Cai von Rumohr: Yes, thanks so much. So, great quarter. You talked about, I mean, Intel was down, not unexpectedly, with FocusedFox. But you talk about that looking good. Give us some color on where you see it going from here. Have we passed the bottom? And secondly, you didn’t talk much about global commercial. And this is the first quarter. It wasn’t basically flat to down sequentially. It had a nice uptick. So, are we seeing something of a turn there?
Horacio Rozanski: I’ll start with global commercial for a moment, and then spend more time on national security, if that’s okay, Cai.
Cai von Rumohr: Yeah.
Horacio Rozanski: Our global commercial business is really a small part of the portfolio. The numbers this quarter still reflect divestitures and softness in the commercial consulting side of the market, which I think is echoed by everything we see what’s happening in the consulting industry in general. At this point, our incident response business there has accelerated. It’s doing really great, and it’s an important part of the offering. But what we really like about commercial is its connectivity to the rest of our business. If you think about our national cyber platform, adversaries look at the entire attack surface of the United States, and they don’t care if it’s private or public or at the intersection. And so, having this presence that cuts across.
Makes us a valuable partner to our government clients as we support them here. But again, it’s a small part of the portfolio. On the national security front, you explained already why the numbers are what they are this quarter. What we’re seeing into the future is a business that has repositioned against the true technology side of intelligence. There’s a lot more. AI space is growing as a significant part of our business. Our clients now look to us to create unique solutions. And they trust us to help them scale those solutions. We’ve spoken before, and Matt just talked about that business always is a little bit rate limited by the speed at which we can clear people or transfer clearances if they already have them. But even with that, we anticipate the growth and accelerating and building.
They want some really interesting work. They have some great pipeline and the talent is staying, including some of the cyber talent that we talked about in the past is staying at Booz Allen and getting redeployed and redistributed against some of these key mission priorities.
Cai von Rumohr: Terrific. And a second one, the whole industry has benefited from a much looser labor environment. But you talked about that you’re doing much better than you ever have in terms of taking people from higher to putting them onto the mission. Maybe give us some color in terms of what you’re doing there to get that improvement.
Horacio Rozanski: I’ll start. I guess Matt’s also been close to this. Credit to this goes to this is all done under the leadership of Kristine Martin Anderson, our COO, and she assembled a team from all of our enterprise operations and the markets to work this problem together to maximum effect. We used to have — first of all, the first thing we identified is that the time we were not taking full advantage of the people that were applying, because we were too stovepiped in our approach. We have now built much more — using both technology and process, much more cross-functional, cross-market view of this. So, easiest way to explain it is the runner up for a position doesn’t get lost in the system, becomes all of that knowledge, positions that person for another similar opportunity.
And again, that allows us to mine our incoming talent pipeline much more. Once we do that, we have gotten a lot better at shortening the cycle from the time we want to extend an offer to the time a person can join. That has been a lot of small changes, but each one of those significant. So that has been shortened. And then we’re really very focused both for our incoming talent and for existing talent about giving them full access to the opportunity set that exists right here, right now. That helps attrition, because people stay longer if they can change jobs if they want to. But it really helps our new folks. We used to have this rule of thumb that it took 60 days to get somebody fully billable once they came through the door. That created fictional billability issues when we were hiring significantly like we are now.
We have shattered that expectation. I don’t — I couldn’t tell you what the actual number is today, in terms of reaching full billability, but it is a fraction of what it used to be. And when you put all of that together, that drives employee satisfaction. It drives economics. It frankly allows us to recruit with a somewhat — to run this business at growth with a somewhat smaller bench. So, it’s all to the good and it’s all intentional. And then coupled with all the training that we’re doing and all the things that we’re doing to upskill people and to keep them here, I think that’s why you’re seeing what you’re seeing. So it’s not — and I agree with you, the market is a little easier than it was 18 months ago, two years ago. But I do think that part of this is all of these changes that we’ve made have, again, allowed us to outperform the labor market.
Matt Calderone: And Cai, I can just add two things to what Horacio said. We typically talk about supply and demand separately and that in the short run, we’re more supply constrained, but obviously the two work in sync. So, part of the reason that we’re able to deploy people quickly on jobs is a lot of work out there, right? Our book-to-bill for — LTM is now over 1.4 times. So, we have sold an awful lot of work. There’s tremendous demand for employees, both internally in our internal marketplace, as Horacio mentioned, and externally in the hiring marketplace. And that’s why, as Horacio said, our bench is actually at the lower end of what we’ve seen historically and why we are continuing to step on the gas from a talent acquisition standpoint.
