, no question in particular we acquire a great Company like Minacs with their capabilities but certainly much smaller than we are with the global footprint we have, the brand we have around the world, that really does enhance the Company's ability to get to really leverage that portfolio and get into opportunities that would not have been available to them without the strength on Concentrix. And on that we're going to have to let you go. We can follow-up with you one on one. We need to let others have an opportunity to ask questions.

You got it thanks a lot guys.

Thanks Ananda.

Thank you. And our next question is from the line of Shannon Cross of Cross Research. Your line is open now.

Hi, good afternoon. Ananda's a tough act to follow but I'll try here. Anyway, my first question is with regard to the pipeline for Concentrix. I know you talked about it being strong. I'm curious if you can give any more details on what it looks like as we look at 2017 and if you can talk at all if you are expecting any changes with obviously there are spinning off condo and just any of the competitive landscape within the end markets that Concentrix looks at.

So I think from a pipeline perspective, we don't generally kind of update frequently on a pipeline. I'll say that we are seeing sort of stronger strength than we saw at the beginning of 2016 in our pipeline across our verticals and geographies and we're seeing some regions outside of North America that are stronger than what we saw a year ago, primarily based on the investments we made in some of those emerging markets, which is fantastic and was part of our plan to execute on. So quite happy with the diversity of the portfolio pipeline and the client segments that they're coming from. In terms of sort of the general competitive marketplace, we see a few things. We continue to see consolidation in the market. We have a very, very good reputation with our clients for doing acquisition, integrating our businesses and supporting that growth through those with our history with not only the IBM acquisition, but subsequently the feedback we've gotten from some of the clients we’ve done Minacs acquisition. And so they see that as a lot of stability in our ability to grow both organically and inorganically is well open to us. Some of our competitors have not necessarily have that strength and so we've been able to take share from those areas. But clearly it's a competitive marketplace and we see other providers also looking at consolidating out of the business or into the business as they grow. That we just see as opportunity to grow our share.

Great. Thank you. And then I have a question from a cloud perspective and pricing and competition as well. We've heard some of the sort of – some cloud services are starting to get a bit more competitive in terms of pricing. People are looking for incremental ways to support customers. It's clearly a huge growth opportunity but I'm curious if you're starting to see some more pressure there and sort of what – I guess what the offset could be in terms of pushing further into cloud services or software services depending on what's available to offset any potential pressure.

Yes I mean overall cloud is certainly a growth area and a great place for us to be. We do play in a number of different aspects of it. So your question I assume is related to specifically to the resale of cloud services on infrastructure as well as software. So we certainly do support cloud, the whole shift to cloud along a number of our different business units. Specific to Software as a Service and those service providers, that continues to be a growing business. It's an annuity business and there's a lot of go-to-market capability that we need to invest in to bring the market to continue to mine new customers and grow them. So we do demand from our vendor partners that we get paid fairly for what we do and that certainly has been the case so far. As other services get commoditized which tends to be a bit of a smaller part of our portfolio, more on the infrastructure side, those ones even though our own pricing environment has been relatively stable, I do acknowledge the comment that that part of the market could be under a little more competitive pressure. But overall, in the markets that we address we seem relatively isolated from that right now.

Okay great. Then just one last question. On legacy technology, having been at CES and talking to a number of vendors, it seems as if there's reason to believe that PCs, at least servers will be flattish, storage who knows but it seems and I think to your comments that in North America at least you're expecting relatively stable environment. Based on what we've heard from some people I'd almost argue that certainly on a year-over-year basis it's an improving environment. So is that a fair way to look at it? And perhaps you're taking a more conservative approach or is it just given the election and all the things going on there's too many uncertainties at this point.

Yes I mean, first of all, I think especially when you talk about devices, despite what you see in the headlines over the past couple of years that it's been much more of a stable environment than not, especially in the commercial space. The consumer market does fluctuate up and down but it does tend to be a smaller part of our business. For us, the legacy IT market continues to be an opportunity and even an opportunity for growth because the way that you sell it is very, very different today than it was only a few years ago. Whether you subscribe to buzz words like IoT or other types of solutions, we've invested pretty heavily in a very small number of solutions and in some key vertical markets where we have unique offerings that we take into and commodity products are certainly part of that offering. So we're not selling commodity products as commodity. We're selling commodity products as part of an overall solution. And that really is our opportunity to continue to grow and gain share. But in addition to that, even for the larger commoditized business, say the broad line business, we have inherent competitive advantages in that market. We are more cost effective than most of our larger peers. And we provide services that help our vendors actually grow and enable them to do business in markets that they're not able to effectively perform those services in. So as a result of both of those, we've been able to execute effectively and continue to grow parts of that business over time and gain share.

Thank you.

Thanks Shannon.

Thank you. And now our next is from James Suva of Citi. Your line is open.

Thank you very much, it’s Jim Suva from Citi. Regarding your Concentrix business you mentioned the turnaround of that challenged contract or the lapping of it. Looking forward, are there any other contracts or areas of improvement we should think of or is this type of profitability given the seasonality of the strength kind of what we should expect going forward and in the core seasonality build on top of that.

So, Jim, it's Chris. I think that contract we've been discussing is frankly very, very unique. Hence why we called it out for multiple quarters. We've always working. To increase profitability by offering new services, optimizing our staff and by driving better results for our clients which generally result in higher payments to us. So in theory, we are on that road path to driving to a double-digit operating income perspective on a consistent quarterly basis through at which timing 2017 and our goal is to hit that and we're on track with where we expected to be on that path right now. So we're quite confident along that way.

Okay, thanks for the details. And then my follow-up is switching gears to Hyve. You made comments earlier in the call that I couldn't quite hear, might have been the call quality on my end. But can you remind us, was your Hyve performance better than expected, in line with expected? Because I know if I remember it right the past history the Company, sometimes there's been some quarters that have materially outperformed or some shifts in that business. If you can just get us up-to-speed of how Hyve was versus expectations. Thank you.

Yes, hi, Jim. This is Dennis. Yes, Marshall noted in the he prepared remarks that Hyve had a solid quarter. And the business did turn out to be a little bit better than we expected than we forecasted. We did expect a solid seasonally strong Q4, but looks like we took a little share during the quarter and that allowed us to outperform. We also had brought on a couple of new customers this time last year into Q1. So we had our first Q4 with them and those individual customers performed a little bit better than expectation. And overall just the business is starting to mature and perform better each quarter. So all those added up to a little bit better revenue than expected.

Thank you so much for the details. I appreciate it.

Thank you, Jim.

Thank you. And our last question comes from the line Louis Miscioscia of CLSA. Your line is open.

Okay, great thank you. So sticking with Hyve for a second, obviously the move to the cloud as that’s been monstrous and we're hearing it's actually even going to accelerate more. So should we think of the business that you have with Hyve growing at that same kind of pace, call it may be 40% or 50%? Or as you look out on 2017 is there some reason why it would not grow that fast?

Jim, I'll start and maybe Kevin can jump in. As far as the growth rate, obviously we don’t break out the business, so we [indiscernible] talk about growth rates within the business. Clearly, the cloud space is growing quite quickly. For us to continue to grow the business, we need to add additional customers. This business is somewhat similar to the Concentrix business in that it has a relatively small amount of customers. In fact, Hyve has a fraction of what Concentrix does as far as customers in the business. So it's key to us to continue to grow that business and again, like Concentrix, it's a very long sales cycle to bring on a new customer. We're very happy with our pipeline right now with Hyve and we expect to transition the pipeline into customers going forward. But to continue the growth rate at a high rate that's what has to occur is conversion of pipeline and also growing with our existing base.

Okay, may be a question for Chris. I guessed this last time, hopefully we can maybe get a deeper answer from you. Doing and covering IT services and BPO your RPA, Robotic Process Automation, is really strong to hit an inflection point, which means maybe you all need less people, but are able to actually deploy more solutions using automation. Can you maybe mention how much it penetrated as much of your work and how fast it’s starting to grow within your own base if you think that you guys are leaders in the RPA automation and the extensions that are possibly a bit of AI and machine learning.

Yes so Lou a couple of things. We’ve been working with RPA and chat box and a number of other mechanisms to drive sort of that whole automation category within our client base for a couple of years now. And we tend to see traction in certain verticals more so than other verticals. So for instance, e-commerce providers tend to be on the cutting edge, some of the financial institutions tend to be pushing a further and then we have some lager, who are just addressing it now. We see it as a big area. It certainly helped within our margin profile as we kind of drive some of those processes in place. I will tell you it's not as simple as what some of the sales material is out there in terms of implementing it, because you're dealing with a lot of legacy systems, a lot of proof of concepts. It's almost reselling the whole program over again by migrating to some of these technologies. But we have a fairly large team. In our organization that is working with clients to do that. That's part of the reason we started the consulting practice over a year-ago. And so we're seeing very, very good traction and expect to see even more of it over the coming years. Our goal is certainly not to grow our headcount linearly with our revenue as part of our margin expansion focus.

Okay, great. Very nice profit in the quarter so congratulations to you all. Last question is again maybe back to you Chris. Whenever anyone is starting with a new customer obviously expectations are always high, but what did happen with the problem contract that maybe you didn't all foresee. And then obviously trying to implement that broadly and just say we wouldn't do that again because may be we don't want to take a one off situation and not extrapolate to a best of practice.

Yes so to put something in perspective, if you look at all the client programs we've launched, new clients we’ve on boarded over the last two year. And our success rate is like five, nine out of this one contract, which clearly this was a large contract that caused some loss. I think really what happened was the volume sizing by the client that was given to us and the data that the client thought they could deliver to us turned out not to be accurate. And the contract didn't necessarily have the right provisions in calibrating as quickly as it needed to on what the economic model should be. And so while we got it to where we needed to do is just much smaller than both the client and we felt was worth the time and attention needed on this contract. So lots of learnings from it, but to put it in perspective we've had tens of other launches with clients that have gone very, very rapidly, very, very successfully over the last two years. And so, we do see it as sort of a one-off case.

Okay great. Good luck on the New Year.

Thank you.

Thank you. At this time there are no more questions in the queue. I’ll turn the call over to our speakers for any additional remarks.

Okay. Well, listen, thank you and happy New Year to everybody. Thank you for being on the call.