Richard Baldry: Thanks.
Operator: Our next question is from the line of Brad Reback with Stifel. Please proceed with your question.
Brad Reback: Great. Thanks very much. Heading back to 2024, the guide from your commentary, is it correct to assume about $10 million to $15 million from acquisitions? Is it in the 125 to 129?
Pat Goepel: Yes.
Brad Reback: Great. And the employment trends that you’re modeling for ’24, give it…
Pat Goepel: To put in, it’s just flat. We’ve not taken anything down. We’ve assumed our employers are going to stay relatively flat for ’24.
Brad Reback: That’s great. That’s all I got. Thanks very much.
Pat Goepel: Thanks, Brad.
Operator: The next question is from the line of Jeff Van Rhee with Craig-Hallum. Please proceed with your questions.
Jeff Van Rhee: Great. Thanks for taking the questions. Pat, just on the Secure Act, maybe you talked about early traction. Can you put a little behind that? Any quantification, a little more color there would be helpful. And then, on the 26% growth in bookings, does that include or exclude ERTC? If it includes it, what was it ex-ERTC?
Pat Goepel: Yes, just a couple of things. First of all, your first question, Jeff was around I apologize. Say that again.
Jeff Van Rhee: The Secure Act, you said you were off to a good start.
Pat Goepel: Yes, Secure Act, and I’m sorry. Shortly after September 14, which put a pause on ERTC, we’ve already begun to pivot towards Secure 2.0 Act. And those that don’t know about Secure 2.0 Act, it’s really a social security is going to be challenged over the future years with retirement funding. There’s still many Americans out there today that don’t have access to a 401 (k) plan. And already now with the Secure 2.0 Act, the government will provide funding not only to set up a 401 (k) plan, but also provide funding in the area of tax credits to employer matches. And so, we get people starting to save and create some independence in addition to social security. And that sliding scale of a match goes over five years. That program has been adopted by 22 states already.
And we anticipate that it will continue to be driven. And if you think about the data that we sit on, which has 401 (k) deduction codes, and it also has forms like the 5,500 to go over the plan, we’re pretty visible. And our offering already is around compliance. And from a compliance perspective with whether it’s minimum wage, sexual harassment training for those states that require it, HR compliance, or payroll taxes, or payroll wage an hour, compliance is what we do and what we’re skilled at. So, we’re going after those clients and those prospects in the states that have mandatory 401 (k) plans. We’re excited to partner with Vestwell, which is also partnered with JPMorgan Chase, which we’re partnered with on another company around our Treasury Management System.
And so, we’re going to go after 401 (k) in a big way. I anticipate that, we’ll do in over 700 plans here next year. We’ll already probably do something like 10% this year. We have visibility around 70 plus plans to sell here in the fourth quarter. I wouldn’t be surprised if we beat that. The marketing qualified leads, the sales qualified leads, the interest level is really, really high. And we’ve only been doing this in a little bit over a month. So, people are pretty excited about the program. As far as sales numbers, the 26%, we have ERTC and we’ll start reporting bookings ex-ERTC. We’ll also do some with ERTC. Some are standalone going forward, if we do book in ERTC deal, it’ll be a current client with the current product. So, we’ll provide a bigger breakout of that.
But suffice to say the 20%, 6% on ARR is really largely without ERTC because and we’ll provide bigger breakout of a definition of ERTC, because in of itself, ERTC was more of a one-time event than an ARR event. It did get kind of packaged, and we’ll have to kind of have a nuanced breakout for you in future quarters. But the 26% ARR bookings is on top of what we booked in ARR, which implicit in that number did not include ERTC.
Jeff Van Rhee: Okay, all right, great. And then, on Marketplace, did it ramp as expected? And any more precise thoughts or bounds around what it might do for ’24, that’s my first question. And the last would be gross margin, John, just how should we think about gross margin for Q4?
John Pence: Do you want to go first?
Pat Goepel: Yes, I will go first on a Marketplace. First of all, 401 (k), we were looking at the big category of Marketplace. With the Secure 2.0 Act, we pulled it out of the marketplace and really have it as a separate category with payroll. So, that’ll perhaps take from the marketplace, but it’s going to be a huge initiative going forward. We announced Lendio in the marketplace this past quarter, because small businesses do need lending options that aren’t regional banks. So, that’ll be a good one. The Equifax relationship has gone very well into the fourth quarter. And momentum is building across the marketplace. We will provide a more wholesome update because we got a lot of partners that we’re working on right now. And as we speak into the first quarter of the following year, but suffice to say, we’re starting to lap some tougher compares by the same token.
And we’re going to grow the marketplace and pretty excited about it. And then, 401 (k), we’re going to take as a full category and we’ll take that out of the marketplace just because we think the traction level is going to be pretty high pretty quickly.
John Pence: On margins, I would say the way I think about it would be to think about just kind of the cost of goods sold. I believe that fourth quarter cost of goods sold will be in line with the previous three quarters. So, if you take a blend of that, I think we did like 8.7, 8.4, 8. So, it’s going to be in that range, right some of them coming at 8. and 8. So, I think that’s a fair way to think about and that the revenue will just generate the gross margin based on that cost of goods sold.
Jeff Van Rhee: Yes, got it. Okay. Great. Thank you.
Pat Goepel: Thanks, Jeff.
Operator: Our next question is from the line of Eric Martinuzzi with Lake Street. Please proceed with your questions.
Eric Martinuzzi: Yes, you gave us the nine months on the ERTC. Curious, can you give us the Q1 and Q2 revenue contribution?
