Randolph Blazer: I would say light waves, we would have sectors and client sectors where you have a little wave up and then you have other sectors with a little wave down, but nothing too dramatic, I would say. So it’s more rolling waves through the quarter. But I think we’re pleased, particularly — and I guess I’d make this comment in our more discretionary areas like the staffing, the firm placement work, the creative marketing work, the fact that it becomes a little more stable towards the end of the quarter, and you could almost predict week-to-week what you’re going to see. And that was a good sign.
Seth Weber: Okay. And then I just wanted to go back to the comment, the Gartner forecast comment relative to your business. I mean, they are — Gartner is projecting a pretty big uptick over the next couple of years. And so I’m just trying to tie that together. Are you just not confident — you’re not ready to make that call yet? Are you seeing any kind of green shoots that would lend you confidence that, that’s the actual right way to think about it? Or it’s just too soon to make that call? Because I mean, Gartner has — does have that forecast out there.
Theodore Hanson: Right. It’s such a broad forecast. I mean, if you start to break it down into areas, the software companies and the big tech companies providing cloud and now generative AI capabilities and other things, they’re seeing pretty good growth rates. The consulting services and the IT services behind that, or a little bit of a lead lag. So I guess, Seth, I would probably lay it more on that, right? And I think what Gartner is capturing is a big, broad spend in all those categories. Rand, would you say anything else?
Randolph Blazer: I think, Seth, we look at it by industry. I appreciate what Gartner is saying, but we watch particularly the earnings of different industries and companies within these industries. So we were pleased that the banks had a good quarter, this past quarter. It looks like big technology had a good quarter. I’m not sure Telco is where they are for sure. We’re not worried about providers because we’re the baby boomers are demanding more services, and you have the flu season. And so I mean, if you watch the earnings, it’s utilities, it’s oil and gas. it’s — this consumer staple is assuming the consumer stays strong, are doing well. And by the way, we’re doing well. If you believe that the banks can continue to improve their — build on their performance — I wouldn’t say improved, build on it, then that’s portends a good thing.
I think technology is claiming they’re getting better in advertising dollars, and they’re getting better reach and they’re coming back. Obviously, the enterprise software guys are doing really well, right? Mostly because they’re embedding AI and they’re raising the rate structure around that AI, which clients have to spend now even if they’re not putting it to full use till later. And that goes back to those 3 layers. We talked about processing power, data and use cases. So there are certainly indicators we watch in a macro sense around the industries to give us a sense of what the client spend will be. And we also know what they’re worried about and what they’re thinking about in terms of their initiatives, particularly in that middle layer, the data layer.
So I mean, I think those are things we look at, right? And is anything conclusive yet from all that data? I think with stability in the federal government and interest rates, I think we might see something good, but what do I know. I mean, I’m certainly not a professional economist.
Operator: Our next question comes from the line of Josh Chan with UBS.
Joshua Chan: I guess you mentioned that on the consulting side, there’s some elongation of projects and that’s causing some of the softness. So historically, what typically gets the clients more confident that they will, I guess, recompress those project time lines again? What are you looking for there?
Theodore Hanson: Well, look, I think it’s back to what Rand said. When Rand is speaking about, they’re watching their bottom line and they’re measuring how much they’re willing to burn and spend on projects in order to get to certain outcomes, they have to feel better about their own growth and pick up the pace, if you will, of investments and initiatives in IT. So they’re hanging in there with the critical stuff. They’re trying to measure it out and watch that. But I think it goes back to again, we’ve said a few times today, and I think it implies to your question, Josh. They just have to feel better about where they’re headed quarter-to-quarter and into 2024 to really lean in harder and speed up and take on more spend in IT.
Joshua Chan: That’s good color. I guess I got my second question on margins. So it looks like your SG&A is going down more than your revenue is. Is that just a function of mix as some of the businesses that are down more have higher SG&A composition? I guess, could you talk to the SG&A decline there?
Marie Perry: So Josh, on SG&A, it’s a — you’re talking about year-over-year?
Joshua Chan: Correct. Yes.
Marie Perry: Yes. So we kind of noted that as well. So it really is a lower incentive comp associated really with our business stabilizers, right? So kind of just the rate around the incentive comp is really with the change is on a year-over-year basis.
Theodore Hanson: And I think to maybe just a second piece of detail under Marie’s point is if you think about last year, we were at full incentive levels in all kinds of different ways. And so that in and of itself is a difficult comp on the expense side, right? So you were at full kind of max incentives and now incentives are properly coming down with — to where the performance of the business is.
Randolph Blazer: Josh, it is worth mentioning, we don’t have 2 different workforces, one for staffing, one for consulting. That was sort of embedded in your question. We have one workforce. Our account managers provide support to our clients across the array of services. Our recruiting team supports not just staffing requirements, but our consulting team requirements, and our back office certainly does both. So don’t think of it as two different workforces. It’s one workforce and then what Marie and Ted said is just what’s happening across the board.
Operator: Our next question comes from Heather Balsky with Bank of America.
Heather Balsky: I wanted to first quickly ask about permanent staffing, including Creative Circle, just if you can share kind of where you are in terms of, I guess, normalized trend, maybe pre-COVID. That would be helpful.
Marie Perry: So for perm placement in Q3, it represents 2.6% of total revenues. If you kind of just look at it from a dollar perspective, we’re down 42%. Last year, we were at 4.2% of total revenues. So — and honestly, when you look at it, you just one other point. During COVID, the 2.6% is almost kind of close to our COVID levels.
