Ramsey El-Assal: Got it. All right, thank you so much. Happy holidays, by the way.
John Gibson: Happy Holidays.
Bob Schrader: Same to you.
Operator: Thank you. Our next question will come from Bryan Bergin with TD Cowen.
Bryan Bergin: Hi, guys. Good morning. Thank you. So, I wanted to start on Management Solutions. The late seasonal hiring that you’ve called out here that drives the weaker view, can you just dig in more on that client profile? And is this more so a pullback in demand for employees or issues in hiring? So, I’m curious what you might be seeing as it relates to clients’ talent acquisition funnels, job openings, background checks, things like that.
John Gibson: Yeah, Bryan, it’s a good — that’s a very good question, very insightful question, because we’re trying to get under that as well. Here’s what I will tell you. It is a very challenging environment for small and mid-sized businesses. I think they are still challenged and we’re seeing it in our HR advising, they’re still challenged with a very challenging labor market in terms of finding qualified workers, I’ll always leave it at that. So, I think that’s certainly part of the issue. I think there — certainly with the high cost to capital, also with lower access to capital, I think they’re being very cautious about investing for growth. So, they’re trying to figure out how do I do more for less. So, there may be a little bit of a hesitancy.
At the time — at the same time, what we hear are people want to hire qualified people. And I think they had some experience with that. There was a small group that I was talking to where what they found was they were paying higher rates for less qualified people. And then, our HR matters that we were dealing with disciplinary issues, no shows, all of these types of issues, I think a lot of business owners are saying, “If I can’t hire a qualified person, I may be better off to try to figure out how I can use to people I have to get there.” So, I just — I read that as the macro environment, because we’re not seeing anything in our data that would say mass downsizings or reductions. That’s not what we’re seeing. I think in the higher-end enterprise side, you are seeing rightsizing going on in the business.
When you get into the mid-market, really what we’re seeing is a little more choppiness in hiring across various industries, and particularly it’s mostly up-market and what I would say what we’ve typically seen seasonal hiring, that’s where we did not see that at the rates that we historically have seen. Now what’s interesting about that I’ll point out is when you see — when I see the impressive results of our PEO team, remember a lot of PEO clients are in Florida, which, as you can imagine, is a pretty seasonal state this time of year. So, the growth numbers you’re seeing there were with a headwind of not having as much seasonal hiring. We saw a similar thing in our ASO business, which is in Managed Solutions, and to a lesser extent in our HCM mid-market business.
So, I would say more choppiness there. In the small market, it’s more of the same moderation that you see in our index, really not what I’d say downsizing or clients taking actions from an employment perspective. But more of either they can’t find people to fill the spots they want or they are being hesitant on adding additional headcount at this time. So, I don’t know if that gives you some additional color.
Bob Schrader: Hey, Bryan. I just want to add a little bit. You didn’t specifically ask this, but just as your comment as it relates to the weaker Management Solutions. The other part of that — beyond the softer hiring versus what we expected, the other part of part of that has to do with the strong performance in PEO as well. We talked to you guys about the PEO business. We’ve had a lot of questions on that and our ability to kind of reaccelerate growth there. And one of the strategies there was that we knew the ASO was really strong last year. We had put a plan together to really go back inside of the base, leverage our data, leverage our AI models, really look at the clients that we thought would be good PEO fits, and we’ve been executing on that plan over the last six months and that has actually been a little bit better than what we anticipated.
So, now the pendulum has swung back a little bit the other way. We probably should just put these two businesses together in one category. It would make mine and John’s job much easier. But we’ve had a lot of success with PEO. I think that’s why you see the raise there. And that is impacting to some extent, to use your word, the little bit weaker performance in Management Solutions.
Bryan Bergin: Okay. That’s all helpful color. And I fully understand the ASO versus kind of PEO shift there. And maybe just a follow-up here on the PEO, can you just dig in a bit more around the expectations of at-risk health insurance attachment participation rates as you go towards the 1/1 go-live period? And specifically, did PEO bookings accelerate in the quarter relative to last quarter?
