TTEC Holdings, Inc. (TTEC) Q4 2011 Earnings Report, Transcript and Summary

Welcome to the Fourth Quarter and Full Year 2011 Earnings Conference Call. [Operator Instructions] This call is being recorded at the request of TeleTech. I'd now like to turn the call over to Karen Breen, TeleTech's Vice President of Investor Relations. Thank you, you may begin.

Good morning, and thank you for joining us today. TeleTech is hosting this call to discuss our fourth quarter and full year 2011 results ended December 31. Participating on today's call will be Ken Tuchman, our Chairman and Chief Executive Officer; and Regina Paolillo, our Chief Financial Officer. Yesterday, TeleTech issued a press release announcing its financial results for the fourth quarter and full year 2011 and also filed its annual report on Form 10-K with the SEC. This call will reflect items discussed within those documents, and we will make reference to them several times on the call today. We encourage all listeners to read our annual report as well on Form 10-K. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements relating to our operating performance, financial goals and business outlook, which are based on our current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise this information as a result of new information that may become available. Forward-looking statements that are subject to various risks, uncertainties and other factors that could cause our actual results to differ materially from those described. Such factors include, but are not limited to, reliance on several major clients, the risks associated with lower profitability from or the loss of one or more significant client relationships, execution risks associated with ramping new business or integrating acquired businesses and the possibility of additional asset impairments and/or restructuring charges. For a more detailed description of our risk factors, please do review our most recent SEC filings along with our recently filed Form 10-K. A replay of this call will be available on our website through March 14. And I will now turn the call over to Ken Tuchman, our Chairman and CEO.

Thank you, Karen, and good morning to everyone joining us today. I'd like to review our results for the fourth quarter and full year 2011 and discuss our strategic priorities for 2012. After that, Regina Paolillo, our CFO, will discuss our financial results in more detail. Our full year 2011 revenue increased 7.7% to $1.2 billion compared to $1.1 billion in 2010. Excluding $81 million of revenue from the U.S. Census program in 2010, full year revenue grew 16.3%. Our fourth quarter 2011 revenue increased 7.2% to $301 million compared to $280 million in the year-ago period. Sequentially, fourth quarter revenue reflects a negative foreign currency impact of $6 million due to the strengthening of the U.S. dollar. During the fourth quarter 2011, we signed an incremental $85 million of annualized business from both new and existing clients. This brings our total signings for the year to $355 million, which represents the addition of 41 new clients. This was an 18% increase over the amount of new business signed during 2010. We saw particularly strong growth in our transportation, technology and retail verticals, all of which grew more than 20%. Importantly, our 2011 new business wins represented a solid mix of solutions across our expanding portfolio. The near doubling of our global client base to 175 of the world's leading brands creates tremendous opportunities to drive new business going forward. Turning now to our operating performance. Full year 2011 non-GAAP operating margin was 8.3%. Full year 2011 non-GAAP earnings per share grew 22.3% to $1.26. Fourth quarter operating margin excluding restructuring charges was 7.4% of revenue. Our margin was impacted by increased severance and other related costs during the quarter. This was attributable to our decision to exit certain non-profitable programs and geographies late in the fourth quarter. As a result, our non-GAAP earnings per share was $0.29, a 3.6% increase over the year-ago quarter. Moving to the balance sheet. We ended the year in a strong financial position, with $156 million in cash and $282 million of additional borrowing capacity. This will enable us to fund ongoing investments in our next-generation platform, as well as select acquisitions and share repurchases, supporting our commitment to further enhancing shareholder value. As we begin 2012, our mission remains steadfast: to be the global leader in helping companies design, build and deliver the next-generation customer experience. As we discussed at our Investor Day last April, demanding customers, social networking, disruptive technologies and a challenging global economy are forcing companies to redefine both their business models and their growth strategies. In my meetings with CEOs, there is one thing that is constant: The customer experience is at the forefront of their agendas. They recognize that it is a critical path to growth and brand differentiation. Companies that were born in the new economy have designed and built their businesses around the customer. They're easy to do business with, and as a result, are realizing significant growth. Facebook is a great example. Unfortunately, most companies were not born in this era. They're hampered by legacy systems, product silos and the inability to turn data into actionable insight. As a 30-year pioneer in the industry, TeleTech has successfully grown and innovated through multiple business cycles. We attribute that success to having remained at the forefront of evolving market trends. We were the first to expand offshore, the first to offer a work-from-home solution, the first to migrate to cloud-based platform nearly 10 years ago, et cetera. As we look to the next 30 years, I'm more convinced than ever that our vision of delivering this next-generation customer experience is a winning strategy. The keystone of this vision is our proprietary scalable technology-enabled platform that is multichannel, tightly integrated and seamless to our client's customers. The key elements of this holistic solution are the following: First, we help our clients better understand their customers' behaviors, preferences and economic value. Using data-driven strategies, we help companies build the business process to chart a profitable course to customer centricity. Secondly, we help our clients ignite sales by delivering timely, targeted and personalized communications that motivate their customers, as well as help tap highly-fragmented markets. Third, we help our clients communicate with their customers anytime, anywhere from any channel via our hosted offerings. In addition, we help our clients deliver a personalized, consistent and high-quality customer experience via our 42,000 strong global workforce. This fully integrated platform is exactly what clients want. Clients are seeking a strategic partner that can transform outcomes, not a tactical provider that can simply offer a onetime cost reduction by offshoring work. The ability to deliver this holistic outcome is increasingly out of reach for many in the industry. We have been investing in our proprietary IT and technology for decades, whereas our competitors do not have the financial wherewithal to innovate or invest in this revolutionary model. Furthermore, our platform enables us to deliver a better customer experience and drive greater returns than our clients can deliver on their own. With this platform solidly in place, we're more ready than ever to address our clients' need for the 21st century. Going forward, we will continue to further leverage our platform for the benefit of both our clients and our shareholders. To that end, one of our top priorities is to continue to build deeper relationships with our existing global clients by being a stronger strategic partner. At the same time, we'll actively pursue a highly targeted list of new clients. We are intentionally focused on companies, view service as a brand differentiator, to reinforce our commitment, to being a strategic growth partner. We've announced an exclusive relationship with Satmetrix, the coinventor of the Net Promoter Score. It has become the industry standard for measuring brand advocacy and a singular focus of well-run companies. Through this exclusive partnership, we plan to integrate NPS, or Net Promoter Score training, and realtime measurement into our delivery platform. Additionally, we're incorporating greater outcome base pricing into our contracts given our past performance, which gives us the confidence in our ability to deliver superior customer experiences that drive results. Further demonstrating our commitment to being a value-added partner is our announcement yesterday of the acquisition of Boston-based iKnowtion. iKnowtion's 12-year history and proprietary analytics platforms helps clients improve performance in 3 critical areas including: One, demand generation; two, increased share of wallet; and three, optimization strategies. Companies view the ability to harness big data as a new strategic asset. They are acting on the insight to influence consumer behaviors, to more intelligently target new customers and to increase wallet share and retention. iKnowtion's team of seasoned PhDs and statisticians and recurring revenue model will further strengthen our analytics-driven platform while adding some of the world's largest companies to our existing client base. With our recently hired head of M&A, we'll continue to target additional accretive acquisitions that further complement and expand our suite of capabilities. Let me now review the performance of certain businesses that power our next-generation customer experience platform. Direct Alliance grew organically more than 21% to $96 million in 2011. This business is at the epicenter of what every CEO needs in today's market, more revenue. Direct Alliance has ignited sales for some of the world's largest and most prestigious brands, utilizing its highly-complex technology-driven platform. Direct Alliance delivered more than $1.6 billion of new revenue for clients in 2011 alone, much of which is reoccurring. Our managed technology solution business grew to $66 million in 2011, complemented by the acquisition of certain assets of eLoyalty corporation. We're very pleased with the performance of this business and expect it to crest to $100 million mark in 2012. Given the solid growth in Direct Alliance and managed technology solutions, as well as in our other high-growth businesses, we believe as a collective group they remain on track to reach 25% of revenue by 2014. We plan to introduce new segment reporting beginning in the first quarter of 2012 to provide greater clarity and enable shareholders to properly value these higher growth businesses. Turning to our outlook. We remain sharply focused on achieving our longer-term 2014 goals and plan to take the necessary steps in 2012 to continue to build the foundation to achieve these objectives. As we begin the year, we are underway with exiting certain non-profitable programs and geographies. We estimate these actions will reduce 2012 revenue by approximately $100 million to $115 million while positively impacting our operating income by $10 million to $12 million on an annualized basis when fully realized. These revenue reductions are expected to be offset by growth in both new and existing client relationships. Given these factors, we expect 2012 revenue will range between $1.15 billion and $1.2 billion excluding the benefit of any future acquisitions. We expect 2012 operating margin will approximate 2011 and range between 8.5% and 9% before any unusual charges. Regarding our longer-term financial outlook, we are reiterating the objectives we first outlined at our Investor Day last April. We are excited about our strategic roadmap given the strength of our reputation, the breadth of our offering, the depth of our client relationships. This gives me confidence in our ability to reach $1.6 billion in revenue and operating margin between 11% and 12% by the end of 2014 excluding any unusual items. In closing, I want to reemphasize a few points. Our path forward is intentional and deliberate. Over the last 3 decades, we have led the market and set new standards for technological innovation around the customer experience. We are now accelerating that strategy and increasing our investment in our next-generation customer experience platform. With our highly seasoned leadership team and deepened executive bench, we're better positioned than ever to deliver. I am excited by our future, and I look forward to sharing our progress with you as it unfolds. With that, I'll turn the call over to Regina.

Thank you, Ken, and good morning, everyone. Given Ken's confirming comments on our next-gen customer experience strategy, let me start by sharing my personal perspective on this topic. There's no exaggeration to the statement, I'm excited to be a part of the TeleTech team. In a nutshell, my first 120 days are confirmation of the value-creating opportunities I anticipated, as I concluded my research and committed to joining the company. Working with the leading provider in an industry where innovation, IP and transformation are critical to realizing significant and lasting shareholder value was and is the deciding factor for me in joining Ken and the team. The breadth and depth of TeleTech's customer experience portfolio, an impressive client base and experienced an expanding leadership team, a strong financial profile, a demonstrated commitment to invest in technology and information-rich platforms and a transition from transaction to outcome-based selling are top of mind relative to my early observations. The challenges and opportunities I see ahead of us will make full use of my information and technology industry experience, as well as my background in private equity. Today, our current BPO-centric valuation does not do justice to the sum of our business pieces. I look forward to the clarity our future reporting structure will bring to the client and shareholder value we are creating. We're building an end-to-end integrated customer experience delivery platform. Already, this holistic platform is delivering differentiated results, efficiently executing customer acquisition and growth for our clients and promoting customer NPS and retention via a personalized channel-of-choice customer interaction. In so doing, we are growing our strategy, revenue generation and managed technology services at an accelerated rate to our core BPO business. We expect our new segment reporting, which will begin with our first quarter filing, to provide greater insight into the progress we are making and value we are creating in these businesses. I believe TeleTech is uniquely positioned to capture greater market share as we integrate these proven capabilities into our existing BPO footprint. There's no confusion as to my priority: Shareholder value. This includes ensuring we execute on the delivery of our fully-integrated customer experience platform; eliminating underperforming programs to redirect investment dollars into analytics, technology and account management that will accelerate our market adoption and profitability; improving our external reporting to provide greater clarity as to the financial profile and performance of our key business segments; and leveraging our balance sheet to augment our organic activities with accretive M&A and share repurchases that will accelerate our business strategy and improve shareholder value. With my thoughts on strategy, opportunities and priorities as a backdrop, let me now transition to provide some context on our 2011 financial performance and 2012 guidance. As Ken mentioned, revenue for the full year 2011 was $1.18 billion, up from $1.095 billion in 2010 and $85 million or 7% -- 7.7% increase. Considering the nonrecurring nature of 2010's $81 million in census revenue, this year-over-year growth required the company to increase revenue by $165 million or 16.3%. Every part of the business contributed to this growth. Direct Alliance grew organics by $20 million; including the acquisition of eLoyalty, managed technology services grew $59 million; our strategy and analytics services, including Peppers & Rogers Group, grew $31 million; and our BPO business grew $55 million. In 2011, our higher growth businesses, including Direct Alliance, managed technology services and customer experience strategy comprised 17% of total revenue. We expect these businesses to represent in excess of 20% of total revenue in 2012. Revenue for the fourth quarter was $301 million, up 7.2% from $280 million in the year-ago quarter. A sequential revenue decline from $304 million in the third quarter to $301 million in the fourth quarter was the result of a $6 million negative impact from FX and the start of volume decreases related to the exit of nonperforming geographies and programs. Based on 2011's $355 million in new bookings, up $55 million from 2010 including 41 new brands and a cumulative client base of 175, we're confident each of our business segments will continue to contribute to our growth. For 2011, our GAAP operating income was $93.5 million or 7.9% compared to 6.7% in 2010. Adding back $5 million of restructuring, impairment and acquisition-related expenses, our 2011 non-GAAP operating income was $98.5 million or 8.3% compared to 8.1% in 2010. The increase in non-GAAP operating income is comprised of improvements in gross margin due to operating efficiencies, a reduction in depreciation offset in part by an increase in SG&A due to the addition of acquired company SG&A. We will continue to manage our SG&A costs to enable increase in investment and sales and marketing while gaining increased leverage from our general and administrative costs. We estimate our SG&A spend as a percentage of revenue in the 15% to 16% range going forward. Likewise, we will continue to pace our investment in real estate, fixed assets and capitalized R&D to maintain both CapEx and depreciation at a 3.5% to 3.75% ratio to revenue. 2011 fourth quarter GAAP operating income was $20.8 million or 6.9% compared to 5.5% in 2010. Adding back $1.4 million in restructuring and impairment costs, our 2011 fourth quarter non-GAAP operating income was 7.4% of revenue compared to 8.3% in Q4 of 2010. The decline in operating margin in Q4 '11 versus Q4 '10 was due primarily to our decision to exit certain underperforming geographies and programs late in fourth quarter. The effective tax rate for full year 2011 was impacted by a $4.7 million onetime net benefit, as we continue to focus our global tax and cash management strategies. Including this net benefit, our effective tax rate for 2011 was 19.7%. On a forward basis, we estimate our effective tax rate will continue to be in the 20% to 22% range. Our full year fully diluted earnings per share was $1.28 versus $0.81 in 2010, and our Q4 fully diluted earnings per share was $0.28 versus $0.07 in 2010. During 2011, the company repurchased 3.4 million shares for a total of $64 million, and yesterday we announced that our Board of Directors has approved a 25 million increase in our share repurchase plan. Including this increase, we had $57 million authorized for future share repurchases at the end of 2011. Turning now to our segments. On a full year basis, the North America BPO segment reported revenue of $832 million in 2011 versus $824 million in 2010. While at first look, the $8 million revenue increase seems slight, North America BPO had a respectable performance when considering 2010's $81 million of nonrecurring Census. The 2011 full year non-GAAP operating margin was 10.2%, down from 2010's full year operating margin of 11.3%, due primarily to the higher-margin technology-based solution delivered on behalf of the Census in 2010. Our International BPO segment reported full year 2011 revenue of $347 million versus $271 million on increases in our strategy and analytics services and increased BPO revenue from existing clients. Full year non-GAAP operating income improved by $16.5 million from 2010's $4.2 million loss on improved pricing and operational efficiencies. As previously mentioned, effective with 2012's Q1 filing of our 10-Q, we will transition to a new segment reporting structure. This structure will include 3 segments: Our consolidated BPO business, Direct Alliance and third, other, which will be comprised of our managed technology services business and our strategy and our analytics services. We made significant progress in Q4, improving net cash provided by operating activities from a negative $8.5 million in the third quarter to a positive $74.3 million in the fourth quarter. As a result, we ended the year with $156 million in cash, $64 million in borrowings against our credit facility and $2.4 million of other debt. At December 31, 2011, our total debt-to-capital ratio was 12.4%, our current ratio was 2.8x and our adjusted return on invested capital was 25%. Our DSO at 75 days at year end 2011 improved 2 days from December 2010. We intend to continue to build on this improvement in DSOs in the coming quarters. Our fourth and full year 2011 capital expenditures were $17.1 million and $38.7 million respectively, compared to $9.4 million and $2.68 million in 2010. In 2012, we estimate that our total CapEx will approximate 2011 spend, with some variation based on the mix and location of our new bookings. Last but not least, let me spend a few minutes highlighting certain aspects of our forward guidance. We expect to unwind a short list of underperforming geographies and programs in 2012. Our plans to execute these activities are well underway. In fact, nearly 75% of the related activities have been planned, agreed and are in process. While our revenue will be impacted by between $100 million and $115 million, we estimate our operating income will improve by $10 million to $12 million on an annualized basis. Up to 60% of this $10 million to $12 million benefit or approximately $5 million to $6 million is expected to be realized during the second half of 2012, with the remainder realized in 2013. The costs associated with these actions will be in the $15 million to $18 million range and will be comprised primarily of cash-based charges for severance and other exit fees, the majority of which will be included as restructure and impairment. We expect the majority of these expenses to be in Q2 and Q3 of 2012. As a result of these actions, we expect our 2012 revenue to be in the range of $1.15 billion to $1.2 billion and our non-GAAP operating margin to be in the range of 8.5% to 9%. In closing, let me reiterate my view on the value-creating opportunities in TeleTech. We expect enable our strategic initiatives through a combination of organic and inorganic activities and to fund such activities by leveraging our balance sheet, eliminating unprofitable business, as well as ongoing efforts to improve the competitiveness of our cost structure. I am confident that we have the vision, strategy and experienced management team to execute on our near- and long-term objectives, and I look forward to meeting with many of you in the coming quarters and sharing our progress against our stated goals. Thank you, and with that, I'll turn the call over to Karen.

Thank you, Regina. [Operator Instructions] Jane, you can now open it up to questions.

[Operator Instructions] Our first question comes from Tobey Sommer with SunTrust.

Ken, I wanted to ask you a question, kind of why now with the exiting of certain markets in the accounts that aren't that profitable?

It's really very simple. We set a goal, and we're executing on that goal. We think that this is something that's long overdue. And we are comfortable with our overall business and the position that it's in and the pipeline, et cetera, that we feel that we can handle this and absorb it. And so consequently, we think the timing is right, and we're going to stay steadfast to executing on this to continue to drive our growth and our profitability and no longer be distracted with certain geographies that have certainly weighed us down.

So from your perspective, it's feeling that you're in a good position to take these actions is what precipitated the timing?

I think absolutely, that's one -- that's certainly one of them. But not -- but in addition to that, as Regina stressed, we are 100% focused on shareholder value creation. And we realized that it is very difficult to do if, in fact, we have certain geographies that have been weighing us down over the years. We have very intentional goals in 2014, and we are absolutely focused on those goals. And in order to achieve those goals, we're going to move every possible obstacle out of the way early on so that we can stay focused on these goals.

Inside your commentary about the higher growth areas, it looks like your guidance calls for them to kind of have around a 15% aggregate growth rate, at least by my calculation. Does that sound about right?

Yes, I would agree with that. On a combined basis, those businesses will grow, I would say, somewhere between 15% and 20%.

Our next question comes from Mike Malouf with Craig-Hallum Capital Group.

I'm just curious, can you just give us a little bit more color on which areas that you're talking about and how long they have actually been such a drag? And are they mostly focused on, say, South Africa, Spain, U.K., those types of countries?

Mike, good question. However, unfortunately, because of -- as you can imagine, negotiations with labor, et cetera, that were -- that are well underway and almost complete, we're not in a position to discuss that. I think that it's probably safe to say that by the end of this quarter, when we report our next quarter, that there'll be far greater transparency. And so I would appreciate if others do not even ask questions in this area because frankly, we're not going to comment on them. And in addition to that, we also have very strict client confidentiality agreements that we in no way, shape or form would ever possibly breach.

Okay. That's fair enough. And then since you're unable to answer that question for obvious reasons, can I just ask how do you think this affects the pipeline in the competitive position? I know that some of the competitors out there have said that a global presence is critical to winning in this sort of global economy. And I'm just wondering if we do exit certain areas around the globe, what does that do to the pipeline and your competitive position?

Well, I would say first of all, it has 0 impact on us being global. We're every bit as committed to being global as we were when we were the first company to go -- to start adding countries out of the U.S. So none of that changes. We're representing no less countries, it's really just about the delivery platform and where we deliver from, and it's about the economics of those delivery platforms and how we can most efficiently deliver them. And so that's what we're focused on. You'd expect any well-run business to operate that way. And I think that you'll see that if anything, we feel that this gives us significantly more confidence in our future pipeline, as well as our existing pipeline because frankly, it makes us more competitive.

We have a question from Matt McCormack, BGB Securities.

I guess the first question, could you just talk about the acquisition that you made and the revenue contribution?

Yes, I'll take that one. So the acquisition of iKnowtion, this is a data analytics company. It's a small company, 40 to 45 people. Really at this point, the financials are immaterial to TeleTech. More importantly, this is an area that we expect to build out and make as a real differentiator across our BPO business and our RevGen business, as well as stand-alone. To simplify it, I guess I'd say there's really 4 things that they do for clients. But each of these 4 things is absolutely focused on increased revenue and profit per customer. And these are things like propensity models, channel optimization, optimizing market dollars and offer optimization. We can certainly go off-line and talk a little bit more about it, but I'd say 2 other things. They do have a very premier customer base, and so we expect to be penetrating that base. And also this is, while small, a recurring revenue base, which is obviously an important part of our business profile.

And then the last point I'd make is obviously, it is growing rapidly or we would not have acquired it. And in addition to that, it's accretive and it's nicely profitable. So it fits all of our criterias from a strategic standpoint.

Our next question comes from Ashwin Shirvaikar, Citigroup.

My question is didn't you already sort of go through the process over the last few years of whittling down your business? And how is this year going to be different? What's different about what you're doing this year versus what you did before with dropping unprofitable clients and getting out of a few locations?

Good question. I would say a few things. One, we're always going through our overall business and trying to make sure that in fact, that we have aligned relationships with our clients and that in fact, they're all profitable going forward. So this is a common part of being in a business in the service business, et cetera. That said, we're at the tail end. And we're feeling actually quite good about that. And then I think the third thing that makes this different is that this is a bit more focused on the geographic delivery locations per se that are just frankly not economical to deliver from. And that's what I think should be your takeaway. So we're -- we think that although the normal course of business is to be proactive with business that's not profitable, I would say we've been less proactive as it relates to nonperforming geographies. This will put to an end any potential for nonperforming geographies, which again, of course, I can't discuss what those geographies are.

Our next question comes from Kevin McVeigh, Macquarie.

This is actually Derek Sbrogna for Kevin McVeigh. Just had one question. In regards to the 2012 revenue guidance that came in a little light of what we have been expecting, is there anything other than the exiting of those certain markets that we should be thinking about, anything material that we should be thinking about which may have impacted the guidance?

No. And I would say the range to some extent will always be based on variability and bookings and timing of bookings and the ramp. But I think equally importantly is as we set that guidance to $1.15 billion to $1.2 billion, it includes $100 million to $115 million. And clearly that range of $100 million to $115 million and clearly the timing of the runoff of that will impact. So couple of variables here. I think as we get through the next quarter, we will continue to have more clarity on that timing and certainly update you as and if our guidance changes.

Our next question comes from Shlomo Rosenbaum, Stifel, Nicolaus.

This is Steven Shui in for Shlomo. Can you give us some color as to how the volumes are doing in different verticals and why revenue was lighter than expected? Did you see an overall volume decline or the issue is more client-specific?

Could you repeat the last part of that question? For some reason, the volume faded down.

Oh, yes. Just did you see an overall volume decline this quarter or were the issues more client-specific?

Yes -- no, we -- in fact, we had our typical kind of volume up for holiday, where the volume decrease is -- as I said earlier, we've got about 75% of the $100 million to the $115 million planned. As we started to execute that early in November, the clients that are affected, the programs that are affected obviously adjusted. And so what we saw in Q4 just generally relative to revenue was a $6 million impact from FX, negative impact, about a $4 million impact from the clients behind these exits of geographies and programs and, you know what, I would say the other thing is we have -- we saw a slight difference in what we expected the ramp of our new bookings to be. But those are more operational issues like circuits and things like that, which don't cause any concern on a go-forward basis.

Our final question comes from Tobey Sommer with SunTrust.

Just one follow-up question in -- that had to do with kind of the good new sales you've had over the last couple of years. I wanted to get a sense for whether the dollar values that you've assigned to them in 2010 and '11 have mapped out accurately. Because even with the revenue that you're trimming from the unprofitable markets, you might think that the revenue growth rate would be a little bit higher if that $300 million in new signings in 2010 was kind of hitting the books and up and running and ramped by now.

Yes, I mean, I think generally those bookings are panning out. Timing maybe slightly different than what we thought. I think the most important piece there, though, is that today, we have effectively 4 businesses, right? Our core BPO business, our RevGen business, Direct Alliance, our technology services business and then our strategy and analytics business. And in particular, in the technology services business and the strategy and analytics business, iKnowtion aside, those bookings are onetime and need to be replaced. So I think what you're probably seeing, especially if you're trying to model, is there's a different rhythm and profile to those bookings on a quarterly basis relative to their link to revenue.

We have a final question from Ross Berner, Weintraub Capital.

Just a quick question, which is can you sort of walk us through the math on all this revenue you've been adding, kind of the $75 million to $95 million a quarter of run rate of bookings? And you've been doing that for the last, I think, like 6 to 8 quarters. And minus the Census revenue I get in 2010, where does that show up? I mean, is this really quick turn stuff or did it take a year to implement? I mean, it would seem like the trajectory would be higher for organic growth based on the numbers you're putting out there. Help me understand that.

So, I mean, just to level that right, $81 million in 2010 number of $1.95 billion, right? So that was $1.15 billion going to $1.179 billion. The link between the bookings and that $1.179 billion is 2 other things: We do have attrition, and while we had good retention in 2011, we generally estimate that attrition to be 6% to 8%. Second, there is a component of these bookings that are nonrecurring, as I just said. And then last but not least, given the size of some of these bookings and the launch, it takes anywhere from 4 to 6 quarters to get this to its full run rate as described in the annual contract value of our bookings.

And if you want, we're happy to, off-line, try to take you through that even more.

Yes, help you bridge that.

Sort of get you to help you bridge it and get you comfortable.

This concludes the fourth quarter and full year 2011 earnings conference call. You may disconnect at this time.