And I think the other thing that we’re seeing is opportunities now as we have finished Project Ignite and really taking a hard look at our cost to look at the supply chain and where there may be some opportunity to roll up opportunities, as I mentioned in my prepared remarks. And in those areas, we are seeing valuations that are a little bit more interesting and realistic because those are not the same valuation models as you would see in a CRA like us.
Andrew Nicholas: No, that’s helpful. And then, Josh, I think you alluded to it in the answer to one of your earlier questions, but would love an update on AI-specific opportunities in automation and any kind of new learnings over the past couple of months as you guys continue to invest in that opportunity?
Joshua Peirez: We are actually in the process now of implementing some of our first efforts here. And I’ll highlight 3 where we’re seeing really good opportunities. One is in the advanced OCR, being able to capture information off documents using AI. So we do have our researchers who spend a lot of time actually having to look at physical documents, pull information and put that into reports. So we’re seeing intelligent document extraction as a really exciting opportunity for us in terms of both using a combination of bot and AI to do that. That is exciting and that’s something that we think could drive both efficiency and cost savings that could be significant. The second area, I think, is consistent with what we’ve talked about before in terms of that interaction, particularly with the candidate, but also with clients, and we’re seeing great opportunities around AI-powered chat box again, behind our firewall in technology that we are able to maintain and control in-house, generally using tools that are available in AWS or Azure, depending on the capability.
So we’re excited about those AI chatbot capabilities as well, which we’ve been testing for the last few months. And then finally, we’re seeing an opportunity around productivity improvements for our developers by using AI, and we’ve been doing POCs on that, that are really interesting and exciting for us in being able to make our developers more productive, which we think, over time, can drive down some of our tech and product costs if we’re able to do that effectively. So those are the 3 areas right now we’re most focused on. There are more, but these are the ones that we think give us the best opportunity to implement the quickest and can give us the most benefit early on from the ones that we’ve seen and tested. Hopefully that helps.
Andrew Nicholas: It does, thank you.
Operator: Our next question comes from George Tong at Goldman Sachs. Please go ahead.
George Tong: [Indiscernible].
Joshua Peirez: George, we can’t hear you. I don’t know…
George Tong: Oh, can you hear me now?
Joshua Peirez: Operator, we can’t hear, George. Yes, I hear that, sorry.
George Tong: Can you hear me now?
Joshua Peirez: Yes, I hear you now, George.
George Tong: Okay great, sorry about that. So you noted that the price tag at the work number is quite high. Can you provide a sense of how much pricing has gone up by at the work number over the past few years and what impact those increases are having on the business?
Joshua Peirez: Yes. So I don’t want to comment on their specific prices. I think what I would say, and it’s consistent with what I’ve said before, they offer a good product when we are able to fulfill through them and not have to do any other work. That’s something that allows us to give reliable results very quickly and freshly. We don’t think their pricing is fair market pricing, but that is the reality. They have afforded opportunities based on volume commitments, not just on the work number, but on everything we do with Equifax as well as by being top of waterfall to have much lower prices that might be on the list or otherwise visible or available. So we think that we’re able to give our clients the best possible price for the work number relative to really all other competitors based on the approach we’ve taken and the partnership that we have been able to strike with Equifax.
And I think as we’ve shared before, our largest client with the work number is actually quite small on an overall annualized basis relative to what we believe some of our competitors may have. And so we have not had material pushback. Obviously, our clients don’t like the price increases, but we haven’t had anybody looking to leave or stop the service based on where the prices are in terms of delivering the overall verification service that we delivered.
George Tong: That’s helpful. And then can you provide some color on how performance among SMBs might be different than enterprises in terms of volumes, base volumes and overall growth trends?
Joshua Peirez: We don’t break out the performance of our enterprise clients versus our SMB clients. We think that we look at our numbers. So for example, our Q3 gross retention rate at 96% reflects all of our clients, large and small. We would expect the smaller clients to have a larger part in that as they tend to move around more quickly and it’s easier for them to do so. They’re typically not integrated. And as you know, we have over 60% of our volumes integrated. That’s typically not going to be those smaller players. And also, I would say that from our perspective, the cost of acquisition of those smaller clients is something that’s unattractive. So it’s not been a focus area for us, the new business generation that we’ve been looking at, the cross-sell/up-sell that we focus on, it’s all in the enterprise category for us. But we don’t break out separately the performance or the trends by those client sets.
George Tong: Got it, thank you.
Operator: Our next question comes from Andrew Steinerman from JPMorgan. Please go ahead.
Andrew Steinerman: Hi Josh. When you say new client growth gets back to 7% to 8%, the typical growth range for you by the year-end, do you mean that it will be 7% to 8% in the fourth quarter? Or do you really mean sort of like in the month of December and helping 2024? And let me just ask my second question, so it’s all together. My question is, at the current level of base revenue activity, if it continued forward into next year, seasonally adjusting obviously for the different seasons, would the easy comps be enough to create positive base revenue growth just at current levels of macro?
Joshua Peirez: Okay. So let me start, I guess, with your first question. So I think we’ve been very specific all year that it’s by the end of the year. So we do think it’s possible that it would be at 7% or 8% in Q4. It’s going to depend on the ramp of the clients that are ramping right now. But certainly, with an exit velocity, we would expect to be there. I think as Peter shared, Q3 was our strongest quarter for new business generation as well on dollars and as a percentage. And actually, even with the weaker macro than we expected in September, that was our strongest month as well. So the trends are in the right direction. They would support the 7% to 8% in quarter or by end of year. We haven’t specified that. So your question is spot on in terms of the language we use.
