There are a large number of factors that can produce a fairly wide spectrum of outcomes in the next few years. Input costs, labor, as well as where the decline rate in U.S. leads will be major contributors. Most interestingly, as highlighted toward the end of my piece, STG's investment into deploying global SAP + ERP have weighed down as additional costs. During conversations, management has also stated they've been slow/hesitant to begin taking costs out where possible until the SAP + ERP is fully integrated. It stands to reason that this can be a double-edged driver of profitability, as the cost of the rollout will lap and will also allow a reduction in other associated costs. The other largest question mark (and one no one can pretend to model or anticipate) is the cadence and scope of future M&A. Size of deals, level of complexity and synergy, and timeline for recognizing said synergies, will all play a direct (and perhaps major) roll in pushing margins around.
Great coverage! Thanks for sharing.
Thank you, Amrita. Glad you appreciate it.
Thank you. Very interesting company. How would you rate the potential for revenue growth and margins in 2024-2026?
Thanks for reading and for the comment, Alex.
There are a large number of factors that can produce a fairly wide spectrum of outcomes in the next few years. Input costs, labor, as well as where the decline rate in U.S. leads will be major contributors. Most interestingly, as highlighted toward the end of my piece, STG's investment into deploying global SAP + ERP have weighed down as additional costs. During conversations, management has also stated they've been slow/hesitant to begin taking costs out where possible until the SAP + ERP is fully integrated. It stands to reason that this can be a double-edged driver of profitability, as the cost of the rollout will lap and will also allow a reduction in other associated costs. The other largest question mark (and one no one can pretend to model or anticipate) is the cadence and scope of future M&A. Size of deals, level of complexity and synergy, and timeline for recognizing said synergies, will all play a direct (and perhaps major) roll in pushing margins around.