Gary Kramer: No, we’re — I mean, we actually saw it come back some in Q3. So sequentially, our clients hired in Q3 over Q2. Now it was a slight positive. It wasn’t a big positive, but it was still positive. And I will take a positive over a negative any time. But if you think of when we started to see the slowdown in our clients, it was November, December of ’22. And then, we saw it come back into Q1 of ’23, Q2 of ’23, and we’ve seen it slowly come back, reverse out in Q3. So, it’s still early, but we’re thinking, especially in the Bay Area where we’re seeing it come back. We’re hoping that, that trend is reversed.
Vincent Colicchio: And one clarification. Did you say the profits gained from staffing clients within PEO offset losses from clients that you shared in the staffing line?
Gary Kramer: So, this is a challenging one to try to explain. We do recruiting for our clients now. And when, we booked the recruiting phase, say $10,000, right? We hire — we recruit for our clients and they hire somebody and we get paid a $10,000 recruiting fee. So that recruiting free profit for us. The sale we recognize on that is $10,000. The profit we recognize to keep it simple is $10,000. Now where that’s different is if that was traditional staffing business and say that person has been aging $75,000 in wages, we would book the wages plus taxes plus other things into the revenue line. So that revenue would have been, call it, $100,000, but we would have made our $10,000 in profit. So, it’s a little bit of a shift in the accounting for recruiting for staffing.
And all we’re trying to say is we’re making adequate margins on staffing. We’re just not realizing — we’re making an adequate profit on staffing. We’re just not realizing as much revenue as we used to, nor are we realizing the cost of it.
Vincent Colicchio: And then you mentioned staffing. I believe you mentioned should grow sequentially. What’s driving that — is in particular?
Anthony Harris: We had sequential growth in this quarter, and we’re projecting modest sequential growth next quarter. Again, we’re talking small positives here, not large percentage sequential increases. But the key takeaway is the large declines really, we think, are behind us. And so the — for example, the 25% decrease in revenue now is really representing just that year-over-year compare where if you look at the trend line now, it’s flat to positive. So, we’re really holding that. We’ve seen, as Gary said, the activity in staffing that we’re excited about is not necessitating to large increases in revenue, but it’s still showing up as some revenue and certainly margin.
Vincent Colicchio: As you go after bigger clients and the competitive, I think the competition is a little different. Are you seeing competitive pressures increased in the current environment?
Gary Kramer: No, no more than normal. I mean, there’s competition everywhere. But with our product and our people in the field, it’s really our differentiator, right? We can talk about all these different tools that we have as far as workers’ comp or health insurance and yada, yada, yada but the people in the field doing the work being there with the business owner. That is the core product, and that’s what we’re able to sell in the market. That’s what keeps the business on the books. That’s the one that the clients truly find the value is in those — this unit.
