Dana Buska: And then, one last question. When you start tackling the — your enterprise marketplace. How are you anticipating that you’re going to go about doing that? Are you going to have to like add more salespeople, more consultants? How are you thinking about tackling that?
Jack Abuhoff: Yes, couple of ways. We’re very excited about the white label program that we’ve now referred to several times because it gives us the ability to scale and gain — to scale our business and gain exposure to enterprise use cases, independent of sales and marketing. That’s a huge opportunity that gives us a lot of competitive advantage, I believe. Beyond that, I think the enterprise opportunity will be driven by direct sales for the most part, although we also do see another couple of channel opportunities that we’re exploring as well.
Operator: [Operator Instructions] The next question is a follow-up from Brian Kinstlinger from Alliance Global Partners.
Brian Kinstlinger: Clearly, your offerings that address large language models, data annotation even with the enterprises is growing or if not, will be growing very fast. But if I’m not mistaken, there’s significant revenue base that predates this that you were talking about before that was a little bit more lumpy, correct me if I’m wrong, if that doesn’t still exist. So is that business still stable, declining or growing as we think about next year for our own sake?
Jack Abuhoff: So the — from a sales execution perspective, the work that we’re hunting right now primarily is the work that we’re doing with large tech companies and the AI enablement work that we’re looking to do for enterprises. We’re very focused on that. Now that runs across the enterprises run across multiple verticals. And one of the capabilities that we’re able to leverage is the relationships that we’ve got with enterprises. So we’ve worked over the years with very many enterprises in business information sector. We’ve worked with enterprises in the financial services sector. We’ve worked with enterprises in life insurance. And all of these are companies that are trying to figure out actively, how do these technologies apply to their businesses and how do they apply to their products?
So you’re absolutely right, Brian, that we’ve got hooks into the companies who are actively thinking about this and the capabilities that we’re bringing back to those customers, the capabilities that have — we’ve developed in AI, they’re very receptive to. We talked about how we announced 3 enterprise deals that we closed this quarter or in Q3. And a couple of those were customers that we’ve done things with years ago, having nothing to do with AI or very little to do with AI, they managed service capabilities. But now we’re going back to them with a different value proposition that they’re very much receptive to and embracing.
Operator: The next question is coming from Bruce Galloway from Galloway Capital.
Bruce Galloway: Jack, congratulations on being a visionary in this area. Obviously, you were the first mover advantage. And since ChatGPT and Microsoft, there’s kind of like a tsunami in this area and I’m sure there’s been a major shift of capital into this area through the venture community and also the private equity communities along with all the existing technology companies that are going to be chasing IT services for generative AI. Can you talk a little bit about the competition and where you are with regard to the competition? And maybe talk about some of the valuations in that segment of the marketplace to give us an idea of what your company could be worth?
Jack Abuhoff: Sure. So well, first, Bruce, thank you for your kind words. I don’t know that I deserve those complements or certainly all of them but thank you for that. We’re competing against several companies and we’ll probably be competing with more companies as we move forward in this area. There’s a lot of activity here. The predictions that analysts released for growth in generate related services are huge, over 100% CAGR for the next 10 years. So naturally, that will, as you’re saying, attract a lot of interest and a lot of money. There are companies that we know are about our size or somewhat larger who have enormous valuations. We think we compete favorably with them. And our focus is to keep doing what we’re doing to do it well.
As you’ve seen from the results, we’re driving aggressive growth. We’re lining up more and more relationships of trust. We’re demonstrating that you can grow aggressively and be profitable at the same time and close these major deals which I think is kind of a hat trick that I’m very proud of. Yes, there are some big valuations out there. I think our valuation will take care of itself as long as we keep executing.
Bruce Galloway: What are some of the valuations that are being done out there on like a price-to-revenue basis?
Jack Abuhoff: We don’t have perfect knowledge of that. We’re aware of some — a company, for example, that has about a — we’re told a $250 million top line with a valuation of about $7 billion a couple of years ago. Again, I’m not an investment banker. I don’t want to get — I don’t want to go well outside my wheelhouse here but we’re aware of those kinds of private market valuations. And I think we just stay very focused on execution and keep doing what we’re doing. And I think we’ve got a strategy now that enables growth in lots of interesting ways. And we can do a really good job by shareholders by staying focused.
Operator: The next question is coming from Tim Madey from White Pine Capital.
Tim Madey: Jack, congratulations on your quarter. Nice job. Two quick questions. One is, could you talk a little bit about gross margins and what you expect over kind of the near term?
Jack Abuhoff: Sure. Happy to. So in terms of gross margins, I think the way to think about kind of the expansion economics of our business is to look at the 2 flavors of the business we have. Fundamentally, there’s a services and solutions business and then there’s a platform business. And our consolidated gross margin will be the sum or the factoring in both of those together. Our adjusted gross margin on the Services Solutions side is probably — we’ve been a range of 37% to 42%. And our adjusted gross margin on the platform side of the business is probably like high 60%, 68%, 69% to about 75% from a modeling perspective. And then I think you’ve seen that in combination with the work that we’ve done on carefully managing cost structure. We’re doing very well when you look at the incremental adjusted EBITDA that we’re throwing off as we scale.
Tim Madey: Yes. I guess I was looking at direct operating costs over revenues and coming to a lower number but I figured it’s somewhere in the adjustment, certainly, the revenue growth and the adjusted EBITDA looks fantastic. But and maybe I can take it offline just to understand how to think about adjusting gross margins or looking at direct operating costs over revenue growth. I am a little confused there.
