Maggie Nolan: Okay. And could you give us a sense for where perm is now and compare and contrast where it is in the range historically, and maybe also describe the margins in creative digital? I know they come down, but can you rationalize that, too, if you could?
Theodore Hanson: Sure. Well, permanent placement is around 3% right now. At its high, it was close to 5% I would say 3.5% to 4% is kind of a normal level for us, if you will. And Cree Circle EBITDA margins are higher than our overall company margins, they range kind of from the mid- to high teens in that business and have been pretty consistent and well-managed by Matt Riley, at Creative Circle over a number of years.
Operator: Our next question comes from Heather Balsky with Bank of America.
Heather Balsky: I ask, first off, can you dig in a little bit more to the slowdown that you saw towards the end of the quarter in terms of kind of the level of deceleration, what areas of your staffing business were most impacted? And when you think about the guide for the second quarter are you assuming kind of a steady state from what you saw in March and April? Or are you kind of factoring in further deceleration?
Theodore Hanson: So maybe a couple of things here. I think coming across the New Year, if you think about coming from the end of December into January, we would typically see a slight notch down. And that’s just natural end of projects and new projects are starting, and I think Marie mentioned in her commentary, that’s a pretty normal thing in the business, and we saw that in this year. What was unique is about 2/3 of the way into the quarter, certainly into February instead of seeing us begin to track back up, we took another notch down. And that was unexpected. And I’d say that’s really the difference. Now what we’ve seen in the last, what I’ll say, 4 to 6 weeks is a pretty good steadiness. So you’re still down a little bit.
In the staffing part of the business and obviously, you’re up on the consulting side of the business. And so they pretty much have kind of continued that offsetting trend here for the last 4 to 6 weeks. So that’s the first quarter. If you think about the second quarter, I think Marie’s comments were that the guidance that we gave really predicated a similar trend to what we’ve seen in March and April. And that’s the flatishness that I mentioned a few seconds ago. And so that’s really where the guidance is predicated we’ve built some conservatism in that for the staffing to potentially get a little bit weaker. And you can see that both in the bands that we gave on the revenue and the EBITDA side, especially to the downside. So what we’ll get, we’ll have to watch and see, but that’s what we see here just 3 weeks into the quarter.
Heather Balsky: That’s helpful. And then switching gears. We’ve gotten some questions just with AI being in the news and very topical. And just curious your thoughts on kind of how the rise of AI right now potentially helps or could hurt your business. I think here we’ve heard through both case, there’s opportunities for AI-type roles. And then on the flip side, is there risk that sort of the number of tech jobs out there shrink. Just curious to get your thoughts.
Theodore Hanson: Yes. So I’ll start and then let Rand had something to say here. I’ll turn it over to him. But I think this is a new business driver, if you will. I mean so often, things come along that kind of push the next wave of digitization, automation and IT work for, and this is certainly going to be one of this. It’s too early to really get your arms all the way around what the opportunity is, but there’s no question that this is one of the inside of our business, I see it as a productivity driver. A lot of the things that we do for clients in terms of helping them solve problems either on the talent side or providing a certain solution is going to remain there. But in terms of how we operate and execute our business, early on, you can already see that there are going to be opportunities for AI to make a real difference in us continuing to increase the productivity and the way we serve our clients. Rand, what else would you add to that?
Rand Blazer: Well, listen, everything Ted said was great. We obviously see AI as a key driver of IT spend going forward, along with machine learning. But let’s remember — and by the way, we featured some of that in this earnings call with our health care client, and we have in the past, featured it with some of the work we’re doing with the Department of Defense and the federal side. But let’s remember that what you need is a good data structure. You need a good cloud and data structure in order to do AI. And so what you see from some of the other big tech giants is cloud work is still moving forward, because that’s — you’ve got to harness data. You’ve got to be able to simulate, — you’ve got to be able to track it and the trends in data, which is both a cloud and a data analysis set of things to do.
So there’s a lot of groundwork to be doing to make AI really work, not to mention just the technology of AI and machine learning. So I think that’s why you see a lot of is still growing in those areas.
Operator: Our next question comes from Jeff Silber with BMO Capital Markets.
Unidentified Analyst: Ryan on for Jeff. Just a quick question. We’ve seen some headlines surrounding declines in IT spend. I was just wondering how those factors impact your business? And are those impacting the digital transformation initiative that you’ve spoken about previously?
Theodore Hanson: Rand, do you want to take that?
Rand Blazer: Let me start. First of all, Jeff, I would say there’s a decline in IT staffing expenditures for sure. Okay? And that’s because, as Ted pointed out earlier, clients, Fortune 1000 clients, specifically can put their finger on it and leverage it or stop it or start it in hours, not even in days, okay? In consulting, we have not seen a slowdown in consulting spend and the projects that make that up. So I guess I would clarify that. And perm placement is also in that IT staffing piece. Why would you hire somebody on your corporate staff at this point in time in the economic cycle. But that will eventually come back as you said. Jeff, the second part of your question was not just whether they’re spending, but go ahead, the second part was what…
Unidentified Analyst: It was just on the digital, how that relates to digital transportation.
Rand Blazer: Yes. I think digital transformation, look, AI and machine learning is on everybody’s mind in the press. But the cloud work and the data analysis I just mentioned is what I call infrastructure and building for that. The digital transformation is embedded and still a big part of what we’re doing for clients. We just recently signed a new piece of work with a telecommunications company, media company using ServiceNow technology. Our GlideFast business is growing. I think Ted mentioned that earlier and their backlog and bookings are growing. So there’s still a lot of interest in some of the digital transformation initiatives our clients are involved with. I think it goes to the comment Ted made earlier. Those are things that have already started. They may they may, if you will, go a little slower at some of them for a small period, but they’re still going.
Theodore Hanson: Yes. in just Ryan, Ryan, 1 more thing I would add to that. I think our clients view their IT initiatives as strategic just like we do, right? And so as we look at the things that we’re doing in the business, we can’t really take our foot off the gas. I mean all these are about REIT customers, being more productive, having better data and analysis, be it in the cloud, having better security. And so while we may let some discretionary spend fall in certain areas inside of our other business, whether it’s marketing or travel or some levels of headcount or what have you. What we’re going to do are best to stick with our investments in all the IT projects that are helping us move down the pathway in our digital road map.
And I feel like our clients look at saying, well, in fact, I know they do because when we talk to them, that’s most of what we get. Yes, they’re being cautious to Rand’s point. But I think IT spend now is so much a strategic initiative than it used to be a cost center, right? And so there’s just a little bit different view of this. And yes, some spending will ebb and flow. None of us need laptops. We bought so many over the last couple 3 years. We don’t need more laptops, but we do need to keep moving on all these things that are initiatives to get the right in our applications in our business to get them into the cloud to keep them secure and make them productive for us to reach our customers and serve them our services. So anyway, that’s kind of how we see it.
Unidentified Analyst: And then, just a follow-up. If there were to be some weakness in some of the top of the pyramid areas, so this architecture, implementation consulting work if you see those, when you see trends coincidentally in your consulting business, some of the systems deployments or service centers? Or is there may be some lag between those 2 areas of the Consulting market?
Theodore Hanson: Well, Rand, certainly, management consulting is an area that’s maybe softer. This went on longer with IT spend around our design and architecture be predabated likely, but the execution of the work, which is where we play for the best part, should still be pretty strong.
Operator: Our next question comes from Surinder Thind with Jeffries.
Surinder Thind: Ted, just to follow up on the earlier color about kind of the transition that’s occurring in 1Q to 2Q in terms of the weakness that we saw in the staffing business. Can you talk about it in terms of — was this company kind of pulling back on staffing in the sense that they’re delaying projects and their having people come off of those projects? Or is it that projects are tending to be pushed were in the pipeline, maybe there was positions that were open and that you had anticipated filling, but at that point, they’ve removed those positions. How should we think about that mix at this point? And ultimately, what the longer-term risk here is over the next 6 to 12 months in terms of what kind of a pullback in terms of trying to kind of put ends on what the way the clients think about this.
Theodore Hanson: Rand, do you want to take that?
