Hello everyone, and welcome to the Sterling third quarter 2023 earnings call. My name is Seb, and I will be the operator for your call today. If you would like to ask a question on today's call, you may do so by pressing star one on your telephone keypad. If you would like to withdraw your question, please press star two. I will now hand over to Judah Sokel to begin the conference. Please go ahead. Thank you, operator. Welcome to Sterling's third quarter 2023 earnings call. Joining me today on the call are Josh Peirez, Chief Executive Officer of Sterling, and Peter Walker, Chief Financial Officer of Sterling. The slides we will reference during this presentation can be accessed on Sterling's IR website under News & Events. The slides have been posted to our website, and a replay will be made available on the website. After prepared remarks, we will open this call to questions. Before we discuss our results, I encourage all listeners to review the legal notice on slide two, which explains the risks of forward-looking statements and the use of non-GAAP financial measures. Additionally, please refer to our most recent Form 10-K and 10-Q filed with the SEC for a discussion of risk factors that could cause actual results to differ materially from these forward-looking statements. Our slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures are in the appendix to the presentation and in our earnings release issued this morning. I'll now turn the call over to Josh Peirez. Thank you, Judah. Good morning, and thank you for joining us. Before we begin, I want to provide an important update. Since July 2019, I have had the pleasure of working in partnership with Peter Walker, Sterling's Chief Financial Officer. As we announced in late September, Peter has found an exciting new role outside of Sterling, and I couldn't be happier for him to pursue this opportunity. Peter has played a critical role at Sterling in so many ways over the past four and a half years, including leading our successful IPO two years ago. Peter has put in place a very strong team, culture, and finance discipline that sets us up well for the future. I am grateful for all he has done to make Sterling the great company it is. While Peter will be missed when he leaves at the end of this week, we are in the midst of a CFO search process, and we feel confident that we will find a CFO who will guide Sterling into the next chapter of the company's leadership and growth strategy. In the meantime, I am happy that Theresa Strong, who is here with us today, will serve as Sterling's Interim Chief Financial Officer during this transition period. Having joined Sterling through our acquisition of TalentWise in 2016, Theresa has nearly 20 years of experience leading finance teams and plays an instrumental role at Sterling as Chief Accounting Officer. I am looking forward to working with Theresa in this capacity. Turning now to slide four, the third quarter of 2023 was a quarter of successful execution towards our long-term strategy and 2023 goals. We continue to focus on what is in our control, a strategy that has produced meaningful results both on the top line and our cost profile, as well as in several other critical areas I will talk more about shortly. In the third quarter, we delivered revenues of approximately $181 million, including strong year-over-year trends within new client growth, upsell and cross-sells, and customer retention. At the same time, our Q3 revenues came in below our prior expectations due to lower base hiring volumes, resulting from a softer macro than we anticipated in the second half of the quarter. However, thus far in Q4, we have seen an improvement in our year-over-year base trends, leading us to expect that the fourth quarter will see year-over-year total revenue growth at the midpoint of our revised guidance range. Even in the face of this challenging macro, our clients continue to hire at a steady pace and recognize that background screening is a critical component to helping them keep their employees safe while hiring faster and smarter. While cyclical hiring trends will come and go, the long-term health of this industry and our business is exciting. Clients are increasingly adding more services to their background screening packages. In particular, both prospective and existing clients are attracted to our innovative solutions within identity verification, pre-hire screening, and post-hire monitoring. As a result, we continue to drive strong market share gains and larger deal sizes on both new and existing clients. Our Q3 adjusted EBITDA margin was in line with our prior expectations, despite the revenue shortfall, a result we are very proud of and which was driven by our progress on cost optimization efforts. We expect these strategic initiatives centered around focused automation, efficiency, and process reengineering to result in a stronger, more scalable, and more profitable company for the long term. We are on track to deliver a $10 million savings in 2023 and our full cost savings target of $25 million in annualized savings. I couldn't be prouder of the Sterling team as we took significant steps forward in Q3 toward achieving our goals. Beginning with our first goal, organic revenue on slide five. Our culture of innovation, technological excellence, and elevated client experiences once again enabled strong results in Q3 on the revenue drivers in our control. Despite the macro environment remaining choppy and uncertain, we are proud to have delivered 10% year-over-year organic revenue growth in Q3 from the combination of new clients and upsell/cross-sell, consistent with our prior expectations. We have achieved this double-digit growth from these two factors for 12 of the past 13 quarters, which is a compelling reflection of the market share gains we have been able to consistently generate regardless of the macro environment. During the third quarter, we saw increased win rates, more signed enterprise logos, and improving customer retention year-over-year. This success is the result of hard work by the entire team as we continuously use a customer-centric lens to deliver the technology, service, and solutions the market craves. With that in mind, we are pleased to have just announced a new partnership with Konfir, a leading provider of instant employment verifications for U.K. workers, leveraging payroll, tax, and open banking data instantly. We expect this partnership to transform employment verifications for Sterling U.K. clients by enhancing an otherwise manual fulfillment process and greatly improving turnaround times. Beyond the initial U.K. launch, we are working with Konfir toward rolling out similar offerings in select international markets. Additionally, we are leveraging our comprehensive offerings to strategically expand the size of deals we are winning, both for new clients and upsell of additional products and services to existing clients. This approach is also amplifying our market opportunity to displace niche vendors due to our ability to consolidate more specialized services as a single vendor solution. The right side of slide five shows an example of one such win, our largest upsell in company history. By selling additional products and enhanced workflows beyond pre-employment screening, we expect to substantially increase this client's spend with us. The new program began ramping during Q3 and is expected to grow our total revenue from this client by over 200%. Our API-driven technology and drug and health screening suite played critical roles in this upsell and is one example of the products through which we are expanding our services to clients. As we look to the future, we see strong evidence that we can continue executing on the organic revenue drivers in our control. In particular, we are excited by our robust opportunity pipeline, representing new client, upsell, and cross-sell deals both in the U.S. and international. Even as we continue to close new deals, the pipeline of prospects keeps building through our targeted sales and marketing efforts, a trend which supports our expectation that we will return to our 7%-8% long-term target range for new client growth by year-end. Turning to slide six, our relentless focus to innovate and bring unmatched solutions to our clients has enabled us to significantly grow our addressable market and our right to win. As we've shared in recent earnings calls, our investments in faster-growing and higher-margin identity and post-hire solutions are paying off. We are pleased to see another quarter of positive outcomes, including a third consecutive quarter where these two areas comprise more than 10% of our revenues combined. Starting with identity, we have seen significant success over the past couple of years due to our identity-first workflow solutions that enhance pre-employment screening and strengthen hiring practices. During Q3, we saw continued growth in global identity adoption on a year-over-year and quarter-over-quarter basis in the U.S. and internationally. Clients are becoming acutely aware of identity as an essential step in the background screening process. In Q3, we saw an approximate increase of 80% in active U.S. identity clients. Furthermore, we grew our advanced-stage U.S. opportunity pipeline by over 100% compared to Q2. Our clients are recognizing that the foundation of a reliable background check lies in the careful verification of candidates' identities. By incorporating our identity verification workflow at the beginning of the background check, clients can guard against the escalating threat of identity fraud. Furthering that point, Sterling's identity solutions generate a significant and quantifiable return on investment by helping our clients make more informed hiring decisions and keep their workforces safe. In particular, our data shows that adding identity verification at the beginning of a workflow can increase the amount of criminal records discovered by approximately 45%, a striking data point which resonates significantly with clients. Shifting to post-hire on the right side of the slide, Sterling was one of the first CRAs to introduce worker monitoring services several years ago. Through continued investment, we've transformed our post-hire screening, and we are optimistic about our consistent progress to grow our monitoring footprint and penetrate this large and growing market opportunity. During Q3, demand continued to grow for our subscription-based monitoring solution, which enables clients to monitor, among other things, criminal arrest and conviction records, motor vehicle registry records, licensing and credentials, and social media. While clients from all industries are benefiting from Sterling's monitoring solution, we are thrilled to see particularly strong growth opportunities in the gig industry, as those companies especially benefit from effortless compliance monitoring through a scalable and API-driven solution. Moving on to slide seven, we are focused on driving long-term, meaningful cost savings and efficiency gains. Over the course of 2023, we have been executing on a comprehensive cost optimization program aimed at building a more scalable, effective, and profitable company now and into the future. Our cost initiatives fall into three key pillars. One, reducing our cost of revenue through a focus on labor and data costs, two, decreasing our facilities costs by leaning even more into our virtual-first strategy and t hree, reducing SG&A costs by streamlining our organization and enhancing functional alignment. We also continue to maintain strong focus on opportunities to drive further fulfillment process improvements, including increased automation and the use of generative AI. Finally, turning to page eight, I will discuss M&A, the final goal. Our strategic acquisitions of Socrates and A-Check in the first quarter remain well on track to hit their integration timelines and drive the expected cost synergies and geographic expansion benefits. As we've shared in previous earnings calls, we continue to target the completion of these deal integrations by the end of 2023 for Socrates and the end of second quarter 2024 for A-Check. We continue to view M&A as a key element of our growth strategy. Given our success with EBI, Socrates, and A-Check, we are confident in our ability to execute on future M&A opportunities. We will continue to pursue deals that enable us to expand our addressable market and grow revenue with accretive margins, either as tuck-ins, geographic expansion opportunities, or the strategic insourcing of our supply chain, where we can create competitive advantages and operational efficiencies. In conclusion, I am proud of what we accomplished this quarter and excited for the opportunities in front of us. Our customers continue to be impressed with Sterling's industry-leading and highly differentiated suite of products that empower clients throughout the full employee lifecycle, from pre-hire to post-hire. We're excited about the growth of the global market and believe that our strong competitive advantages, innovation-led culture, and financial discipline will help us remain at the forefront of the industry for years to come. With that, I will hand it over to Peter Walker, our CFO, to take you through our financial results. Peter? Thank you, Josh, and I appreciate your kind words. I'm so proud of the Sterling team and all we've accomplished together over the last four and a half years. I have strong conviction for Sterling's future success, and I look forward to cheering the company on from the sidelines. Turning now to an overview of our financial performance, starting with revenues on slide 10. During the third quarter of 2023, reported revenue was approximately $181 million, a 9.4% decline compared to the third quarter of 2022 on a reported basis, and an 11.9% decline on an organic constant currency basis. The third quarter included a 2.4% contribution from M&A and 10 basis points contribution from foreign currency translation. These organic results were below the expectations we provided on our August earnings call due to softness in base hiring volumes in the second half of the third quarter, driven by continued macro choppiness. We also lapped a very strong Q3 2022, during which we reported revenues of $199 million and an 18% growth rate. As Josh mentioned, we expected year-over-year trends in base revenue to improve sequentially during Q3. Specifically, we expected base revenue to be down approximately 10% year over year, but base revenue remained down in the mid double digits for Q3, comparable to our trend in the first half of the year. However, thus far in Q4, we are seeing improvement in our year-over-year base trends, leading us to expect total revenue growth in the fourth quarter. Outside of base softness, we delivered strong year-over-year performance in Q3 and the revenue drivers in our control, namely, new client growth, upsell, cross-sell, and customer retention. Let me provide some details on those three key revenue drivers. First, we saw growth from new clients of approximately 5%, in line with our expectations. Notably, Q3 growth for new clients in both revenue dollars and on a percentage basis was the best quarter we've had so far in 2023. Based on deals already live and deals ramping before year-end, we expect new client growth to further increase and return to our 7%-8% long-term target range by end of year. Second, we maintained strong growth with upsell and cross-sell in our long-term target range of 4%-5%, an accomplishment we are very proud of, given client base volumes are lower year over year. Client adoption for both newer and differentiated solutions, as well as ancillary services, is growing at a robust rate. Our comprehensive product suite and unique global capabilities are expanding our ability to grow market share regardless of the macro environment. Third, our LTM client retention was 95%, also within our long-term target range, and it was even higher during Q3 at 96%, as we maintain a client-centric lens to deliver best-in-class technology and service to our customers. As we've mentioned in past quarters, it's important to view our results relative to history, as current industry hiring volumes remain strong on that basis and are down year over year only when measured against 2022's record levels. Looking further back, our 3Q 2023 revenues grew at a 15% CAGR over the past three years since 2020, demonstrating strong secular growth we've delivered through this cycle. Looking at revenues by region, revenue performance in the U.S. was led by our healthcare vertical in the third quarter. Within the U.S., we have a diversified and attractive vertical mix, which has been instrumental in supporting our compelling revenue growth in recent years. We saw softness in some verticals, including financial and business services, industrials, and tech and media. Revenue performance in our international business was led by our EMEA region, where we saw strong new client growth. Similar to the U.S., base volume declines offset good trends in the revenue drivers we can control. Our international business is benefiting from a consistent trend of clients looking to consolidate globally to a single scale provider. In the third quarter, we delivered 2.4% of inorganic revenue growth from Socrates and A-Check, the two acquisitions we closed in Q1 of this year. We continue to be pleased with both companies' results in line with our initial expectations. As Josh described, our integration work is on track to hit target integration timelines, with cost synergies being realized throughout 2023. Our continued success in integration gives us increased confidence to execute on additional M&A when attractive synergistic targets become available at the right valuations. Turning to Slide 11, our third quarter adjusted EBITDA was $47.6 million, a 10.4% decline compared to last year due to the base revenue declines. We are very pleased that our adjusted EBITDA margin this quarter was 26.3%, in line with our expectations despite the revenue shortfall in the quarter. This positive outcome was a direct result of continued progress on our cost optimization initiatives and financial discipline. As we've described in past calls, we are focused on our cost optimization program and are driving meaningful cost savings and efficiency gains. We're on track to generate $10 million in savings in 2023 and $25 million in annualized savings. We plan for these initiatives to drive permanent reductions in our cost profile and position the company to scale efficiently and profitably over the long term, creating the foundation for significant margin expansion when our base revenues inflate positively. In the third quarter of 2023, we had adjusted net income of $25 million, or $0.26 per diluted share, representing a year-over-year decline in adjusted EPS of 10%. This year-over-year change was primarily driven by the decline in adjusted EBITDA, with a lower tax rate offset by higher interest expense. Turning to Slide 12, free cash flow year-to-date was approximately $51 million, a 12% decrease from the prior-year period. The decrease was primarily driven by lower operating income and higher interest expense. Our net leverage at quarter-end was 2.4x net debt to adjusted EBITDA at the lower end of our 2-3x target. Year-to-date, we have spent $49 million of net cash on our two acquisitions and $46 million on share repurchases, including $20 million during the third quarter. Our net leverage remains at an attractive level, and as mentioned in our last call, would have fallen below 2x without our M&A or buyback activity. We ended the quarter with total debt $500 million, cash and cash equivalents of $50 million, and approximately $200 million available under our credit facility, providing us with ample capacity to execute our growth strategy of reinvesting in organic revenue growth and pursuing M&A. This year, we have also enhanced our capital structure through the implementation of an interest rate hedging program, which fixed approximately 60% of our floating rate debt. Our capital allocation priorities remain: investing in organic revenue growth, pursuing M&A, and maintaining a healthy balance sheet. This includes opportunistic share buybacks under our previously announced share repurchase program. These priorities hold true in a lower growth environment, as we see macro uncertainty as an opportune time to build the foundation for future success. On Slide 13, we show our updated guidance. For 2023, we expect to generate revenues of $720 million-$730 million, representing a year-over-year decline of 4.5%-6%. Adjusted EBITDA of $186 million-$191 million, representing year-over-year decline of 4%-6%, and adjusted net income of $95 million-$99 million, representing year-over-year decline of 7%-11%. Our revenue guidance range includes full year organic constant currency revenue decline of 7%-8.5%. For Q4 specifically, the implied revenue guide is flat to positive 6% year-over-year, with growth of 3% year-over-year at the midpoint. We continue to see solid growth in items within our control, including new client wins and upsell cross-sell, and we expect an improvement in those revenue drivers from Q3 to Q4. We're particularly optimistic about growth from new clients, where we expect to return to our long-term target range of 7%-8% by year-end. As we mentioned in previous quarters, we will benefit in Q4 from a significant number of larger new clients that have gone live as a result of our industry-leading innovation and sales engine. In Q4, we also expect revenue growth to meaningfully improve because of easing comps in our base business. In particular, we expect the year-over-year declines in base revenues to moderate in Q4, driving the total revenue growth to be positive year over year. As Josh mentioned, we've seen this trend thus far in October and the beginning of November. Importantly, we are not forecasting an increase in base hiring volumes from our current run rates. Included in our total reported revenue guidance is approximately 2.5% of inorganic revenue growth from our two M&A deals. We are also assuming no material impact from foreign currency in line with our previous assumption. Our guidance reflects the expectations for substantial margin expansion in Q4 of approximately 170 basis points to 26%, driven by our revenue growth that benefits from our cost actions ramping and easing of year-over-year margin comps. To further help with your modeling, we've included a page in the appendix with our updated assumptions for 2023 and a detailed breakdown of our revenue guidance. In closing, we are reaffirming our long-term targets on slide 14. Over the long term, we are targeting 9%-11% organic revenue growth levels, with margins expanding to 29%-32%+ an adjusted net income growth of 15%-20% per year. Even in the absence of revenue growth this year, we expect 2023 to be a healthy step towards achieving our profitability targets. That concludes our prepared remarks. At this time, operator, please open up the line for questions. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, please press star two. Our first question today comes from Mark Marcon from Baird. Please go ahead. Good morning, and thanks for taking my questions. Josh, I'm wondering if you could talk a little bit about just the base volume trends. You know, when did it slow down a little bit more than expected in the third quarter? And can you give us what the numbers were in terms of the base volumes for October and, you know, the first week of November? And how we should think about that if, you know, the economy slows a little bit further, you know, in this year and going into next year? Hi, Mark. Thanks for the question. So I think as we shared in the prepared remarks, you know, we had been expecting the base growth to still be down double digits, around 10%, in Q3. And what we saw in the last half of Q3, really kind of mid-August through the end of September, was that the base growth was worse than we expected, and it led us to have a -17% on base growth in the quarter. What we've seen so far in Q4 is actually consistent with the guidance that we've provided here today, which is an improvement, which is what we had expected all along in Q4, based on the comp from last year. We're not expecting the volumes to improve at all through Q4. We're expecting the normal seasonal trends, but we are expecting, based on the comp from last year, to see that improvement throughout the quarter. So we do anticipate our normal seasonality. We have not seen an improvement in October or November in terms of the volumes themselves from what we saw in the back half of Q3. But because of the relative comps from last year, we do see a significant, you know, improvement in the year-over-year decline in Q4 on those base growth trends. Mark, if we look back at 4Q of 2022, that was the first time the base growth went negative for us, and that was negative in the low double digits. So if you kind of back into a base growth assumption for 4Q based on the guidance, you know, it gets similar to the base growth that we saw, negative 17 in 2022. So it really is the comp that's helping there, along with, you know, stronger performance on new business, cross-sell, upsell, and maintaining our industry-leading retention rates. That's great. Then can you talk a little bit about, you know, the new contracts that are starting in Q4? Have all of those already started, and can you talk a little bit about, you know, what the source of the wins were, you know, in terms of whether they were coming from some of the other members of the big three, or were they coming from smaller players? You know, any sort of characteristics there. And what level of upsells did you have in terms of identity and post-hire for those new contracts that are rolling on? Great, great questions, Mark. Thank you. So I think first of all, you know, the deals that we're seeing in Q4, that we're relying on to return to our 7%-8% long-term target by the end of the year, are deals that are already implemented or implementing as we speak and ramping up. You know, they don't come on necessarily big bang on day one, so they are in the continued ramp-up and implementation phase. So we're pleased about that and feel confident there. In terms of where we win deals from, it's consistent with what we've said before. You know, we win some deals always from the other big players, but, you know, we also tend to win a lot of deals from that mid-tier and smaller players, particularly as clients are looking for broader sets of services, consolidating, you know, to a single vendor, or looking for better technology and better interfaces for their teams. So we're very pleased with you know with those wins continuing. You know, we don't talk about wins in a quarter ever. We always talk about the actual revenues as they're appearing, because there's a time lag between winning a deal and when you see those revenues, and you also never quite know exactly how accurate the revenues are gonna be from what a client gives you. So we're giving you that information. But again, I think we're in a strong industry. There's a lot of opportunity, and the trends are really in the favor of us and other bigger players who are able to provide those services that some of the smaller and mid-tiers can't provide. So we continue to win deals from competitors of all sizes, including our public peers. But, you know, we continue to see great opportunity to consolidate and take share downmarket in the smaller and mid-tier players. Did you see an increasing adoption of identity and post-hire among those new contracts that you just recently signed and that are in implementation right now? Yeah, we continue to see the strong trends we've been seeing. You know, more than half of those deals continue to contain identity in particular. You know, post-hire is typically more of an upsell that's separate. It's not usually part of the same package because the package itself is to get the person on board, and then the monitoring is across an entire employee base, not just the people being hired typically. So those are usually a separate upsell that would occur, but we are seeing the pipeline for those continue to grow as we shared in the remarks as well as the deals to close. And in particular, in the gig industry, we're seeing a lot of opportunity on that post-hire side, in addition to the areas like healthcare and financial services that have always had that as part of their service. Terrific. Thank you. Thank you. Our next question comes from Manav Patnaik at Barclays. Please go ahead. Hi, good morning. This is Ronan Kennedy on for Manav. Thank you for taking my question. Josh, or and/or Peter, could I ask for your, your take on the macro versus expectations? I think it was consistent with regards to the choppiness. I know you referred it to cyclicality coming and going, but just kind of your take on the macro versus expectations, what we're seeing in the BLS reports, whether it be quits, hires, churn, employment, and what, you know, what can happen from here under varying scenarios? Yeah, thanks, Ronan. I'll go first, and then Josh or Peter wants to jump in. So I think, you know, what we're seeing was the macro itself actually get a little bit worse in the back half of Q3 than what we expected. And that was based on what we had been seeing in early August, as we had shared on the call, because we had seen June and July have kind of a drop-off as well. And then what we have seen continue through October till now is consistent with what we saw at the back half of Q3, which is why we felt that it was prudent and necessary to change the guidance as we did, to reflect our new expectations of that continued trend through the rest of the quarter. So, you know, I think for us, we are happy to get to the point where we have now gotten through our toughest comps, and to be at the beginning of where we saw the weakness starting last year. So, you know, that's really what's reflected in the revised guide and why we do feel like we'll see growth in Q4. I think if you think about the guidance at the midpoint of the range versus the previous guidance, right? We had, you know, called one-fourth of that impact Q3, and then we've taken the remaining 3/4 of that, and it's impacting Q4, resulting in a lower guide, all driven by change in base growth assumption. Okay, thank you. With regards to Project Nucleus, the cost optimization initiatives, et cetera, if you could talk about that as a lever and further levers that could potentially be pulled if things were to decelerate further, and how kind of you would change... You know, if you would make any changes in go-to-market or look to execute more M&A, et cetera, you know, in a same type of question, varying scenarios going forward. Sure. So, so I think first of all, we're pleased with where we are on our cost optimization efforts in terms of achieving the $10 million in savings that that we had targeted for this year and expect to achieve that, as well as the $25 million dollar, you know, run rate save that we expect to have, you know, as we go into next year, and expect to fully achieve those, you know, somewhere in the beginning part of the year. In terms of additional levers, as I mentioned in the prepared remarks, you know, we continue to see additional opportunities for automation, opportunities around AI, which I'm happy to get into more detail on. I think, you know, one thing to remember, of course, is that we do have highly variable costs in our cost of goods sold. In particular, you know, 80% of those are just data costs that we don't incur if we don't actually fulfill the service, so those come out automatically. We are much more flexible than we were a year ago in terms of managing our staffing levels as well on the cost of goods sold, as we talked about in terms of not having to run a surplus. So we feel like on the COGS, we're able to react quickly and pull those costs out at this point. And in terms of SG&A, I think we've shown through this year that we continue to find opportunities. We continue to have levers that we think we can pull. I don't know that it would be dramatic changes to the go-to-market approach, because I think we feel like that approach really benefits us in terms of new business wins, retention rates, cross-sell and upsell capabilities. So we're pleased with where we are. We've already made some consolidation and changes around that, as we talked about earlier this year. But I think that we continue to have more room in other areas of SG&A that we may take action on regardless of whether things deteriorate or not. And we'll, you know, be looking forward to talking about that with you as we close out the year and have our Q4 call. Maybe I would just add two points just to what Josh shared. First is, we have a whole new set of capabilities as a result of launching Project Nucleus in terms of in-house expertise on end-to-end process improvement, automation and AI. So we've got, you know, the whole organization focused on how do we serve our clients better, and how do we do that more efficiently. So I think that will continue to pay dividends for years to come. And then I think the other thing to point out is on an adjusted OpEx basis, so adjusted for stock comp and other things like that, you know, we expect Q4 to be the lowest level of OpEx expense for the company in the last eight quarters, and that has trended down every quarter of 2023. So you can definitely see the impact of the cost optimization initiatives in our numbers, and it's also why, you know, we are pleased to deliver a margin of 26.3% for the quarter despite the overall reduction. Thank you very much. Appreciate it. Our next question comes from Toni Kaplan at Morgan Stanley. Please go ahead. Thank you very much. Wanted to start off asking about the partnership with Konfir, offering the instant employment verification in the U.K. I know you mentioned it could be rolled out to other international markets. I guess, what's the barrier to bringing it to the U.S. as well? And is it only for certain types of jobs, or is it more broad than that? You know, it just sounds like an interesting product. Thanks, Toni. Yeah, we're excited about this partnership. I think we've talked really since the time of the IPO about looking for more chances to automate, and in particular, to be able to do that in the verification space and/or in the drug and health space, as we felt that, particularly in the U.S., on the crim side, you know, we had achieved very high levels of automation. And so, the opportunity with Konfir is something we're very excited about because it allows us to take a process that today, for us, is very manual, and to actually automate that. It's something that, you know, based on the data that they pull today, you know, they're connected and operational in the U.K. and Ireland, so we know that we can launch there right away. We have discussed with them and commitment from them to roll out in other markets along the lines of our prioritization. We do, of course, have automation in this space in the U.S. Obviously, you know, the price tag at The Work Number is quite high, but this is something where, you know, we continue to look for those opportunities, and we think it's something that could be disruptive over time in the U.S. and that we would love to be able to implement if the opportunity presents itself. But for now, we're excited that it gives us the chance to automate and drive our costs down outside the U.S., starting with the U.K., which is, you know, our most significant market outside of the U.S., and then to expand from there. Yep, that sounds great. I wanted to ask about sort of thinking about 2024, I guess maybe first, like, from client conversations about hiring plans and things like that, you know, how, how you're expecting an improvement in the macro, or if maybe you're not, just how are you thinking about 2024? And, you know, what, what do you think are, outside of the macro, sort of the biggest tailwinds that you have going into 2024, and obviously, ex the easier comps? Sure. Well, thanks, Toni. I think, you know, first of all, you know, we're not in a position to really talk about 2024 or give guidance around that yet. You know, we'll be doing that at the end of the year. Obviously, the macro, in our view, changed from our expectations for the remainder of this year, so I definitely don't wanna, you know, get out there on 2024 until we have a better read. You know, our clients are right now in their planning processes for next year. What we're hearing from them is that this year's planning process is more of a return to normal planning. That doesn't mean what their levels of hiring will be, but last year, as you'll recall, at this point, they were all in a wait-and-see mode as the macro had changed so dramatically on them so quickly that they were not in a position to actually know what their hiring trends were gonna be until much later. So we're hearing a return to a normal planning process. That's actually consistent with Sterling's own experience and how we're starting to think about and plan for next year. In terms of hiring levels and the tailwinds we have, I know you said ex the macro, but ex the comps, but obviously, the comps are one big piece going into next year that will benefit us. The second thing I would say is that, as we mentioned in our prepared remarks and have said all year, we expect to return to our long-term target on, new business growth. We consider that to also be a tailwind as we look into next year. And the much stronger pipelines that we're seeing, and close rates and deal sizes, all of which I mentioned in the remarks, so those things that are in our control, we think those give us, good tailwinds going into next year as well. But in terms of the base growth assumptions, you know, we're gonna have to wait and come back on that, when we set guidance, on the Q4 call. But, you know, we are looking at Q4 this year showing growth, and so we're happy about that. Super. Thank you. Our next question comes from Andrew Nicholas, from William Blair. Please go ahead. Taking my questions. I think the commentary around your appetite for M&A was pretty consistent with how you've talked about it the past couple years. I'm just curious on how kind of private company market valuations are looking to you. Has there been, you know, a reset there in terms of, you know, potential targets, expectations for multiples, or are they still relatively elevated, you know, compared to your own expectation? Yeah, so I think we're seeing a couple things. You know, one, I think we're seeing in the U.S., those, those private entities, unless someone is really eager to get out, we're not seeing a big change in those valuations yet. So that's something that, you know, does temper, our ability to do kind of a U.S. straight up tuck-in. I think where we are seeing some, some interesting opportunities, however, is outside the U.S., we are seeing those valuations become a bit more attractive, and so I don't wanna specify regions because I don't wanna, necessarily flag for our competitors where we might be looking right now. But we are seeing some more realistic valuations outside the U.S. in areas that, that could be interesting for us, as tuck-ins in markets where we have a presence. I think the other thing that we're seeing is opportunities now, as we have finished Project Ignite and really taken a hard look at our costs to look at the supply chain and where there may be some opportunity to roll up opportunities, as I mentioned, in my prepared remarks. And in those areas, we are seeing valuations that are a little bit more interesting and realistic because those are not the same valuation models as you would see in a CRA like us. Got it. No, that, that's helpful. And then, Josh, I think you alluded to it in the answer to one of your earlier questions, but would love an update on AI-specific opportunities in automation and any kind of new learnings over the past couple of months as you guys continue to invest in that opportunity. Thank you. Yeah, thanks, Andrew. You know, we, we are actually in the process now of implementing some of our first efforts here. And I'll highlight three where we're seeing really good opportunities. One is in the advanced OCR, being able to capture information off documents using AI. So we do have our researchers who spend a lot of time actually having to look at physical documents, pull information and put that into reports. So we're seeing intelligent document extraction as a really exciting opportunity for us in terms of both using a combination of bots and AI to do that. That is, that is exciting, and that's something that we think could drive both efficiency and cost savings that could be significant. The second area, I think is consistent with what we've talked about before in terms of that interaction, particularly with the candidates, but also with clients, and we're seeing great opportunities around AI-powered chatbots. Again, behind our firewall in technology that we are able to maintain and control in-house, generally using tools that are available in AWS or Azure, depending on the capability. So we're excited about those AI chatbot capabilities as well, which we've been testing for the last few months. Finally, we're seeing an opportunity around pro-productivity improvements for our developers by using AI, and we've been doing POCs on that that are really interesting and exciting for us in being able to make our developers more productive, which we think over time can drive down some of our tech and product costs if we're able to do that effectively. So those are the three areas right now we're most focused on. There are more, but these are the ones that we think, you know, give us the best opportunity to implement the quickest and could give us the most benefit early on from the ones that we've seen and tested. Hopefully, that helps. It does. Thank you. Our next question comes from George Tong at Goldman Sachs. Please go ahead. George, we can't hear you. I don't know if... Can you hear me now? We can't hear George. Yeah, I hear that. Sorry. Can you hear me now? Yes, I hear you now, George. Hi. Okay, great. Sorry about that. So you noted that the price tag at The Work Number is quite high. Can you provide a sense of how much pricing has gone up by at The Work Number over the past few years, and what impact those increases are having on the business? Yeah. So I don't wanna comment on their specific prices. I think what I would say, and it's consistent with what I've said before, you know, they offer a good product, when we are able to fulfill through them and not have to do any other work, that's something that allows us to give reliable results very quickly, and freshly. We don't think their pricing is fair market pricing, but, you know, that is the reality. You know, they have afforded opportunities based on volume commitments, not just on The Work Number, but on everything we do with Equifax, as well as by being top of waterfall, to have much lower prices than might be on the list or otherwise, you know, visible or available. So we think that we're able to give our clients the best possible price for The Work Number relative to really all other competitors, based on the approach we've taken and the partnership that we have been able to strike, you know, with Equifax. I think, you know, as we've shared before, our largest client with The Work Number is actually quite small on an overall annualized basis relative to what, you know, we believe some of our competitors may have. So we have not had material pushback. Obviously, our clients don't like the price increases, but we haven't had anybody looking to leave or stop the service based on where the prices are, in terms of delivering the overall verification service that we deliver. Got it. That's helpful. And then can you provide some color on how performance among SMBs might be different than enterprises in terms of volumes, base volumes, and overall growth trends? Yeah, you know, we don't break out the performance of our enterprise clients versus our SMB clients. You know, we think that we, we look at our numbers. So for example, our Q3 gross retention rate at 96% reflects all of our clients, large and small. We would expect the smaller clients to, to have a larger part in that, as they tend to, you know, move around more quickly, and it's easier for them to do so. They're typically not integrated. And as you know, we have over 60% of our volumes integrated. That's typically not gonna be those smaller players. And also, I would say that from our perspective, the cost of acquisition of those smaller clients is something that's unattractive, so it's not been a focus area for us. The new business generation that we've been looking at, the cross-sell, upsell that we focus on, it's all in the enterprise category for us, but we don't break out separately the performance or the trends by those client sets. Got it. Thank you. Our next question comes from Andrew Steinerman from JP Morgan. Please go ahead. Hi, Josh. When you say, new client growth gets back to 7%-8%, the typical growth range for you by the year-end, do you mean that it will be 7%-8% in the fourth quarter, or do you really mean sort of like in the month of December and helping 2024? And let me just ask my second question, so it's all together. My question is, at the current level of base revenue activity, if it continued forward into next year, seasonally adjusting, obviously, for the different seasons, would the easy comps be enough to create positive base revenue growth just at current levels of macro? Okay. Let me start, I guess, with your first question. I think we've been very specific all year that it's by the end of the year. So we do think it's possible that it would be at 7% or 8% in Q4. It's gonna depend on the ramp of the clients that are ramping right now, but certainly with an exit velocity, we would expect to be there. I think as Peter shared, Q3 was our strongest quarter for new business generation, as well on dollars and as a percentage. And actually, even with the weaker macro than we expected in September, that was our strongest month as well. So the trends are in the right direction. They would support the 7%-8% in quarter or by end of year. We haven't, you know, specified that, so your, your question is spot on in terms of the language we used. I want to acknowledge that. In terms of the, the base trends, I think that, you know, one way to think about it is, you know, what we're giving you for Q4, and obviously Q4 of last year was the first quarter where we saw a significant decline in the base, the first time, honestly, since 2020, that we saw that. We saw that decline get larger in base growth, you know, through the first three quarters of this year, largely based on the comps, more than anything else. So, you know, if you kind of flow that through and look at consistent levels against that, you know, we expect the Q4 number that we're putting out there still has, you know, base declines in it because the Q4 of last year was not as significant a base decline as what we've seen through the first three quarters of this year. So you can kind of flow that through and draw your own assumptions. But, you know, we'll provide more color on that on our Q4 call. That's fair, Josh. Thank you very much. Our next question comes from Kyle Peterson from Needham. Please go ahead. Hello, Kyle, can we just check your line is not on mute? Unfortunately, we're not getting anything- Hello. From your line, Kyle, so we'll have to move on to the next quest. Oh, hello, we can hear you now. Hi. Yeah, sorry, guys. Good morning. Thanks for taking the questions. Wanted to touch on the base growth softness that you guys saw as the quarter progressed. You know, were there any key verticals or geographies that, you know, drove that weakness or had an outsized impact, or was it truly, you know, pretty broad-based across the business? Hey, Kyle. Good morning. It's Peter. So I would say that it was broad-based across the business. Then in terms of kind of our, you know, top performers, you know, they've been consistent with what we've been all year. Healthcare and industrials, you know, kind of really led the U.S., and EMEA led international. Got it... We may have lost you, Kyle. Can you guys hear me? Now I hear you again. Okay, thanks. Yeah, just a follow-up. You know, would you guys consider upping, you know, the buybacks here? You guys have, you know, pretty healthy liquidity position, you know, obviously to, you know, help to defend the stock here, you know, especially since this seems to be more of a macro disruption rather than anything structural. Just wanted to get your thoughts on, you know, buybacks and capital deployment, you know, at these levels. Yeah, thanks, Kyle. So I think, you know, our view overall on our capital allocation has not changed. You know, our first and primary effort is to focus on investing in driving organic growth. We think that continues to benefit us in the new business generation across all upsells, so investing in things like identity and monitoring, those are important. You know, we think that that is the best thing that we can do to return, you know, shareholder value. I think the second thing has been M&A. I gave commentary on that to one of the earlier questions in terms of, you know, where we would prioritize. But again, we're not going to overpay in the CRA market for a tuck-in, given where we are right now, particularly in the U.S., as I mentioned earlier. Third is in, you know, returning value to shareholders, which we've done through buybacks. I think our view has been that we wanna make sure we're balancing both the great opportunity we have to invest in our stock at these very low prices, which we think do not accurately reflect the value of our company because of the challenging macro. So that is attractive, and that's why we've been doing our buybacks. However, you know, we are cautious to remain in our 2-3x leverage, as you see, at 2.4x, even with the acquisitions we've done and the buybacks we've done. So that's something that we are continuing to be committed to, absent some sort of a unicorn opportunity for a short period of time. Finally, I think our view on the buybacks is we want to make sure we balance the, the liquidity needs in our stock that is important to our investors, with our own opportunity to buy. And so we think we've been very prudent in our approach, and have not gotten to that point. And in fact, we were able to get that follow-on offering done when we did it, which has helped with that, with that, liquidity issue. And so we're committed to making sure we don't create a new liquidity issue. But, but will we look at doing more buybacks or less buybacks based on the macro, based on the stock price, based on, investor feedback? Absolutely. We always do that, and we'll definitely be taking a look at that over time. Makes sense. Thanks, guys. Our next question comes from Shlomo Rosenbaum from Stifel. Please go ahead. Hi, thank you for taking my questions. Hey, Josh, last quarter, you talked about numerous deals where you had line of sight to closing. Are things closing on the pacing that you had expected, or are things getting pushed out? Can you just talk about kind of the cadence of the deals? And then, just, you know, there was a comment made by a competitor about a takeaway in the quarter. They didn't specify who, but would you comment if there were either significant positive or negative takeaways amongst the top three that impacted you guys? Sure. So let me just start with the new deals ourselves. I think as we shared in the prepared remarks, we've closed more deals, larger deals, have a larger pipeline of advanced opportunities, and overall, have closed more in terms of expected dollar volume than we did last quarter, which was also higher than the quarter before. So all those trends are very strong. In terms of timing, it's playing out, you know, pretty much as we expected in terms of timing of closing deals. More importantly, I think, is the timing of ramping deals, which so far we've continued to see happen according to our expectations. Generally speaking, things always move a month here or there, up or down. But I think we've been generally accurate with those expectations from the last call. In terms of, you know, individual deals, we never comment on individual wins or individual losses from competitors. It's just a practice that we have, so I'm not going to be able to give specifics on that. What I will say is, you know, we did in Q3 get back to the 96% retention rate that we had had through last year, and we had been running at 95, so we were pleased to see that improvement. Again, just one point, but staying within our range. We expect to stay in our range next year. We see nothing that would change that. So hopefully, that gives you color on if there are any losses, which there always are, what those sizes are. You know, we don't talk on specific clients or specific deals. Thank you. Our last question comes from Jason Celino from KeyBanc. Please go ahead. Hi, good morning, Josh and Peter. This is actually Devin, on for Jason, today. Just one question from us. I also wanna ask about your pipeline. I know you mentioned, you know, it's still really strong, expecting deals to close. But just want to ask, you know, just given macro and companies kind of tightening their, their budget further, have you seen more companies may be more inclined to stay with their current providers that might have resulted in kind of no action from some of your opportunities in your pipeline lately? Yeah, thanks for the question. No, I think we're seeing, if anything, you know, more RFPs, as we mentioned last call. You know, that's why the pipeline's larger. We're continuing to see, you know, really good opportunities in all markets and all verticals around the world. So we haven't seen that trend. If anything, I think it would be the opposite, that they're more likely to want to move if that were true, particularly if they're unhappy with their current provider. You know, I think that our view overall is that those trends tend to benefit us and the other big players, because when people are looking to move, they're gonna see what we're able to provide and continue that consolidation trend around the larger players in the market who can offer better services, more services, and of course, we like our chances against the other guys as well. Great, thank you. We have no further questions on the call, so I'll hand back to the Sterling team to wrap up. Thank you all for joining us today, and we'll look forward to talking to you soon. Thank you. This concludes today's conference. Thank you all for joining. You may now disconnect.