So those come out automatically. We are much more flexible than we were a year ago in terms of managing our staffing levels as well on the cost of goods sold, as we talked about in terms of not having to run a surplus. So we feel like on the COGS, we’re able to react quickly and pull those costs out at this point. And in terms of SG&A, I think we’ve shown through this year that we continue to find opportunities. We continue to have levers that we think we can pull. I don’t know that it would be dramatic changes to the go-to-market approach because I think we feel like that approach really benefits us in terms of new business wins, retention rates, cross-sell and up-sell capabilities. So we’re pleased with where we are. We’ve already made some consolidation and changes around that, as we talked about earlier this year.
But I think that we continue to have more room in other areas of SG&A that we may take action on regardless of whether things deteriorate or not, and we’ll be looking forward to talking about that with you as we close out the year and have our Q4 call.
Peter Walker: And maybe I would just add two points to what Josh shared. First is we have a whole new set of capabilities as a result of launching Project Nucleus in terms of in-house expertise on end-to-end process improvement, automation and AI. You’ve got the whole organization focused on how do we serve our clients better and how do we do that more efficiently. So I think that will continue to pay dividends for years to come. And then I think the other thing to point out is on an adjusted OpEx basis, so adjusted for stock comp and other things like that, we expect Q4 to be the lowest level of OpEx expense for the company in the last eight quarters, and that has trended down every quarter of 2023, you could definitely see the impact of the cost optimization initiatives in our numbers. And it’s also why we are pleased to deliver a margin of 26.3% for the quarter despite the lower revenue.
Ronan Kennedy: Thank you very much. I appreciate it.
Operator: Our next question comes from Toni Kaplan of Morgan Stanley. Please go ahead.
Toni Kaplan: Thank you very much. I wanted to start off asking about the partnership with Konfir offering the instant employment verification in the U.K. I know you mentioned it could be rolled out to other international markets. I guess what’s the barrier to bringing it to the U.S. as well? And is it only for certain types of jobs or is it more broad than that? It just sounds like an interesting product.
Joshua Peirez: Thanks Toni. Yes, we’re excited about this partnership. I think we’ve talked really since the time of the IPO about looking for more chances to automate and in particular, to be able to do that in the verification space and/or in the drug and health space as we felt that particularly in the U.S. on the crim [ph] side, we had achieved very high levels of automation. And so the opportunity with Konfir is something we’re very excited about because it allows us to take a process that today, for us, is very manual and to actually automate that. It’s something that based on the data that they pull today, they’re connected and operational in the U.K. and Ireland. So we know that we can launch there right away. We have discussed with them and commitment from them to roll out in other markets along the lines of our prioritization.
We do, of course, have automation in this space in the U.S. Obviously, the price tag at the work number is quite high. But this is something where we continue to look for those opportunities and we think it’s something that could be disruptive over time in the U.S. and that we would love to be able to implement if the opportunity presents itself. But for now, we’re excited that it gives us the chance to automate and drive our cost down outside the U.S. starting with the U.K., which is our most significant market outside of the U.S. and then to expand from there.
Toni Kaplan: That sounds great. I wanted to ask about sort of thinking about 2024, I guess, maybe first from client conversations about hiring plans and things like that, how you’re expecting an improvement in the macro or if — maybe you’re not, just how you’re thinking about ’24? And what do you think are outside of the macro sort of the biggest tailwinds that you have going into ’24 and obviously, ex, the easier comps?
Joshua Peirez: Sure, Toni. I think, first of all, we’re not in a position to really talk about ’24 or give guidance around that yet. We’ll be doing that at the end of the year. Obviously, the macro, in our view, changed from our expectations for the remainder of this year. So I definitely don’t want to get out there on 2024 until we have a better read. Our clients are right now in their planning processes for next year. What we’re hearing from them is that this year’s planning process is more of a return to normal planning. That doesn’t mean what their levels of hiring will be. But last year, as you’ll recall, at this point, they were all in a wait-and-see mode as the macro has changed so dramatically on them so quickly that they were not in a position to actually know what their hiring trends were going to be and so much later.
So we’re hearing a return to a normal planning process. That’s actually consistent with Sterling’s own experience and how we’re starting to think about and plan for next year. In terms of hiring levels and the tailwinds we have, I know you said ex the macro, but the — sorry, ex the comps. But obviously, the comps are one big piece going into next year that will benefit us. The second thing I would say is that, as we mentioned in our prepared remarks and have said all year, we expect to return to our long-term target on new business growth. We consider that to also be a tailwind as we look into next year. And the much stronger pipeline that we’re seeing and close rate and deal sizes, all of which I mentioned in the remarks, so those things that are in our control, we think those give us good tailwinds going into next year as well.
But in terms of the base growth assumption, we’re going to have to wait and come back on that when we set guidance on the Q4 call, but we are looking at Q4 this year showing growth, and so we’re happy about that.
Toni Kaplan: Super, thank you.
Operator: Our next question comes from Andrew Nicholas from William Blair. Please go ahead.
Andrew Nicholas: Taking my questions. I think the commentary around your appetite for M&A was pretty consistent with how you’ve talked about it in the past couple of years. I’m just curious on how kind of private company market valuations are looking to you? Has there been a reset there in terms of potential target expectations for multiples or are they still relatively elevated compared to your own expectation?
Joshua Peirez: Yes. So I think we’re seeing a couple of things. One, I think we’re seeing in the U.S., those private entities, unless someone is really eager to get out. We’re not seeing a big change in those valuations yet. So that’s something that does temper our ability to do kind of a U.S. straight up tuck-in. I think where we are seeing some interesting opportunities, however, is outside the U.S., we are seeing those valuations become a bit more attractive. And so I don’t want to specify regions because I don’t want to necessarily flag for our competitors where we might be looking right now, but we are seeing some more realistic valuations outside the U.S. in areas that could be interesting for us as tuck-ins in markets where we have a presence.
