Greetings, and welcome to the ASGN Incorporated Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. It is now my pleasure to introduce Kimberly Esterkin, Investor Relations.

Good afternoon. Thank you for joining us today for ASGN's Third Quarter 2024 Conference Call. With me are Ted Hanson, Chief Executive Officer; Rand Blazer, President; and Marie Perry, Chief Financial Officer. Before we get started, I would like to remind everyone that our commentary contains forward-looking statements. Although we believe these statements are reasonable, they are subject to risks and uncertainties. As such, our actual results could differ materially from those statements. Certain of these risks and uncertainties are described in today's press release and in our SEC filings. We do not assume any obligation to update statements made on this call. For your convenience, our prepared remarks and supplemental materials can be found in the Investor Relations section of our website at investors.asgn.com. Please also note that on this call, we will be referencing certain non-GAAP measures, such as adjusted EBITDA, adjusted net income, and free cash flow. These non-GAAP measures are intended to supplement the comparable GAAP measures. Reconciliations between GAAP and non-GAAP measures are included in today's press release. I will now turn the call over to Ted Hanson, Chief Executive Officer.

Thank you, Kim, and thank you for joining ASGN's third quarter 2024 earnings call. Market demand for ASGN's services remained stable in the third quarter. Q3 2024 revenues of $1.031 billion were similar to the second quarter and within our guidance range. In terms of profitability, adjusted EBITDA margin of 11.3% was at the midpoint of our guidance range and reflects the continued evolution of our business toward higher-end, high-value consulting solutions. IT consulting is now approaching 60% of total revenues. We had 57.9% of third quarter 2024 revenues in commercial and government consulting, up from 54.5% of revenues in the year-ago period. Despite relatively consistent top-line results, global economic uncertainty remains. As a result, we have yet to see a meaningful increase in client IT services spending. This caution, however, is not meant to imply that our commercial enterprise and federal government customers have deviated from their long-term digital transformation paths. Rather, our clients know that advancing their IT road maps is crucial to maintaining their competitive advantage. Strong commercial and government bookings in the third quarter demonstrate the continued need for ASGN's IT services and are a sign of the pent-up demand within our customer base. As we progress through the final quarter of the year and prepare for an improved IT spending environment, we continue to develop our solutions and capabilities in core areas of interest to our Fortune 1000 and federal government clients, including data and analytics, cloud, cybersecurity, and early-on AI applications. We are differentiating our business by bringing to bear unique solution capabilities across industry verticals, while at the same time being fast adopters of new technologies. I will provide some examples of these efforts as we review ASGN's third quarter segment performance. So let's begin with our largest segment by revenue, Commercial. Our Commercial Segment services Fortune 1000 and large mid-market companies. Commercial Segment revenues for the quarter were driven by growth in our commercial consulting business. Commercial consulting revenues improved 3.9 percent year-over-year and were also up 1.2 percent sequentially. Commercial consulting bookings of $282.5 million put our book-to-bill at 1.1 times on a trailing twelve-month basis. Although consulting bookings remain more weighted toward renewals than new work, our new work is growing each quarter. Looking at the total Commercial Segment from an industry perspective, we saw year-over-year growth in two of our five commercial verticals. TMT revenues improved 10.9 percent compared with the third quarter of 2023, led by double-digit growth in software and services and e-Commerce. Consumer & Industrial accounts are returning to modest growth year-over-year, driven by double-digit growth in Utilities and Materials. On a sequential basis, we also saw growth in two commercial industry verticals. Consumer & Industrial accounts improved low single digits, driven by growth in Consumer Staples and Materials, which improved mid-single-digits sequentially, as well as Energy and Utilities, which were up high-single-digits from the prior quarter. The Financial Services vertical also saw slight growth sequentially. This modest quarter-over-quarter improvement was driven by Regional Banks, which saw mid-single-digit improvements, and Insurance Services, which improved high-single-digits from the second quarter. Notably, within Financial Services, Big Banks were flat quarter-over-quarter after four consecutive quarters of decline. Although the Healthcare industry vertical remained down year-over-year and sequentially, within the vertical, Healthcare Payers were up mid-single-digits from the second quarter. As we continue to mature our consulting practice, we are selectively adding new skill sets to our project teams, including solution architects. Adding these high-end solution capabilities provides us with the opportunity to strengthen our work and thereby improve our margins, expand our contract sizes and lengths, and enhance the industry vertical performance I just described. We are aligning our solution architects with services of greatest interest to our clients. Solutions that are seeing the most traction of late include application development and modernization, cloud migration and modernization, data platforms and products, and cybersecurity advisory and support. These services are all foundational to realizing the value of generative AI. While there is still much data readiness and infrastructure work that needs to be completed before our clients can deploy enterprise-wide applications of GenAI, they are beginning to implement specific AI models in portions of their organizations by leveraging ASGN's core data and analytics capabilities. Let me provide a few examples. During the third quarter, one of our clients, a Fortune 500 multinational department store, came to our Data & AI Team looking for a way to improve staff utilization at its global distribution centers. Leveraging machine learning and AI to analyze historical and real-time data, our team built a time-series model that can produce a 26-week labor forecast compared to the client's legacy manual staffing model. This new model significantly reduces our client's costs by more accurately forecasting labor demands using internal and industry-wide data. For another client, a Midwest public utility, our Data and AI Team was brought in to develop an automated solution to verify customer addresses. The new system would need to process large datasets with limited manual intervention. With a focus on automation and scalability, our team built a predictive analytics solution that automated the entire address validation process, thereby reducing manual intervention by 50% and enabling better decision-making, smoother logistics, and enhanced customer satisfaction. Achieving customer satisfaction is always top of mind. One key way we are earning accolades from our clients is by providing them with a one-stop shop, onshore and near-shore for their technical needs. For a large financial advisory client facing data integrity complications, we brought together a team of commercial and government consultants in the U.S., along with engineers from our Mexico Delivery Center, to assess our client's data systems' security and accuracy as well as to provide gap reporting and offer strategies to improve their systems' integrity. This cross-border, cross-segment engagement team combined expertise from our application development, data analytics, and cybersecurity solutions. This opportunity offers multiple years of expansion work that will deepen our saturation within the client, all while increasing our technical qualifications. Speaking of technical qualifications, we've strengthened our commercial governance, risk, and compliance practice, or GRC practice, by joining the strengths of our commercial and government cybersecurity resources to support our commercial industry clients. In a recent GRC engagement, we offered strategic advisory and engineering talent to help a major financial institution fortify its data security defenses. We also renewed a multi-year partnership with a key healthcare client, working closely to enhance its cybersecurity framework to comply with industry regulations. Also in the healthcare industry, one of the largest public hospital systems in the country turned to our consultants at GlideFast to reimplement their entire instance of ServiceNow. Our team won this highly competitive pursuit by understanding the challenges and restraints of the system's prior installation and offering the client a shared vision for how to deliver value across every phase of the project. This win reinforces GlideFast's position as an elite ServiceNow provider, and our team now has the opportunity for continued client partnership by implementing additional ServiceNow modules as the project matures and progresses. Each of these aforementioned consulting projects illustrates ASGN's unique ability to integrate comprehensive solutions to address our clients' IT needs. We complement our internal capabilities by partnering with technology industry leaders, such as ServiceNow, Salesforce, Snowflake, Databricks, Microsoft Azure, and AWS, amongst others, knowing that being a fast adopter of the latest technological advancements is vital to our success. And as we move with the fast currents of IT, we are strategically positioning ourselves within our clients' organizations, enabling us to grow and expand our relationships over years and decades to come. Let's now turn to our Federal Government Segment, which provides advanced IT solutions to the Department of Defense, the intelligence community, and federal civilian agencies. The Federal Segment's revenues for the quarter improved 1% sequentially. Net new contract awards were $666.4 million, putting our book-to-bill at 2.1x for the third quarter and 0.9x on a trailing 12-month basis. Contract backlog was over $3.1 billion at the end of the third quarter or a coverage ratio of 2.5x the segment's trailing 12-month revenues. As is evident from our quarterly book-to-bill, the pace of task orders has increased. We began to see this trend in July at the same time of our second quarter earnings call, and this continued throughout Q3 as we were awarded work under previously won contracts, including several IDIQs. At the same time, task order volume increased, so too did our recompete win rate, which reached 100% for the quarter. By increasing our market focus and rigor, we boosted our win rate and expanded our average deal size. For example, in September, our federal government team was awarded a $528 million, six-year single-award data services IDIQ with the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency, or CISA. Under this new award, a portion of which is included in our third quarter bookings, our team will design, develop and deliver solutions that will standardize the integration of cybersecurity data across dozens of federal civilian executive branch agencies. This award is a true testament to our team's exceptional cybersecurity qualifications as well as our long-standing relationship with and institutional knowledge of CISA. Given our partnership with CISA and having passed other prerequisite steps, our team was asked to compete against other companies to deliver CISA a prototype of a cybersecurity threat intelligence platform. This platform will allow civilian agencies, along with state and local government and critical infrastructure entities to streamline the generation, use, and sharing of cybersecurity threat intelligence to increase the resiliency of US national security. By being a part of this important prototype, ECS has the opportunity to assume a key advantage on a large future contract with CISA's Threat Intelligence Enterprise Service program. During the third quarter, we also won task orders on a number of previously secured contracts and IDIQs. For a premier law enforcement agency, we were awarded our first two task orders, which expanded our current work providing advanced architecture, engineering, and operation for the agency's important cybersecurity domain. For the National Institutes of Health, we won several task orders to support patient-centric solutions and for Veterans Affairs, we won multiple task orders to provide enhanced veterans experience, including supporting key applications used for accessing veterans healthcare information. While it took some time to see task orders flow through, as we predicted, we are gaining traction and our pipeline of new work and recompetes continues to grow. Importantly, our diversified government portfolio of critical customer accounts with national priorities, along with our focus on mission-enabling IT solutions, mitigates the potential impact to our business that risks from macroeconomic conditions, geopolitical conditions, or the upcoming presidential election may pose. Before Marie discusses our third quarter results in more detail, I'd be remiss if I did not speak about our growing AI/ML work for the defense and intelligence community. As one example, in the third quarter, the National Security and Intelligence Division provided us with funding for work related to AI-enabled operations and exercises, autonomous systems deployment, AI algorithm and software deployment, and AI-enabled publicly available information toolkits and training programs. ASGN has been a top AI/ML contractor for the government for many years, and in August, ECS was named a top five federal AI/ML provider by Deltek for the third year in a row. While our talented professionals and qualifications are certainly being recognized by the industry, to ensure that we stay ahead of the latest developments in AI and GenAI, we continue to expand our core team of practitioners to provide solution architecture, engineering, and business growth support. With that, I'll now turn the call over to Marie to discuss the third quarter results and our fourth quarter guidance.

Thanks, Ted. It's great to speak to everyone this afternoon. Third quarter revenues were $1.031 billion, a decrease of 7.7% year-over-year, but essentially flat to the second quarter. Revenues from the Commercial segment were $718.8 million, a decrease of 8.1% as compared to the prior year. As Ted noted, revenues from commercial consulting, the largest of our high-margin revenue streams, totaled $285 million, up 3.9% year-over-year and up 1.2% sequentially. Revenues from our Federal Government segment were $312.2 million, a decrease of 6.6% year-over-year, but up 1% sequentially. As we noted in our second quarter call, the year-over-year decline in Federal segment revenues can largely be attributed to fewer license revenues compared to the prior year. Excluding these licenses, Federal segment revenues improved low single digits year-over-year. Turning to margins. Gross margin for the third quarter of 2024 was 29.1%, an increase of 20 basis points from the third quarter of last year and at the top end of our guidance range for the quarter. Gross margin for the Commercial segment was 32.8%, up 30 basis points year-over-year, reflecting a higher mix of consulting revenues as well as margin expansion in these revenues. Gross margin for the Federal Government segment was 20.7%, also up 30 basis points year-over-year, primarily due to a higher mix of direct labor, which is higher margin work, along with lower license revenues mentioned previously. SG&A expense for the quarter was $207.5 million, compared to $206 million in the third quarter of 2023. SG&A expense also included $1.1 million in acquisition, integration, and strategic planning expenses and a $3.6 million legal settlement accrual, both of which were not included in our guidance estimates. For the quarter, net income was $47.5 million, adjusted EBITDA was $116.9 million, and adjusted EBITDA margin was 11.3%. Turning to free cash flow. Free cash flow for the quarter was $127.9 million, or a conversion rate of approximately 109% of adjusted EBITDA. At quarter end, cash and cash equivalents were $166.6 million, and we had full availability under our $500 million senior secured revolver, and our net leverage ratio was 1.9 times. Our robust free cash flow provides a strategic advantage that enables ASGN to fund key growth initiatives and opportunistically repurchase shares to return value to stockholders, while maintaining a healthy and resilient balance sheet. By following a disciplined and balanced approach to capital allocation, we can invest in high-return opportunities and prudently manage our leverage, driving sustainable long-term value to our stockholders. Given the market opportunity, we deployed $95.6 million for the repurchase of roughly one million shares at an average price of $92.26. We have approximately $573 million remaining under our $750 million share repurchase authorization. With solid free cash flow generation and full availability under our revolver, we have ample dry powder to make strategic acquisitions when opportunities become more readily available. Turning to guidance. Our financial estimates for the fourth quarter of 2024 are set forth in our earnings release and supplemental materials. These estimates are based on current market conditions and assume 61 billable days in the fourth quarter, which is one more day than the year-ago period and 2.5 days fewer than the third quarter. The fewer billable days in the fourth quarter generate a sequential headwind that equates to about 4% of revenues. We expect market conditions and demand for our services in the fourth quarter to be similar to that of the third quarter. While third quarter bookings indicate a solid pipeline of work, we do not anticipate an uptick in our clients' IT spend in the fourth quarter. With regards to EBITDA margin, the fourth quarter typically sees a decrease in margin sequentially due to client furloughs and fewer billable days along with traditional seasonal softness in perm placement revenues. With this background, for Q4 2024, we are estimating: revenues of $990 million to $1.01 billion, net income of $39.2 million to $42.1 million, Adjusted EBITDA of $103.0 million to $107.0 million, and Adjusted EBITDA margin of 10.4% to 10.6%. Thank you. I'll now turn the call back to Ted for some closing remarks.

Thanks, Marie. Last quarter, I ended our discussion by reviewing ASGN's core values, including our belief in the IT services sector, our move to become more consultative, and our focus on supporting large, industry-diverse, commercial enterprise, and federal government clients. Another core value to include on that same list, that I hinted at the start of today's call, is being a fast adopter of new technologies to bring to our clients. A differentiator of our business model, ASGN strategically pivots as technology advances, so that we can drive our clients' IT roadmaps while competitively positioning our own business. AI is undoubtedly a central focus of the IT roadmaps of corporate enterprises and federal agencies alike, making the investment and integration of GenAI a top priority for our clients. The Global ISG Index, one of the leading sources of market intelligence on the IT and business services sector, anticipates that global spending on GenAI will increase by 50% in 2025 and represent upwards of 7% of companies' total IT spend by year end. While leveraging data and AI will enable companies to unlock increased value, before that value can be realized, company tech stacks need to be improved. Businesses must enhance their data management capabilities as well as their cloud and cybersecurity infrastructures in order to fully leverage the benefits of GenAI across our enterprises. With that in mind, there remains a lot of foundational work that needs to be completed for modernizing and cleaning up data lakes and enhancing cybersecurity frameworks to driving automation and ensuring regulatory compliance. All of these areas are core to ASGN's differentiated service offerings and with strong bookings and a diverse client base across six key industry verticals, ASGN is positioned to take advantage of the opportunities to support our clients' IT roadmaps now and for many years to come. That concludes our prepared remarks. I want to extend my heartfelt gratitude to everyone at ASGN for your support this past quarter your dedication to fostering deep, long-standing client relationships is truly commendable and no doubt places us at the forefront of the IT industry. Thank you again for joining our third quarter 2024 call. Operator please open the call to questions.

Thank you. We will now be conducting a question-and-answer session. And our first question comes from the line of Jeff Silber with BMO Capital Markets.

Hey thanks so much. This is Ryan on for Jeff. Just curious what you need to see and what trends you are monitoring that would make you more bullish on the IT spending environment and the digital transformation environment ahead? Thank you.

Ryan thanks for the question. In the long-term, we're bullish. There are a lot of underpinnings here that are going to be drivers of our business as we help our clients drive their IT roadmaps over time. In the near term, what we're watching here is confidence, so that our clients have confidence to begin to invest at more normal levels in their IT needs. That's a balance of two things here. We are making progress. There are some things in the overall economy like the interest rate cycle, the elections, and other factors that have clients remaining cautious, but are beginning to move through and pass some of those issues, hopefully leading to greater business confidence. With that confidence will come a heavier investment in their IT roadmaps, and we'll be right there to serve them.

Great. Thank you. And then just for the follow-up, do you think the growth trend in commercial consulting has troughed at this point now that you're past kind of the tougher comps from last year? I was just curious how you expect that to trend relative to the core assignment over the next couple of quarters. Thank you.

I think we're kind of at low single-digit growth rates here. It seems over the past few quarters that we are in a stable place quarter-to-quarter if you adjust for billable days and those other considerations. So, bookings also remained very solid. We were at 1:1 in the last quarter, which indicates growth going forward. If you look at the metrics around book-to-bill and you examine past performance over several quarters, we've consistently posted low single-digit growth. I think we can begin to grow at higher rates. That, again, hinges on our customers being able to open up and invest more fully in all their desired projects. The book-to-bill indicates good demand, and our pipeline supports that. So, it's less a matter of if and more about when.

Understood. Thank you very much.

Thank you. Our next question comes from the line of Maggie Nolan with William Blair.

Hi. Thank you. Can you elaborate on what may be different in terms of your strategy when you emphasize the solution architect additions? Is this representing a shift in go-to-market or how you secure and manage talent for your projects?

I'll let Rand take that. I would call it more of an enhancement than anything else.

Our go-to-market features the accounts we focus on, the portfolio, and the growth within those accounts and our intimacy with them. Supporting that is an evolution of our solution strength which evolves as technology and the needs of our clients change. For example, AI was, in past quarters, more about governance requirements. Today, as featured in Ted's remarks, we're getting more into building algorithms for forecasting, searches, and updates, as well as better security algorithms. This requires continued solution strength in support of the account portfolio. Accounts come first, solutions second, and we have to excel at both.

Thank you. That's helpful. And then to build on the first set of questions, could you share any expectations for 2025 in terms of the IT spending environment and client sentiment regarding 2025 budgets?

I can’t comment explicitly on IT spending rates for 2025. However, the positive news is that we see good demand in both our pipeline and bookings, which suggests stronger growth in the future. The question is when and how that develops, and that's a bit early to assess. However, what's reassuring is that we like what we see in our bookings and pipeline, and we'll need to keep monitoring this to understand when we can expect spending at more normal or higher rates.

Fair enough. Thanks, Ted. Thanks, Rand.

Thank you. Our next question comes from the line of Surinder Thind with Jefferies.

Thank you. Can you provide additional color on the assignment business, including any signs of stabilization or trends within the IT business or Creative Circle?

Generally, adjusted for billable days, we're seeing stability quarter-to-quarter. We observed this developing in the first part of the year, and it's persisted. The perm placement segment has weakened a bit as we get deeper into the year, and we expect it to be the same in the fourth quarter given that historically, it's not a strong quarter for that part of the business. However, what we're witnessing in the assignment business shows that this is the primary channel through which customers manage their spending. They have continued to maintain a cautious approach, but while stability is present, we are looking for signs of them loosening that spending.

That's helpful. In light of the assignment business being an area where clients seek efficiencies, how are you thinking about the staffing model in the context of Gen AI productivity improvements? Is there a risk that clients will look for solutions to reduce headcount from a support perspective?

With changing technologies, clients’ skill sets will also evolve. Some areas will wane, while others will become more in-demand. We believe the need for talent remains, and our opportunity is to deploy next-generation AI solutions within our own business, which we are already doing, to enhance productivity. While clients will still need solid solutions and technical talent for various opportunities, we will leverage these AI advancements to serve them better.

Thank you.

Thank you. Our next question comes from the line of Joseph Vafi with Canaccord Genuity.

Good afternoon. Nice to see your steady results. I'd like to drill down into the financial services vertical. Can you highlight any specific demand drivers there?

I'll let Rand take this one.

Certainly. The financial services sector is crucial not just for ASGN but for IT spending overall. We're encouraged to see that the big banks have reported solid results, and the Regional Bank sector is improving. Our penetration in these accounts is growing through the consulting side. The staffing side will see increased opportunities as clients feel more confident to invest. We are encouraged by the sequential numbers, and while down year-over-year overall, the Regional Banking segment is a point of growth for us. We aim to capture value in both staffing and consulting, which is critical given that we have cracked into many of these accounts.

Thanks for that insight, Rand. Additionally, it seems like enterprises have some budgets left over for the year based on your discussions. Do you think they'll carry that budget into next year, or is there a chance of a year-end spending rush?

Rand, do you want to respond?

We're seeing some spending in the government sector, which drives our bookings. However, on the commercial side, clients seem to be adopting a cautious approach, without a strong urgency to spend in the last months of the year. I think everyone is waiting for the elections to pass before accelerating spending. As we examined our AI spending, our work is evolving. Clients are preparing for what they want to achieve, moving beyond basic productivity gains using Gen AI to more substantial AI investments. They are also focused on data management, which remains a significant area of work for us as they improve data accessibility and mixing internal with public data.

Thank you for the clarity, Rand.

Thank you. Our next question comes from the line of Tobey Sommer with Truist Securities.

Good afternoon. This is Jasper Bibb on for Tobey. Great quarter for ECS bookings, north of two times book-to-bill. Can you elaborate on what you've done to boost win rates? Additionally, could you clarify how much of the $530 million data services you mentioned was booked in the third quarter?

This is the result of diligent work focusing on account opportunities. We had some nice wins on IDIQ contracts, where we leveraged our client relationships established at the end of 2023. The release of task orders has encouraged us to capture our share of that business. I can't specify exact figures for the contract amounts booked, as we typically capture bookings on a net basis.

Thank you. Just curious about managing capacity levels within your consulting business as growth has moderated. Has the mix of your personnel, whether full-time or temp, really changed in the last couple of quarters?

Most of our consulting resources derive from our IT staffing capabilities, which provides us with an advantage when business conditions fluctuate. This helps us maintain productivity and profitability. Rand, would you like to add anything?

Exactly. We utilize contingent labor for additional support on consulting work, allowing us to avoid having an inflated bench that complicates resource allocation. While we've grown in our Mexican delivery centers, we have also recently established a focused team in India aimed at enhancing our ServiceNow capabilities.

Thanks. Lastly, could you expand on demand for temp IT specific to Creative Circle and assignments?

Overall, we've observed consistency in this segment. The Creative Digital Marketing unit was among the first to soften since it is most exposed to discretionary spending, but has stabilized in recent quarters akin to the general assignment business.

Thank you. Our next question comes from the line of Kevin McVeigh with UBS.

Thank you. Regarding the one million shares repurchased in the quarter, is this indicative of the expected quarterly cadence? Any insights would be appreciated.

Our strategy involves utilizing free cash flow from each quarter for share repurchases and maintaining flexibility for M&A opportunities. That's likely the right way to think about it.

I would say we monitor M&A opportunities closely. While there are fewer transactions overall, we are seeing an uptick in smaller deals. However, we haven't yet seen a substantial change in valuations, with sellers still holding strong. Our strategy remains focused on identifying the right opportunities.

Understood. Could you discuss where you stand on the internal deployment of Gen AI and how it varies between federal, commercial, and assignment businesses?

Rand, do you want to address that?

The deployment of AI internally affects both federal and commercial operations, providing significant benefits across the board. For instance, our cybersecurity AI improvements apply to both sectors. We're enhancing our proposal development processes and utilizing AI for recruitment to match skills with opportunities more effectively. These advancements are shared between government and commercial teams.

That's insightful. Moving into the telecom space, how do you view expense savings from your initiatives? Will these be reinvested into the business or returned to shareholders?

The goal here is to enhance productivity while evolving our business to be more consultative, aiming for higher growth rates, margins, and EBITDA. We leverage AI to provide better services to our clients, and that should translate some of those productivity gains to the bottom line, supporting growth initiatives as well.

Thank you.

Thank you. Our next question comes from the line of Mark Marcon with Baird.

Hi, good afternoon. On M&A, what kind of opportunities are you currently observing? Are valuations becoming more reasonable?

It's difficult to determine if pricing is becoming more reasonable, but it's clear there are fewer transactions occurring. While we note the beginnings of a slight pickup, it’s mostly smaller deals. Valuation trends remain rather static as sellers are not making significant concessions. We're actively pursuing opportunities, though.

Regarding the federal business, when can we anticipate these wins will convert to revenue?

Most of the contributions from Q3 wins will materialize in 2025 rather than in the fourth quarter. Although some revenue will flow from recent task orders, the impact will be bigger next year. Additionally, as we look towards the election, we believe that customer hesitance will ease once some uncertainties are resolved, resulting in increased spending on essential IT projects.

On the commercial consulting side, regarding what you are currently doing to assist clients with data in preparation for AI initiatives, can you quantify that effort?

Rand, can you expand on that?

We categorize work into AI or pure AI versus AI extended. Currently, the pure AI revenue is still a small portion of our total revenue, while the data preparation and consulting work constitutes a significant share. We monitor both segments closely and are positioned to transition effectively as AI applications evolve.

That’s great. Thank you.

Thank you. We have reached the end of the Q&A session. I would now like to turn the floor back to Ted Hanson for closing remarks.

Great. Thank you, operator, and thank you, everyone, for participating today. We look forward to being with you in the first quarter of 2025 to talk about our fourth quarter results. Have a great day.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.