Derrek Gafford: Well, I would be really surprised if we had anything as volatile as what we had in 2020. Now, remember, when we had that significant decline that you just mentioned, most of that was around different forms of hospitality. Airlines, hospitality, hotels, that was a third mix of our business and as you know, in 2020, that segment got really hammered. So I wouldn’t expect that kind of volatility. Now the PeopleScout business in and of itself is a little bit more lumpy because the revenue per customer is – the proportions to the total revenues is a higher, there’s not near as many customers there as there is in, say, a PeopleReady business, so it can be lumpy at times, but I wouldn’t – I’d be really surprised to see that kind of revenue decline again on a year-over-year basis.
Jeff Silber: Okay. That’s really helpful. If I could just sneak in one quick one. You mentioned a revenue reserve adjustment in PeopleScout in the quarter, can you just quantify what that was for us?
DerrekGafford: Sure. That was maybe about $3 million. When it comes to revenue recognition for our PeopleScout business is pretty straightforward. We go and find candidates, we turned over some candidates to hiring manager, they select one, and right around that point, revenue gets recognized. Now with that said, we do have other agreements with those same customers around volumes – annual volumes that have to be estimated, certain turnover ratios, different things that are built into these. So we’ve always had some form of what we refer to as a revenue reserve adjustments that are made. It’s usually a few little ones that go one way, a few that go the other way. This particular quarter, they just all seem to go one way. So this is the first time that we’ve talked about it in 10 years and I wouldn’t be surprised if we didn’t talk about this for another 10 years.
Jeff Silber: Hope so. All right. Thanks so much.
Operator: Our next question is from Mark Marcon with Baird. Please proceed.
Mark Marcon: Yes. I just want to follow up on some of Jeff’s questions. With regards to just PeopleScout, Taryn, welcome to the call. I’m wondering, given your expertise in the area, can you describe a little bit more about like what you were seeing there, just in terms of the one large client that accounts for half? Is that kind of a temporary one-time thing or were they just over-hiring post-COVID and now it’s getting back to normal? And then what did you see with the other players, and were there any clients that have been lost or anything along those lines?
Taryn Owen: Thank you so much for the welcome. Excited to be here. Related to the customer that have the decline this quarter, it’s a large retail customer who had declining volumes within their business in the quarter. We hope this customer with their surge hiring during the holiday season and during other periods of surges within their business. So we had a combination of a couple of things going on. First, they didn’t need to hire as many people. And secondly, they didn’t have as many people that are on staff busy with work on the sales floor. And so they have those individual supplements by doing some recruitment themselves. So that’s what drove that decline in this quarter with the large customer.
Mark Marcon: Great. And then what are you seeing with the others? Is it fairly steady? And have you retained all of your customers? Are there any sort of contracts that might be terminated or winding down or anything along those lines?
Taryn Owen: Yes. I would say just overall, the sentiment that we’re hearing from our customers is really around uncertainty about their short-term staffing needs. And so, in RPO specifically, customers were seeing a lot of activity from first-time buyers. They’re really interested in getting support with their hiring. However, they have been slower to make long-term hiring decisions. So we’re seeing a surge in some of our shorter-term offerings like recruiter on demand and some project RPO work where we’re able to support our customers rapidly with their needs now, while they sort through what their hiring volumes are going to be for the long term. But otherwise, as Derrek mentioned, we have some customers that are slowing down their hiring.
They’re being more hesitant, they’re going on and off holds, and really just trying to sort through what their hiring volumes are going to look like this year. But otherwise, we are just in current course of business, trying to support them with the needs that they have right in front of them.
Derrek Gafford: Yes. Mark, this is when it comes to the PeopleScout business, this is really a story about our customers’ hiring volumes coming down. Interestingly enough, it’s not because they don’t still have open jobs. They do. With all of these customers, they’re not sure where things are going. At a company, one of your worst fears is you hire some people in two, three, four, six months later, you’re going back to those people and saying, we’re sorry. We got to let you go. That’s not good for the people, it’s not good for the business. And so there are many of our customers that are in that spot trying to understand where things are going and they’re saying, we’re going to this hold, we’re going to pause, we’re going to delay this month and everybody is talking to their employees. Everybody has just going to have to get by. Everybody’s going to have to get by till we get some more direction on where our own business is headed and that’s what we’re seeing.
Taryn Owen: Yes. And I would just add one more point. We felt volumes in 2022 with our customers that were really high because they were experiencing turnover like they had never experienced before. And many of those customers have put good plans in place to bring that turnover down, which is just naturally bringing down that turnover in the hiring volume accordingly.
Mark Marcon: That’s great color. And then, just given the comment with regards to the one large one having that surge in Q4 the prior year and not having it this year, does that mean that – how should we think about the revenue decline that we ended up seeing here in the fourth quarter? Should that continue into the first quarter? Because presumably that retail client wouldn’t have had the same level of surge hiring in Q1 a year ago.
Derrek Gafford: Yes. We’re expecting the revenue decline in Q1 for the PeopleScout business to be pretty close to what we had this quarter, albeit from a different path. So, yes, if you took the 16 points of revenue decline and you adjust this for this one customer we talked about, we’d be more at about 9% excluding that customer. However, going into the first quarter, we’re hearing from more clients, not anything big but more positive. And so we’re getting – we’re expecting to be at about the same revenue decline, it’s just getting there through a slightly different path than what you saw in Q4.
Mark Marcon: Okay. Great. And then how should we think about the staffing levels internally within TrueBlue for the PeopleScout division? How should we think about the expense profile of that business if things are going to continue along these – this kind of path?
Taryn Owen: Yes. The great news at PeopleScout is that the model is built to scale up and down to meet the hiring volumes of our customers. And so from a recruiter and a recruiting coordinator perspective, we do have a flexible staff that we are able to scale based on the hiring volume. It’s built into the model. It’s a big reason that customers choose to outsource to us so that we can bring them that level of scalability.
Derrek Gafford: So, Taryn gave you the most important big picture, I’ll just give you just a little bit of geography. So just to also understand as we make those adjustments, it won’t show up in our SG&A. Our recruiters are actually in our cost of sales. And so what Taryn is talking about, our actions will be taken as it’s needed as volumes come down to scale the recruiting resources to the amount of demand to keep the gross profit percentage in that business whole.
