Operator: Our next question comes from the line of Rob Oliver with Baird. Your line is open.
Robert Oliver: Great. Thanks. Good morning, guys. Joe, I had one for you and then Paul, I had a follow-up for you. So Joe, just on Command Center, it sounds like really encouraging trends here through the beta. I’m curious to hear just on the usage of Command Center, you guys had some tiered pricing out there for Command Center. And just curious what you’re seeing within usage patterns and how that could play out in terms of where your customers may land in those tiered pricing plans?
Joe Walsh: Well, as we said, it is still in beta. And it’s early, but we’re seeing people hook up a unified inbox and pull together all the different communications that are coming from different areas. And we’re hearing things like I’m not missing messages anymore. I mean, who goes and always checks every one of your social outlets every day. It’s kind of a laborious thing to do and it’s pulling it all together into one place. And there are customers, not big numbers yet, very small numbers, but we’ve had some customers discover Command Center online, go and downloaded in sort of 60 seconds, start using it, say, wow, this is all really cool, move through and buy another center, like buy a business center, like move all the way through the process and self-upgrade and buy more stuff.
So it’s really early, and there were some early little glitches and things during the beta period that we worked out. So we’re super optimistic about what that will mean in terms of helping us meet new qualified customers, ideal clients in the future. So the numbers are very small of people that have self-upgraded and are buying, and we haven’t sold anybody Command Center yet. But we’re super optimistic about what it will look like as it comes off data, it becomes generally available, and we begin to actually promote it and tell people about it and spread the word.
Robert Oliver: And then, Paul, just curious if any revenue impact since it starts to go live this quarter was contemplated in your guidance relative to Command Center for the quarter?
Paul Rouse: Command Center, very little, but that’s really something you’re going to see more in the out-year period. It’s really driven by the success of Marketing Center the optimism — Marketing Center we have is the optimism in the fourth quarter.
Joe Walsh: Yes, I’m just going to add a little tiny bit of that answer just for the whole audience. The — because it’s a freemium motion in Command Center, while we’re excited about it, we don’t see any revenue really this year. And even in the first half of next year, it will be a relatively slow ramp of revenue, not of users, we think users are going to go through the moon. And it’s going to be a really powerful tool for us to enter new markets, meet new customers, kind of spread a blue ocean of excitement about what we’re doing, but revenue will follow later because we want to deliver value to those customers before we ask them for any money. So it’s not like some of the other centers where there were sales-driven motions where as soon as you rolled it out, you started selling it.
Operator: Our next question comes from the line of Zach Cummins with B. Riley Securities.
Zach Cummins: J Your line is open. Hi, good morning. Thanks for taking my questions. Joe, I just wanted to ask a little bit more about Marketing Center. Can you just give us a sense of how much opportunity is left within the existing zoo? It seems like it’s really been a focus in the near term, but just trying to get a sense of how much more runway there is to go in terms of adoption on that side?
Joe Walsh: A lot, a whole lot.
Paul Rouse: Yes. We’ve got nearly 400,000 customers. Right now, we’ve got [ 60-odd-thousand ] that are buying some kind of center from us. There’s a lot. I mean, I can’t really think of a reason why over the balance of this decade, virtually all small businesses won’t adopt some of these tools. And since they’re our customer, and they have a relationship with us, the average has been with us for 15 years on average. Why wouldn’t they give us a chance? Why wouldn’t they talk to us? And so I’m quite bullish that we’re going to be able to penetrate our way through that base. And I will tell you, approaching them with marketing-related products and services is easier than approaching them with a full business process change and they need to sign up for a CRM and really change the way they do business.
It’s easier this way. Maybe we should have done them in a different order. I’m not sure, but it is what it is. But we’re definitely getting more traction now. And I’m quite bullish that, that will carry through next year and you’ll see zoo hunting as a bigger piece of the puzzle of customer acquisition. And relying less on outbound and inbound marketing and spending money to acquire customers just continues to drive better margins in the SaaS business as well.
Zach Cummins: And regarding the decision, the restructuring within Marketing Services that maintain more of those salespeople. Should we think of that as more of just a one-time margin impact here in Q4? Or what’s the right way to think about that in terms of continuing to manage margins across the Marketing Services business?
Joe Walsh: Yes. So if we kind of back the camera up a little bit and think about the big picture of what we’re doing here, we are taking a Marketing Services business and we’re running it on a harvest for cash. We’re not really making any efforts to grow that business. And so if you think about over the last number of years you’ve been following the company, we’ve been variabilizing all the costs against Marketing Services, in advance of revenue decline. So we sit down in the summer before 2023 and we map out what revenue is likely to be and it’s incredibly projectable and predictable what those revenues are going to be. And we lay out what our cost should be to continue to deliver high margins. And so one of the #1 levers that we’ve used to variabilize the cost of the business is adjusting the number of feet on the street, how big that sales force is.
So we’re reaching a point — kind of an inflection point now where Marketing Services and — or excuse me, SaaS is getting to be a much, much bigger percentage of our overall revenue and carrying more overheads. And so we actually have the luxury now of not necessarily shrinking that sales force into that number. And so there’s a little bit of cost that you see show up in it, but we think that will quickly convert into stronger SaaS revenue as we go into the future. So, it’s not so much adding anything, it’s just slowing down the action that we’ve been taking. And directionally — this is not meant to be specific guidance, but directionally, SaaS will be approaching 40% of revenue next year. And within the next bunch of quarters, actually cross over and become our predominant revenue stream.
And so we’re looking more and more at how to grow our SaaS business as opposed to just how to manage margin on the Marketing Services business. It’s really just kind of a transitory thing that’s taking place inside the business. It’s gradual. It’s not all at once.
