Andrew Nicholas: That’s really helpful. Thank you. And maybe a couple more and I hate to spend too much time on guidance, but if you want to talk about the ICR, a little bit more. I mean the last couple of years, you started at a much higher level or I guess, lower spread, depending on how you look at that metric. Just curious what gives you more conviction at the outset of the year that you can be a little bit more profitable in that business in 2023 relative to kind of your starting point in the last handful of years?
Kelly Tuminelli: Yes. Really, when I think about the insurance cost ratio, we do continue to price it to risk. We watch trends as we come as we’re leaning into the year. We see favorability on our workers’ comp book just given the trend to remote work. Regarding health, there is still a level of uncertainty associated with it, given providers, renegotiating price, nurse costs, et cetera, et cetera. But we’re comfortable with the range just given the fact that we set pricing many months in advance as we’re evaluating those trends, and we’ll continue to watch it. So, we’ve seen utilization come up, absolutely. It just didn’t come up as much in 2022 as we had changed pricing. So, we’re really trying to refine that and give our clients the best offering possible, but making sure that we’re covering it. So it’s our best view at this point in time.
Andrew Nicholas: Great. Thank you. And then if I could just ask one more. I wanted to go back to Burton, in your prepared remarks, you talked about and then ability to take advantage of the opportunity because of the lack of sales capacity. I’m just kind of wondering what would you, how would you describe kind of getting to that point? Is it higher-than-expected attrition within your own sales force? Or was it maybe not anticipating as much explosive growth in your end markets? As maybe you’ve seen over the past couple of years. Just trying to figure out what got to that point and maybe what your conviction is on the ability to turn that around? Thank you.
Burton M. Goldfield: Yes, no problem. So good question. Look, again, there is a secular trend towards PEO. So the opportunity is strong. We’ve talked about the unpenetrated market. I talked about that. And what we were really looking for last year was to get to a level of sales productivity that we could continue to invest in net new salespeople that could be successful. Now there’s a lot of things that go into that. Part of it is the ability to generate qualified leads, brand recognitions, penetration by vertical, leadership and sales in the field, ability to quote properly upfront and probably five other things that I’m not mentioning €“ by the end of the year, it became clear that sales productivity was at a level, that if January was successful, we could start to turn on the spigot for net new reps and believe that we had a model, which would provide them with a strong territory and opportunity.
And by the way, this is not going outside of our core verticals. I am not now going into business I didn’t want before. This is our core verticals, geographic penetration, good leadership and hopefully, a repeatable model. As we hire reps, and are able to keep an acceptable level of productivity, we will continue the hiring throughout 2023.
Andrew Nicholas: Thank you again.
Burton M. Goldfield: Thank you.
Operator: Our next question will come from David Grossman with Stifel. Please go ahead.
David Grossman: Thank you. Good afternoon. Hi, I think you said this during the prepared remarks, and I may have missed it, but what is the rate contribution to 2023 growth versus what you experienced in 2022? And that can include mix also just kind of curious.
Kelly Tuminelli: Yes. I don’t think I did say it in my prepared remarks, and actually, I don’t have that at my fingertips right here, David. But really, when I think about the rate is low single-digit improvement year-over-year mix. I think mix is about even. We were pleased with the mix that we saw in 2022, with strength in our strong verticals and volume is a smaller contributor.
David Grossman: I’m sorry, what was that on volume, Kelly?
Kelly Tuminelli: It was a smaller contributor, just given the fact we are starting off with a lower base.
David Grossman: Right. And just on volume, I think, Burton, if I heard you right, you said after this year, you’re hoping to grow units or WSEs, high single digits or low double digits. So €“ if I heard that right, I don’t recall the company ever really exceeding mid-single-digit growth in WSEs. So, I hear what you’re saying about the sales force and productivity, but is that enough for loans to really kind of achieve that kind of turnaround.
Burton M. Goldfield: So David, it’s a great question. I am proud of our strong revenue and profit growth, particularly over the last five years, consistently, and I hear the focus on growing profitable WSEs. I am going to build that sales force to take advantage of the market opportunity to grow WSEs as the years go at a higher rate. The message is clear. So from my standpoint, I’m not going to sacrifice our revenue and profit growth, and I’ve been pretty resolved in that over the last five years. But the message I’m trying to give you is I’m going to build that capacity so that the WSE growth occurs in these out years.
David Grossman: So just if the sales productivity is at the level €“ I think if I heard you right, you feel comfortable that you kind of achieved what you set out in 2022, which is to get those sales productivity levels at a point where you could hire. So even with a down or flat to down in the economy, should we expect you to be adding materially to the sales headcount in 2023?
Kelly Tuminelli: David, let me take that because I view that kind of as an expense question. We do plan on adding quota-carrying sales reps at the front office to increase the capacity. We did invest a lot in productivity, and that investment has to pay off this year. We’re going to fund it through efficiency elsewhere. We’re really putting all of our energies and making sure we’re growing profitable WSEs. So €“ that’s really where we’re rotating this year. We’re trying to make sure that everyone is leaning in and we’re going to be able to grow our business.
David Grossman: Right. And just one last question. Just a set because I think this has kind of come up over the years at different points in time. But I believe it’s hard to compare your model to some of the other Tier 1 providers because you’re an at-risk provider, if you will, of health insurance. So how do you guys look at that internally or at the board level, when people are comparing your unit growth rate to your Tier 1 peers, given that you are at risk, which has different implications in terms of how much unit volume you can take on at a point in time.
Burton M. Goldfield: I would say my Board is consistent with my position, David, that strong revenue growth and profit growth is the long-term focus of the company consistently executing and meeting and beating the plan on a regular basis has been the focus. So I am not going to sacrifice that for WSE growth, but the €“ but I will be taking WSE growth to the forefront as we execute the plan over the next couple of years.
David Grossman: Yes. I guess what I’m asking, Burton, though, is that just if you just look at the business model, it’s different. And so if it is different, shouldn’t €“ and the focus to your point is on margin, which you’ve definitely demonstrated that you can operate this at-risk model in the last several years. But I think with that, you’re not as free though, to drive unit volume growth because of that. So I was just really €“ the question was more, is there any kind of rule of thumb or anything you want us to take away in terms of kind of what your unit growth should be relative to those Tier 1 peers given the differences in the model?
Burton M. Goldfield: So I’m not comparing myself to anybody else. I believe I’m going to answer it two ways. Hopefully, this will help. One is, I have a vertical strategy. The markets €“ in are not penetrated significantly and I don’t see that as a limiter to my growth. That’s sort of number one. And number two is, we have invested heavily in the go-to-market strategy, whether it be marketing or the back office transformation €“ as Kelly said, one of the outcomes in January was all the work that we did last year. And by the way, the investment we made last year.
David Grossman: Right. Right. And can you give us €“ given the importance of January, can you give us any concrete metrics on what it looked like in terms of win rates or €“ whatever the key metrics that you’re looking at?
Burton M. Goldfield: So as I said, the year-over-year WSE and ACV annual contract growth was 35%. As the first quarter is about 40% of the year’s new ACV. So that’s where the question around the confidence in the year comes from €“ the win rates were up. The add-backs were significant and the focus on not only our core verticals, David, but the in target accounts within those core verticals was significant. The overall size of the customer was good right in the range that I like. And overall, it was pretty strong across the company. That’s the east, if you look at a geography, East Coast and West Coast.
David Grossman: Okay. Got it. All right. Great. Well thanks very much. Good luck.
Burton M. Goldfield: Hey, you’re very welcome. Thanks.
Operator: This concludes our question-and-answer session as well as our conference call for today. Thank you for attending today’s presentation and you may now disconnect.
