PRGX Global, Inc. (NASDAQ:PRGX) Q3 2018 Earnings Conference Call Transcript
Nov 01, 2018 • 05:00 pm ET
Good day, ladies and gentlemen, and welcome to the Q3 2018 PRGX Global, Inc., Earnings Conference Call. (Operator Instructions)
I would now like to introduce your host for today's conference, Mr. Pete Limeri, CFO.
(Forward-Looking Cautionary Statements)
I will now turn the call over to Ron.
We completed another strong quarter at PRGX, where we delivered solid revenue and adjusted EBITDA growth, won three sizable deals that we believe will deliver significant revenue in future quarters, and achieved important milestones in delivering two advanced technology platforms.
This quarter was our ninth consecutive quarter of year-over-year revenue and adjusted EBITDA growth. Both Recovery Audit and Adjacent Services grew, with Adjacent Services delivering its second consecutive quarter of sequential growth, expanding revenue 155% compared to the third quarter in 2017. This strong performance was primarily driven by continuing demand for data-led analytics capabilities using our PRGX OPTIX SaaS solutions. Pipeline in Adjacent Services remains very strong, and we expect for the fourth quarter to be another quarter of Adjacent Services growth.
Our global Recovery Audit business delivered solid revenue results for the quarter against the tough comp versus the third quarter of 2017, which posted year-over-year growth of over 20% compared to 2016. Our Q3 2018 Recovery Audit results were led by a very strong performance in the Europe/Asia-Pacific segment, which grew more than 12% compared to the same period in 2017, primarily driven by the significant wins in the UK retail market described in previous earnings calls. Revenue from these wins started to ramp up in Q3, and we expect to see further increases in Q4 and beyond.
Our global revenue in Recovery Audit was slightly behind our expectations, primarily due to over $2 million of revenue in the Americas, which was delayed at the end of the quarter. A large portion of this delayed revenue was invoiced in the month of October, and we expect the remainder to be billed before the end of the year.
Adjusted EBITDA for the third quarter was $6.4 million, or 14.9% of revenue. This was an increase of 3.7% compared to 2017 on a constant-dollar basis. Our comparative results are particularly impressive given our strong adjusted EBITDA performance in the third quarter of last year, which reflected a 31% increase over the prior year. In addition, we continued to make significant investments in sales and marketing and technology development during the quarter.
I described our significant investment in building our global go-to-market team in our Q1 earnings call. I am pleased with the significant progress and momentum in our global sales engine due to these investments. We have signed more new clients with higher projected new contract value at this point in 2018 than we did in all of 2017. Our dedicated team of experienced sales and marketing professionals is building an impressive pipeline of new sales opportunities for Q4 and going into 2019.
We also made considerable progress in our technology development efforts in Q3, including completion of initial releases of our next-generation Recovery