Mark Marcon: Great. And then great job with regards to the bill pay spread. How much more room do you think you have there? It sounds pretty encouraging in terms of thinking about how it could end up being for the fourth quarter, although, if I — Jenn, did I hear you correctly, 40% to 41% is kind of the guide for gross margin?
Jenn Ryu: Yeah, that’s right. 40% to 41%, correct.
Mark Marcon: Okay. So maybe slightly down relative to Q4 of 2022?
Jen Ryu: Yeah. That’s right. And that’s — look, I mean, the pay bill spread we still expect it to be strong in Q4, but compared to last year, if you look at our indirect costs just because top line is down compared to last year. So it’s less — just unfavorable leverage there. That’s what’s bringing down the overall gross margin.
Mark Marcon: Got it. But the bill rates still expanding at a sustained rate or higher?
Jenn Ryu: Yes. I mean we believe we have more upside on our pricing and bill rates. So yeah, I expect that our pay bills should be — we should be able to sustain that not improve it.
Mark Marcon: Terrific. And then Kate, you spoke about multiple growth levers, obviously, within the staffing industry, there’s a lot of discussion with regards to these talent platforms and what you’re doing with HUGO would fit within that. Can you give us a little bit of a sense for like how material you think it could end up being over the next two to three years in terms of potential revenue? I know it’s early days, but just how are you thinking about it? How is the Board thinking about it in terms of the investment?
Kate Duchene: Yeah. So with these platforms, there’s a hockey stick effect. So if you look at — the most successful platform in the marketplace today in staffing is in health care staffing. And so on the health care is one that we all looking . Yeah. But if you look at their growth, I mean, they started small, and now they’re over $11 billion. So you do see that hockey stick effect once you get critical mass and you’ve driven behavioral change and that’s what I think is just ahead of us. So this next fiscal year will be focused on critical mass, economies of scale, really delivering in the three markets where we’re already focused. And that’s important, Mark, because we’re all reading about the return to the office for some roles.
And we do believe it’s important to have more localized talent pools for some of this work if on-site delivery is required. But overall, going to your question, what we’re modeling is modest growth in the year ahead, but then continuing to scale more like a hockey stick approach, especially as we invest more in digital marketing and sales support.
Mark Marcon: And how many markets — you’re currently in three markets, how many market could you be in by the end of the next fiscal year, so fiscal ’24?
Kate Duchene: Well, I really — like I said, I think we’re going to concentrate first on getting the critical mass in the markets we’re operating in now, it takes about three months to build a quality talent pool in a new market. I will share that with you. We’re doing it both with dedicated onshore talent, but also with an offshore partner. So we can scale pretty quickly once we establish that we’ve achieved critical mass in the markets we’re in right now.
Mark Marcon: Great. And then obviously, there’s all sorts of macro questions that are out there. If we were to go into a mild recession, what do you think the downside would basically be with regards to EBITDA margins? You’ve done a nice job of getting them up over the last couple of years. How should we think about what your flexibility is from a cost perspective if things get a little bit worse?
