Kartik Mehta: Fair. And then just — we’ve talked a lot about, obviously, PEO and ASO. And I’m just wondering if you could give a little bit of context as to revenue per client PEO versus ASO?
Efrain Rivera: Yes. I’d say, Kartik, the way to think about it is ASO does not, in general include insurances. And so, what you end up getting in a little bit of price on PEO on the base product is the added revenue that comes from benefit attachment, typically, workers’ comp and also healthcare. Not all clients take health care, but when they do, then the revenue can be significantly higher.
Operator: Thank you. Our next question comes from Bryan Keane with Deutsche Bank.
Bryan Keane: Just a clarification on the preliminary outlook for fiscal year ’24, it doesn’t sound like you expect the U.S. recession in that guidance. Is that correct? And I guess if we do see a U.S. recession, how would it show up in the numbers, Efrain, because there’s definitely a lag impact to where it shows up in the actual financials?
Efrain Rivera: Yes. So Bryan, a good point, and obviously, we all hear the same chatter everyone is hearing. So let me just move to the answer to that. That’s a little bit more new. At this point, I can only tell you what we see right now. And I can say, as we said we’ve repeated earlier, we see signs of moderation that we’ve been seeing progress since the fall after Q1, but we don’t see any significant signs of slowing. So we just got through the last three months, John gave an overview of kind of what was happening from the selling season, that would have been to a signal that, hey, maybe something going on here that we needed to pay attention to and incorporate. At this point, through the selling season, we haven’t seen signs of a slowdown.
Again, I’ve seen signs of moderation and we’ve incorporated that in our thinking. To the extent that we saw a slowdown, obviously, we’d see it by July, and we’ve incorporated that in our thinking, we come back and say, guess what, things are slowing down. I don’t think that things will occur that way, but it could. The way we think about the year is really — and I’ve said this probably for the last three or four years, it’s in two halves. So I think that are confident in terms of what we expect to see in the first half is at this stage, decent win by thesis. I mean, we’ve got enough trending to say something should not fall off the cliff in the first half of the year. The Fed is tight. And John said, our clients are going to be much more impacted by rate increases in the prime rate than anything else.
And at this point, they seem to be absorbing where we’re at and seems to be absorbing a higher rate environment. And the other thing that I would say is that our thought process is that we’re getting close to peak short-term rates. So if we put that all of those factors into the gumbo and then stir it up a bit and see what our view is of first half and look at the micro factors in the business, strength in retirement services, strength in HR, we’re seeing good progress on HCM and then a rebound in PEO or it produces the results we have. Now the nuance that I would provide to that is that, that takes us through, as you know, the end of November. That’s the first half. We’ll come up for air and see is that the trends that we expected to occur in the back half of the year actually materialized.
