Stephen Neeleman: Well, I think it was a little earlier. I mean the recession was not really a recession yet, I guess. But I mean there’s no question that employers are trying to be thoughtful about how they’re putting people in benefits. But I think overall, the biggest driver for those $170,000 is employers are figuring out, this is actually the richest benefit in kind of an ironic way. I mean if you can do a well-designed €“ we’ve got this Pfizer case study that’s out there now kind of burden about it. And when they thought about this thing for 18 years before they did it, finally, they did it and they said, we’re not doing this as a takeaway, we’re doing it because you can leverage a tax code and you can leverage some other features of this to actually make it the richest benefit. And so I think that’s one or Jon, if you’d agree, but I think more and more recent growth is not, I want to save some bucks. I want to give the best benefit I possibly can
Mark Marcon: That’s great.
Jon Kessler: I just think what is true is that we win when our clients on the benefit side need to be creative whether it’s creative to retain people or creative to manage costs or whatever, like creativity is our friend. And this is a cycle, and I expect next cycle will be such where people created. And what are they really trying to do ultimately, they’re trying to deliver the most value to their teammates. And that’s what people go into benefits to do. They want to deliver real value. They don’t just want to cut off. And to Steve’s point, these are ways to do it, whether it’s promoting stuff that already exists or fiddling around with it, there’s real value here. And that’s what people are looking to do.
Mark Marcon: Great. And what does your guidance imply in terms of new adds for the fourth quarter?
Jon Kessler: I don’t think we don’t literally give sales guidance, but I guess what I would say is as Tyson commented earlier, if you look at last year, we ended up selling in the full-year, I want to say, a little over 900,000 accounts. And what €“ if you look at each quarter this year, while the new adds have slowed down, as you might expect, as the labor market slowed down a little bit, they’ve been on a really good pace. So it’s probably similar to the message I would have given you on this topic at this point last year, which is €“ do I think that we’re going to blow through a million accounts. No, I don’t. There’s just not enough accounts out there, but we should have a very healthy year sort of kind of certainly as healthy as last year.
Mark Marcon: Perfect. Thank you.
Jon Kessler: Thanks, Mark.
Operator: Our next question comes from Allen Lutz with Bank of America. Please go ahead.
Allen Lutz: Hey, everyone. Thanks for taking the questions. Tyson, I guess on the OpEx side, technology and development as a percent of revenue has kind of steadily ramped. Since fiscal 2015, I think it was around 12% of revenue then. And then even pre-COVID, it was about 15%, and now it’s 21%. I guess just a level set, what exactly are the increases in tech and development being spent on? And then, I guess, is there any chance €“ or I guess what’s the timing around when we can see some operating leverage from that part of the business? Thanks.
Tyson Murdock: Yes. That’s a good question. Thanks for asking it. You were exactly right on the numbers going up like that, how to deal with mainly the acquisitions, right. So anything about wage and then further as well, those play a big part of that, the amortization of the capitalized development that’s in there, the security build-out that we’ve done. We have built a very good security team over the course of my tenure here and spent quite a few dollars, putting that in place. And I think it’s got a selling tool as anything. So that’s in there. So I don’t think there’s no chance that it goes back to where it was before. And I don’t think that would be the right thing to do for the business. I do think it’s sort of leveling off.
The other thing I would say in there, too, is that a lot of it has to do with stock comp coming through in the talent grab that we need to make in that particular area. And so you see that playing into that as well. Of course, that’s getting back down to the EBITDA margin side. So you don’t see the impact of it there, but a lot of that increase will be in that area. And then really, when you think about other things that are in there, there’s not any large investment in there necessarily. There’s just the merit and the associated costs of the folks that are in there and then how much we end up capitalizing relative to what we’re building. I don’t know, Jon, anything else you want to add to this.
Jon Kessler: I mean, the only other €“ look, I think big picture, I mean, it’s kind of gotten about as high as it’s going to get is the way I might put it, at low 20s percent of revenue. It’s kind of funny. I mean, when we were at 2015 as I recall, one of €“ Allen, one of your predecessors was like, it doesn’t sound like enough for a growth company. And the way I kind of look at it is I do think when you sort of go apples-to-apples, we have increased spend in this area and the sources of increased spend, I think, are ultimately refold versus €“ I’m sorry, it’s security, as Tyson mentioned. I think the second is the fact that we €“ is the fact that we are actually investing more to innovate around the business, and you’ve seen that and what the business has done over the course of time in any number of areas, and we’ll continue to do.
We talked about some earlier in this call. And then the last thing that is worth mentioning is that in practice in the near-term anyway, the conversion to cloud on the IT side, as you’re doing it, it does have a €“ it does hurt you a little bit. Now over time, that works itself out and that should be a tailwind, but I think that plus kind of having kind of now getting through the amortization of acquisition-related technology spend and all that. I think you’re going to see this number start to come down as a percentage of total revenue over time without like efforts.
