Dylan Becker: Got it. Super helpful. Thanks again, guys, and really congrats on a nice set of numbers here.
Githesh Ramamurthy: Great. Thanks, Dylan.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Kirk Materne of Evercore. Your line is open.
Kirk Materne: Yes. Thanks very much. Githesh, I was wondering, just based on your comments on sort of the challenges facing the industry right now, can you just talk about how sort of the cohorts are progressing as it relates to sort of going from pilot projects to production? Meaning as more and more of your clients start playing around with your newer products, whether it’s subrogation or Estimate-STP, have you seen the clients that are sort of trying it out today being able to move through sort of pilot projects at a little bit of a faster pace? I realize you have a very methodical customer base, but I was just kind of curious if the external pressures are maybe helping them move along at a faster pace.
Githesh Ramamurthy: Hey, Kurt, thanks for the question. I would just say broadly, this is kind of what I was talking about earlier in the call, is that we have multiple customer segments. We’re working with, we’re working with Insurers and even inside Insurers, the team that handles subrogation is different from the team that handles appraisals, from the team that handles total losses. And then on the repair facility side, we are not only dealing with the core aspects of helping them repair the vehicle, write the estimates, we’re also helping the front office, the back office. And what we really feel good about is the breadth of the solutions we have, the breadth of the customer base we have and they are all at various stages of adoption.
And I was actually standing on the show floor at SEMA last week and to see our repair customers for the first time use jumpstart which allows them to take photos and to be able to pre populate and start the estimate, they can write a pretty large chunk of it exclaim. Oh my God, this is going to be unbelievable. This is going to save me a ton of time because I have such a shortage in terms of labor. Those individual conversations when you see the result of several years of development, what we really love is when customers see those Aha moment that can have that kind of an impact and it is translating into adoption, pilots more breadth. Yes, we’re seeing that and hence our focus on continuing to build out a broader solution set.
Kirk Materne: And then just Brian on the, thanks Githesh and Brian, certainly on the early look at adjusted EBITDA for next year makes 40% still an amazing sort of level to get to. Any specific expenses or I guess investments rather, that you guys are focusing on for next year that sort of keeps you in that range versus what you sort of end the year at or is there someone timers in the back half of the year that influence that as well?
Brian Herb: Yes, it’s a good question. I mean we’re really happy with where the margin is in the second half, what we delivered in Q3, what we’re guiding for in Q4 and just ending the half at 42%. We are suggesting the point of movement from 40% is where the margin progression is going to build. There’s a couple of things that are playing through that. I mean, one is just the kind of seasonal reset on payroll taxes. Merit comes in at the beginning of the year. We have our customer conference, which is an investment that’s in the first half of the year; we will be putting additional headcount ads into the business going forward. So it’s those type of things that will naturally come in the first half of the year. That’s why we’re suggesting moving off the 40% margin, not using the 42% exit margin.
Kirk Materne: Perfect. That’s helpful. Thank you all.
Brian Herb: Okay.
Operator: Thank you. One moment, please, for our next question. Our next question comes from the line of Saket Kalia, Barclays. Your line is open.
Saket Kalia: Okay. Hey, guys, it’s Saket from Barclays. Thanks for taking my questions here and echo a very solid quarter.
Githesh Ramamurthy: Thanks, Saket.
Saket Kalia: Sure. Githesh, maybe for you, maybe just to expand on a problem, I’d love to dig into the parts business a little bit more, maybe more strategically. The question is, what are you typically replacing there when customers are not using the network? And do you see anything on the horizon that can help accelerate the adoption of parts networks like CCC? Obviously, I mean it’s grown quite a bit over the last couple that you think can accelerate that adoption.
Githesh Ramamurthy: Hey, thanks for the question. I would say to start with, the most fundamental question is that a lot of parts are still handled through phone calls where you have a part number. So what we’ve seen is if you look back a few years ago, people were putting roughly eight, nine parts for repair. Today people are putting 13 parts. Complexity has increased. So this process of email, phone calls is, for the most part, that’s really what we’re replacing with a seamless electronic system where once you write the estimate, you can just go click, click, click hit, hit the things, to set up your suppliers electronically, send out the order, get the invoice back, get that reconciled. So that’s really what we’re doing. And we have seen that in the earlier years, as we’ve been building the parts business, we needed to build out the geographies, right we needed to maximize the suppliers in say, the Pacific Northwest or the Southwest.
