Jeffrey Martin: Kramer, I wondered if you could elaborate the accounting side, maybe more of a question for Anthony, but I know, Kramer, you have a CFO background. But the placement and recruiting side of the business, that’s relatively new. Maybe remind us when you kick that off, $3 million is pretty substantial amount of fees associated with that. How does the accounting work on that? Is that reported on a gross or net basis? And what kind of margin contribution does that have relative to, say, a temporary staffing position?
Anthony Harris: Well, Kramer’s quickly forgotten all of his accounting knowledge. This is Anthony, Jeff. Yes. So that’s a great point. So this product has been rolled out in Q3 and Q4, primarily of this current year, but it’s really just getting started. We said positive early results. We’re really going to start to see that more in 2023. So our staffing product historically has been much more traditionally aligned to the temp labor market, light industrial temp labor specifically. And we have always done some permanent placement and early conversion in that model. Really, the change here is that we’re taking those skill sets and those capabilities for recruiting, applicant tracking, screening and going and saying, we’ll do recruiting and placement for all of our PEO clients, which is obviously a much larger group of companies, much broader range of roles.
And with that will also receive on average higher placement fees with those companies than we were in the existing staffing clients. So as we do that, the important thing is for our current staffing presentation in the income statement, we bill for all the wages of our employees and then a markup on top of that. And so that is kind of grossed up on the income statement. These new fees obviously would just be a placement fee with very little of any direct cost of sales component. So they’re very high margin but won’t have as big of an impact on the top line on the staffing revenue there. So as we see that, we’ll begin to see margins increase. It’s obviously a much higher margin rate on those revenues. We’ll see how that builds. We don’t have a guide to what that number would be in ’23 yet, but you will start to see margin rates improve in staffing even with less of a significant impact on the top line.
Gary Kramer: Yes. And I’ll give you the nonaccounting answer. With this new product because the payroll is not included in the revenue, we think in ’23, we can be in a position with our staffing revenue decreases. Our profitability in the Staffing segment could increase.
Jeffrey Martin: That sounds great. I wondered if you could characterize the renewal period. You renewed probably the bulk of your clients in January and February. Curious how that year-end transition and into the renewal season has progressed, how that retention compares with the past couple of years?
