David Kelly: Yes, this is Dave, Josh. One, I would say it’s played out more slowly than we would have hoped. I think that’s fair, but I had mentioned a few minutes ago it has been a bit uneven. We’ve seen slight periods where we’ve seen some benefits, but generally speaking the economic environment continues to be challenged. It continues to be uncertain for us as Joe alluded to at the beginning of this call some of the drivers. Clients are being very cautious because they don’t want to overcommit. It’s slower than we had anticipated. I think slower than some economists have been saying, but there have been predictions over recession. We don’t know what’s going to happen when Joe touched on rate cuts. So, it’s clear. If there’s one thing I think that’s clear is I don’t think anybody knows what’s going to happen? So I think it’s just imparting significant amount of caution that continues to be the case across effectively every industry.
Josh Chan: Sure. That makes sense. I appreciate that. And then you mentioned that the sequential increase in activity is similar to a normal seasonality going from Q1 to Q2. Is the margin development similar as well to pre-COVID or how do you think about the margin expansion going from Q1 to Q2 versus normal?
Jeffrey Hackman : Yes, Josh, this is Jeff. Good to talk with you. Yes, I think the anticipation, Josh and contemplated in our guide is a fairly seasonal improvement in our bottom line profitability and overall operating margin. When you look at the first quarter obviously seasonally lower because of the payroll tax dynamic. Clearly, we’re getting the alleviation of that in our second quarter guide. The margins as we’ve mentioned a couple of times have been very stable from a flex margin standpoint. So, absent the alleviation of the payroll taxes, expect that to be stable Q1 to Q2. Dave and Joe each touched on the capacity that we have within our current associate population. And I think that gets you to a point, Josh, where we can absorb capacity if we were to see some additional revenue growth higher than perhaps what we contemplate.
So, that gets you into a, would we expect to see a profitability kind of normal seasonal uptick? I think the answer to that is yes. You know, we are still, as we’ve talked about in the past, investing in our enterprise priorities and continue to advance those as we look to the long term. You know, as we talk about the slightly greater than $2 billion in annual revenue and double digit operating margin, our enterprise priorities play a significant role in that. So, we’re still making those investments for the long term. But, yes, I think the short answer is yes.
Josh Chan: Okay, great. Thanks for the color and good luck in Q2.
Jeffrey Hackman: Thank you, Josh.
Joe Liberatore: Thank you.
Operator: We’ll take our next question from Toby Summer with Truist.
Toby Summer: Thanks. With respect to the sequential growth that you’re anticipating in tech, are you accessing new customers to achieve that and taking some share or is this a pickup and sort of same customer growth?
David Kelly: Yes, Toby, this is Dave. So, the answer is both, right? So, we obviously have had some success. It’s been pretty broad based, I would say, across every industry, as I said, across many different clients. As you might expect some larger clients when you don’t necessarily have a lot of incremental spend we obviously have a very strong sales engine and diversification is always an important part of what we are doing and what we continue to attempt to do. So, it’s some of that growth from new client logos. It sure is, yes. So, it’s a combination of those things that we’re seeing, but I would say in a footprint that we’ve consistently been attacking. So, large clients, we don’t do business with every large client and there are certainly plenty of opportunities to build business, both with new clients and to gain traditional client shares. So, again, a combination of both of those things.
Toby Summer: Thanks. I’d love to get your perspective on your customers’ internal recruiting capacity, because we talk about cycles and so forth, but this has not been a recession. It’s been a drift down for 18 months, two years in outsourcing and recruiting demand. You know, we’ve had GDP growth and we had pretty good job growth. I’m trying to get your perspective on what growth would look like in the staffing industry in your own business in the first year of sort of an acceleration in growth where there is more demand. Can your customers satisfy kind of more of that themselves or do you think they’re going to have to turn to you pretty quickly?
Joe Liberatore: Yes. Toby, it’s Joe. We’re going to see the same cycle that we always see. I mean, this is another pattern that has existed probably going back into the 90s at the advent of the monsters and kind of leveling the playing field a little bit on talent access. And ultimately, what happens is during this part of the cycle, I mean, their recruiting capabilities have been decimated. You know, what’s going to happen when it turns is, yes, they’re going to be pointing to providers such as the Kforce and others in the world because they’re not going to have recruiting capacity. And then what’s going to happen is they’re going to start to hire recruiting capacity, build recruiting capacity. And then we’re in the thick of the cycle where there’s demand across the board for everybody.
So, we don’t really feel that. I mean, this is one of the things I try and coach individuals on this. When they’re making moves for money, purely money, that ultimately what happens is when we go into tougher times, the first function that’s cut inside these large corporate customers is the recruiting function. And sure enough, that’s what happened to many of our individuals this cycle as it’s happened in other cycles. And then they find themselves in difficult spots in terms of career-wise and those types of things. So, the cycle, this is one of those ones that just keeps coming around and plays out the same way every time.
Toby Summer: Thank you.
Joe Liberatore: Sure.
Operator: And that concludes the question-and-answer session. I’d like to turn the call back over to Joe Liberatore for any additional or closing remarks.
Joe Liberatore: Thank you for your interest and support in Kforce. I’d like to say thank you to every Kforcer for your efforts and to our consultants and clients for your trust in Kforce and partnering with you and allowing us the privilege of serving you. We look forward to talking with you again after our second quarter of 2024.
Operator: Thank you. And that does conclude today’s presentation. Thank you for your participation today and you may now disconnect.
