Alexander Sinatra

Alex Sinatra asked about the decline in the digital segment, inquiring about the pace of new sales going forward and indications from existing and new clients.

Answer

CEO Gary Burnison explained that the decline was a purposeful decision several quarters ago to reduce the number of sellers in the digital solution by about 35%, pivoting the entire firm towards IP monetization. The strategy now focuses on bringing in more enterprise sellers and consultants. He noted that a couple of very large transformational deals were postponed from Q2 to Q3, one of which has since been secured, and mentioned a pivot towards more licensing arrangements. Regarding new RPO contracts, Mr. Burnison stated that the majority were renewals, primarily from Marquee and Diamond accounts (which represent 40% of the firm's revenue and have outperformed the portfolio with 10% growth). He identified industrial and healthcare as key sectors, with roughly three-quarters of new business from renewals and 25% from new logos. CFO Bob Rozek added that historically, approximately 50% of RPO fee revenues have come from referrals originating outside that specific solution.

Alex Sinatra of Robert W. Baird & Co. asked about the internal reception to the company's margin focus and talent management actions, and sought color on monthly new business trends, particularly for the current month.

Answer

Executive Gary Burnison explained that the difficult talent-related decisions were made over a year ago and are well understood by colleagues, so there are no current internal issues. Regarding monthly trends, he stated it was too early to comment on September but noted that the past four months have shown consistent performance.

Alexander Sinatra asked about the competitive landscape and pricing dynamics for ASGN's large projects, including those involving TopBloc and GlideFast. He also inquired if ASGN's Mexican facility has been impacted by the political climate.

Answer

President Shiv Iyer stated that ASGN competes against traditional players like Accenture, the Big Four, and India-based pure plays for large projects. He noted that pricing for TopBloc and GlideFast work is holding up due to the quality and unique assets/accelerators ASGN brings. Mr. Iyer confirmed that the Mexican facility has not been impacted by the political climate.

Alexander Sinatra inquired about the competitive landscape for ASGN's large projects, including TopBloc and GlideFast, and how competitive dynamics are affecting pricing. He also asked if the political climate has impacted ASGN's Mexican facility.

Answer

President Shiv Iyer identified competitors as Accenture, the Big Four, India-based pure plays, and smaller platform-specific firms. He noted that pricing for TopBloc and GlideFast work is holding up due to ASGN's quality, assets, and accelerators. Shiv Iyer confirmed that the Mexican facility has experienced no impact from the political climate.

Alexander Sinatra of Baird asked about the cost associated with ASGN's significant investments in AI initiatives, such as code discovery tools and cybersecurity agents.

Answer

CEO Ted Hanson explained that while the company is not quantifying the specific costs, the AI investments are being managed to be accretive, not dilutive, to the company's margin profile. He emphasized that these investments are made with a focus on accelerating returns and are contributing to a gradual improvement in margins.

Alexander Sinatra asked for more color on demand trends in the On Demand segment, particularly in Europe and Asia, and inquired about the financial impact of amortizing the technology transformation costs.

Answer

Executive Bhadresh Patel noted that demand is increasing in finance, digital transformation, and supply chain, with the pipeline filling up more than in the previous quarter, though overall activity remains choppy. CFO Jennifer Ryu clarified that the annual amortization expense for the transformation costs will be around $3 million, starting mid-Q3, with Q4 being the first full quarter of impact.