Kate Duchene: Yes. I think the smaller offices would serve more middle market. Clients have been a little bit slower because that buying base has been more conservative. I really look at it not as much territories, Mark, but industries like where are we starting to see momentum in industries. So we talked about financial services. Pipeline is definitely growing in financial services, in health care, our longest-standing client has — we have 3 big proposals into that client right now. I feel bullish on our opportunities to continue to serve them, but it’s just when those projects will start. The next category that we’re starting to see spending again is in the retail or consumer goods space. That’s particularly true because that’s an important concentration of clients in Europe.
And then last, I’d say manufacturing is starting to come back a little bit. So that impacts more of the Chicago area, that’s central of the country base probably impacts Atlanta a little bit more too. So that’s really how we think about how we’re gaining momentum. Let me also talk about technology because we mentioned in our earnings call a couple of quarters ago that we were starting to see some movement in technology, which has also been a very strong sector for us. And I’d say that we’re seeing kind of fits and starts, we’ll see some momentum, then we’ll see more layoffs. Then we’ll see things get put on hold because nobody wants to start a big project with on-demand talent when they’ve just done layoffs. So that’s been a little bit, I’d say, herky-jerky, but we’re starting to see more momentum in the media and entertainment space, which is pretty exciting.
And that will have some positive impact in Southern California where we’ve had some leadership and turnover changes. So we’re addressing those actively as we get ready for more opportunity there. So I hope this color has been helpful for you.
Mark Marcon: Absolutely. And then can you just talk a little bit more about the pricing within North America. What are you seeing from the big 4 and other competitors? We’ve obviously been reading about some of the things that they’ve been doing. But just wondering when you’re competing with them how does that come through? Would you anticipate that pricing would actually continue to stay up year-over-year in North America? Or how are you thinking about that?
Kate Duchene: Yes. So, Jenn.
Jenn Ryu: I’m back to you guys. I’m so sorry. I was having some technical difficulties. I think I heard — Mark, I think I heard Kate correct the one of the stat that I said in Asia Pac, instead of a decline of 4% is actually an increase of 1.8% on a constant currency basis. Yes. So I want to make sure that we clear that up. And then maybe I’ll take a stab at the pricing question, Mark. And then Kate, feel free to jump in. I mean, what we’re seeing from the big 4, we talked about this in the last call, obviously, the big 4, they deployed bench resources. And when they have some bench resources, they can kind of deploy for free, they’re certainly doing that. And they also have deployed offshore resources. Therefore, they can blend the rates down.
And there’s a lot of competition when we compete with the boutique staffing firms, too. For sure, they tend to want to race to the bottom in terms of pricing. To combat that, I mean we’re actively — we talked about this last quarter, actively building our own kind of offshore talent delivery hubs and then using them as much as we can in order to blend down the rates while protecting our margin. Obviously, we’ve got to now strike a balance between volume and pricing to maintain our market share. But the good news is, given our predominantly variable cost model, even with lower bill rates, we’re still able to maintain our margin. So that’s what we’re seeing. Hopefully, that helps that, Mark, hopefully, that answers your question.
Kate Duchene: Yes, I would, Jenn, add that we remain very focused on value-based pricing, Mark. That is not changing. But when you have the big 4 giving their bench resources away for free, it puts your rational pressure in the short term, not the long term.
Operator: It comes from the line of Andrew Steinerman with JPMorgan.
Andrew Steinerman: Jenn, thanks for the revenue guide for the fourth quarter. Could you just go over what that would be on an organic constant currency basis year-over-year in terms of a percentage change on a same-day basis? And if you could mention if there’s a difference in days in this fourth quarter versus the year ago fourth quarter.
Jenn Ryu: Yes. Sure. The full quarter guidance at the top — at $142 million, which is the top end of the range, it’s about a 23% down compared to year-over-year on a same-day constant currency basis. And there is no — in the U.S., there is no business day difference.
Operator: [Operator Instructions] And it comes from the line of Marc Riddick with Sidoti.
Marc Riddick: So I think you mentioned in your prepared remarks, financial services and health care. I was wondering if you could touch a little bit on those, particularly maybe starting with financial services, what maybe some of those drivers are. Is that a regulatory driver? Are you seeing a little bit of a pickup from improved M&A out there, which seems to be off to a decent start so far this year?
Kate Duchene: Yes, I’d say primarily, it’s tied to regulatory requirements. Some technology investment in change. Financial services that have grown with a lot of consolidation system alignment is something that we’re starting to see those large organizations address. And I think there is some activity related to M&A, and we’re starting to see an uptick in request for project management type resources, Marc.
Marc Riddick: Okay. Great. And then it was very encouraging to see the launch in North America around the talent management system. I was wondering if you could — I think you mentioned in — Jenn, I think you mentioned in your prepared remarks that the financial system launch. I wasn’t sure if you said calendar year or fiscal year. Is there sort of a ballpark time frame we should be thinking about for that?
Jenn Ryu: Yes. Yes. The financial systems will go live later this calendar year.
Marc Riddick: Calendar year. Okay. Okay. Excellent. And then I was sort of thinking about, I guess, maybe sort of circling back to the M&A question but in a different way. I appreciate the commentary around Reference Point. So there’s now been a couple of transactions during the year. Could you maybe sort of give your thoughts and views as to are things getting to be more attractive out there as far as potential acquisition targets and maybe the volume of what’s out there, the quality of what’s out there and the valuation?
Kate Duchene: Yes. So we’re very much focused on continuing to invest in our digital capabilities and looking at companies that bring, I would say, more forward-looking capabilities to bear because we’re so strong in functional expertise here. And so investing in more of the Veracity-type platform is something that we’re looking at and looking globally. We did CloudGo, which is now part of the Veracity brand in late calendar ’23 and we’ve been looking to add to that platform as well and valuations are getting more reasonable. So our pipeline of companies that we’re looking at has grown. We’re also, though, in a very targeted way at capability to add to what we might have. So think about the procurement supply chain space that seems to be gaining some momentum in terms of project retention and budget in our client base, and we’d like to grow our capabilities there.
Marc Riddick: Okay. Great. And then the last thing, I know you had made commentary around the fits and starts around technology activity. And I was wondering, do you get any sense that some of that is maybe tied to some of the regulatory pressures, whether they be home or abroad or whether or not the customers are more sort of tied to the interest rate discussion that you mentioned earlier.
Kate Duchene: Yes. I think it’s tied to interest rate and I think headcount decisions that those firms are making. I don’t know that I would say it’s so tied to regulatory. I don’t feel qualified Marc, to answer that question fully. But I do think that at our largest account, for example, that is a technology company, we had been worried about some roles that we knew were coming, and those folks have all been extended, and we see now growing opportunity in that account again. So I think it’s a matter of those firms tended to over hire more coming out of the pandemic. And now that they’re rightsizing or justifying more of that headcount, it’s really a matter of timing again more than, I think, opportunity.
Operator: And as I see no further questions in the queue. I will turn it back to Kate for final comments.
Kate Duchene: Thank you, operator. Well, thank you, everyone, for attending the call. We’ll look forward to adding Bhadresh to our earnings call following the end of our fiscal year and talking to you all again then. Thank you very much.
Operator: And with that, I conclude the conference. Thank you all for participating. You may now disconnect.
