ASGN IncorporatedASGNNYSE
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Kimberly Esterkin: Greetings, and welcome to the ASGN Incorporated Third Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press 0 on your telephone keypad. It is now my pleasure to introduce your host, Kimberly Esterkin of Investor Relations. Thank you. You may begin. Good afternoon. Thank you for joining us today for ASGN's third quarter 2025 conference call. With me are Theodore S. Hanson, Chief Executive Officer, Sadasivam Iyer, President, and Marie L. 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.micron.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 Theodore S. Hanson, Chief Executive Officer.
Theodore S. Hanson: Thank you, Kim, and thank you for joining ASGN's third quarter 2025 earnings call. ASGN delivered solid performance in the third quarter, with revenues reaching $1.01 billion and an adjusted EBITDA margin of 11.1%, both at the high end of our guidance ranges. Our IT consulting business continues to be a key growth driver, representing approximately 63% of total revenues in the third quarter, up from 58% in the same period last year. Commercial consulting bookings totaled $324 million, translating to a book-to-bill of 1.2 times on a trailing twelve-month basis. While bookings remain weighted towards renewals, we are seeing the volume of new lands grow as we take on more complex multi-capability engagements and assessment projects. In our federal segment, new contract awards totaled $461 million for the third quarter, or a book-to-bill of one times on a trailing twelve-month basis, and 1.5 times for the quarter. As anticipated, bookings increased in the third quarter, coinciding with the end of the government fiscal year. Federal contract backlog was approximately $3.1 billion at quarter-end, or a coverage ratio of 2.6 times the segment trailing twelve-month revenues. Although IT spending levels remain steady quarter to quarter, our commercial and government clients continue to acknowledge the importance of executing their key initiatives despite macroeconomic conditions. Strong quarterly bookings reflect the demand across our client base, and ongoing investment in AI highlights a significant commitment to digital advancement. Reflecting upon this ongoing trend, ISG highlighted on their third quarter 2025 index call that AI spending is not merely a passing fad but a fundamental replatforming of enterprise technology. We are witnessing this firsthand. We deploy a growing number of AI use cases on behalf of our client base and are witnessing an increasing volume of data and cloud initiatives flowing through our pipeline as clients prepare for their next phases of digital and AI growth. That said, even with this continued drive towards AI, the path to enterprise-wide AI adoption is not without its challenges. Organizational readiness and operational governance remain hurdles as companies work to streamline and integrate these new technologies into their stacks. In addition, many commercial enterprises and government agencies lack the skills and engineering talent needed to successfully deploy AI. This reality is driving greater reliance on IT service partners like ASGN that can offer the breadth and depth of capabilities needed. On the topic of specialized skill sets, we are actively tracking the potential changes to the H-1B visa application process and believe that any changes to the process will be an incremental positive to ASGN. To further illustrate the demand for our expertise, I would like to turn the call over to our president, Sadasivam Iyer.
Sadasivam Iyer: Thanks, Ted. It's great to speak with everyone this afternoon. Let me begin with an overview of our commercial segment industries. Our consumer and industrial accounts saw the greatest improvement in the third quarter, posting mid-teens growth year over year. This strong performance was driven by gains across our material utilities, industrial, consumer discretionary, and consumer staples clients. Healthcare was our second-best performing industry, up high single digits as compared to the year ago, to double-digit growth amongst our healthcare provider, pharmaceutical, and biotech clients. Financial services, TMT, and business services all experienced year-over-year declines. Looking sequentially, we saw growth in three of our five commercial industries. The healthcare industry saw the largest sequential growth and was led by our provider clients. Consumer and industrial accounts also posted modest sequential gains driven by our work with utility, materials, and consumer staples customers. In TMT, growth was supported by our e-commerce group, as well as incremental gains in telecom hardware and equipment accounts. Beyond these three industries, we continue to watch financial services closely as these customers are some of the largest spenders on IT. While our financial services revenues declined from the second quarter, new wins for the industry outpaced renewals in Q3, with much of this work in our federal segment slated to begin in Q4. We track our revenues across four customer types: defense and intelligence, national security, civilian, and other clients. In the third quarter, defense, intelligence, and national security accounts comprised approximately 70% of our total government revenues. Notably, national security revenues improved 12% year over year, driven by our work with the Department of Homeland Security. Looking ahead, we are encouraged by the future of our federal segment, particularly due to the increased defense budget under the one big beautiful bill, as well as the strong quarterly bookings that Ted highlighted earlier. Also of note, given the mission-critical nature of the work we perform, the government shutdown to date has had an immaterial impact on our operations. That said, we continue to stay very close to our clients and monitor what is a very dynamic situation. Let's now turn to our solutions capabilities. For the quarter, we saw an increase in projects focused on data and AI, application development and engineering, customer experience, and cybersecurity. I'd like to share a few examples of each. Beginning with our data and AI work. For a Fortune 500 managed care organization, we partnered to develop a centralized data supply chain platform leveraging Databricks, AWS, Snowflake, and MongoDB. Through this engagement, not only did we modernize our client's core data capabilities, but we also laid the groundwork for advanced AI and machine learning workflows that will enable our client to offer smarter, faster, and more efficient healthcare delivery. Our deep expertise in platforms like Databricks and Snowflake, along with our ability to tailor these solutions to each client's unique environment, truly sets ASGN apart in the marketplace. Additionally, our suite of AI-embedded developer productivity tools created for specific industry use cases provides a competitive edge. For example, when a global privately held hospitality company sought to modernize its loyalty application, our AI accelerators shortened the discovery phase by 25% and captured 40% more of the project's detailed requirements than traditional manual methods. This approach reduced project risk and laid a solid foundation for faster modernization of the new loyalty application. We're also building accelerators and custom AI solutions for our government clients. In the third quarter, we secured an extension with DHS to continue supporting the agency's enterprise data warehouse. Our team provides a range of data engineering, data science, and data analytics capabilities to DHS and is leveraging both commercial and our own custom-built AI solutions to advance DHS's mission-critical initiatives. Our data and AI work is closely aligned with the work we are conducting in our application development and engineering space. As an example, under the FBI's information technology supplies and support services contract, a recompete won during the third quarter, we're delivering enterprise-scale software development and application modernization services to help the FBI accelerate DNA analytics delivery across federal, state, and international partners. On the commercial side, with a leading US crop insurance provider, we secured our largest application engineering services contract to date. Our selection was based on our deep industry experience, proven accelerators for legacy modernization, and cost optimization through a blend of onshore, nearshore, and offshore delivery. This three-year contract will modernize policy administration, claims, and customer engagement platforms, enabling real-time data access and insights that enhance underwriting accuracy, claims efficiency, and customer experience. Using AI to reinvent customer experience represents a growing area within our creative digital solutions portfolio. For a Fortune 250 pharmaceutical company, we're leading a full-scale transformation of their in-house agency, reimagining how customer experience is delivered globally. Using our in-house agency excellence framework, we embedded Adobe-powered personalized and AI-driven operations into their workflows, combining translation, reasoning, and execution with human strategy and creativity. This project is one of our many customer experience projects that demonstrate in the AI era, human creativity isn't replaced; it's amplified with AI. Just as we help our clients elevate their own customer experiences, we strive to provide the highest level of service to our clients. This approach often helps us outpace the competition during the proposal process. For example, our cloud and infrastructure team recently replaced a long-standing incumbent as the new level three network support for a Fortune 500 athletic footwear and apparel company. Our deep understanding of this client's business needs was a key differentiator during the selection process. Now, as this retailer's highest level network support, our team of network engineers is responsible for everything from network triage, strategic decisions, and network optimization across the company's distribution centers, stores, and headquarters. Similarly, broader network protection or cyber remains in demand across our client base, particularly among our federal government customers. In the third quarter, we won a recompete contract with the US House of Representatives to support their 24 by 7 security operations team. As the House's first line of defense, our teams provide real-time network security monitoring, endpoint detection and analysis, and cyber incident response and reporting for more than 20,000 geographically dispersed endpoints. These are just a few of the many projects our commercial and government teams secured over the past three months. The breadth of this work underscores our deep industry expertise and engineering capabilities. It also highlights the growing strength of our ecosystem and alliance partnerships, all of which position our business for continued growth. With that, I'll turn the call over to our CFO, Marie Perry, to discuss ASGN's third-quarter segment performance and fourth-quarter guidance.
Marie L. Perry: Thanks, Shiv. For the third quarter, revenues totaled $1.01 billion, a decrease of 1.9% year over year but at the top end of our guidance expectations. Revenues from our commercial segment were $711.3 million, a decrease of 1% compared to the prior year. Assignment revenues totaled $376.4 million, a decrease of 13.2% year over year, reflecting continued softness in portions of our commercial segment that are more sensitive to changes in macroeconomic cycles. Revenue from our commercial consulting, the largest of our high-margin revenue streams, totaled $334.9 million, an increase of 17.5% year over year. Excluding Toplot, which we acquired in March 2025, consulting revenues improved mid-single digits year over year. Revenues from our federal government segment were $300.1 million, a decrease of 3.9% year over year. Turning to margins, gross margin for 2025 was 29.4%, an increase of 30 basis points from the third quarter of last year. Gross margins for our commercial segment were 33.2%, up 40 basis points year over year, reflecting a higher mix of consulting revenues. Gross margin from our federal government segment was 20.3%, a decline of 40 basis points year over year due to the loss of higher-margin work related to Doge and the completion of certain projects. SG&A for the quarter was $212.2 million, compared to $207.5 million in 2024. SG&A expenses included $4.2 million in acquisition, integration, and strategic planning expenses. These items were not included in our previously announced guidance estimates. For the third quarter, net income was $38.1 million. Adjusted EBITDA was $112.6 million, and adjusted EBITDA margin was 11.1%. Also, at quarter-end, cash and cash equivalents were $126.5 million, and we had approximately $460 million available on our $500 million senior secured revolver. Our net leverage ratio was 2.4 times at the end of the quarter. Our strong free cash flow provides a strategic advantage that enables ASGN to fund growth initiatives, invest in strategic M&A, and opportunistically repurchase shares, all while maintaining a healthy balance sheet. Free cash flow was $72 million for the third quarter, a conversion rate of approximately 64% of adjusted EBITDA, well within our target of 60 to 65% conversion. We deployed roughly $46 million of free cash flow to repurchase 0.9 million shares at an average share price of $51.46. At quarter-end, we had approximately $423 million remaining under our $750 million share repurchase authorization. Turning to guidance, our financial estimates for 2025 are set forth in our earnings release and supplemental materials. These estimates are based on current market conditions and assume no further deterioration in the markets we serve. In addition, estimates do not include any acquisition, integration, and strategic planning expenses. Guidance also assumes sixty-one billable days in the fourth quarter, which is the same number of billable days as the year-ago period and two and a half days fewer than the third quarter. We typically see a larger sequential decline in billable days between the third and the fourth quarter due to holidays. The fourth quarter had the lowest number of quarterly billable days. In terms of our business segment, on a same billable day basis, our estimates assume a slight sequential improvement in our commercial segment from the third to the fourth quarter. For 2025, we are estimating revenues of $960 million to $980 million, net income of $32.1 million to $35.7 million, adjusted EBITDA of $102 million to $107 million, and adjusted EBITDA margin of 10.6% to 10.9%. Thank you. I'll now turn the call back over to Ted.
Theodore S. Hanson: Thanks, Marie. As we progress through 2025, I'm genuinely excited about the path ahead and eager to share more about our vision for sustainable growth and long-term value creation. On November 20, we'll be hosting an investor day in New York City, where we'll offer an in-depth look at our strategy and unveil new three-year financial targets. I encourage you to listen to the webcast and hear directly from our expanded leadership team about the next phase of our growth journey. A link to register for the webcast is available on our Investor Relations website. This concludes our prepared remarks. I want to express my deep gratitude to every one of our employees for your steadfast dedication throughout this past quarter. Your hard work has been instrumental in strengthening our client partnerships and driving our continued move into high-value technology and engineering solutions. With that, we'll open the call to questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions.
Jeffrey Marc Silber: Our first question comes from the line of Jeffrey Marc Silber with BMO Capital Markets. Please proceed with your question.
Theodore S. Hanson: Hey. Thank you so much. This is Ryan on for Jeff. Just wanted to dig a little bit more into the H-1B situation. Particularly, what gives you the confidence that you're a beneficiary there, and how do you see the situation evolving in the coming months based on just your conversations with clientele? Thank you.
Theodore S. Hanson: Brian, thank you for the question. I think, you know, from our standpoint, almost all of our delivery is onshore, nearshore. We have very little presence, you know, most of the H-1Bs are coming from India. At the end of the day, anything that tightens the program, whether it's, you know, enforcing all the regulations the right way, maybe making the program a little smaller and tougher to get in, increasing the fee, which ultimately would, you know, tighten the program. All those put a focus back on onshore and nearshore technical, you know, skill capabilities, and that's really where we sit. We're at the intersection there. And I think it just makes our services that much more important to the client. Without diminishing anything, if you will, on the other side. And the other side of this, you know, at the end of the day is, you know, better enforcement of those regulations. It's gonna create also pricing improvements because a lot of the things that are going on there in terms of the way the program is used to skirt, you know, certain situations where the client would wanna pay a prevailing bill rate. Again, it just highlights our services and our core capabilities.
Jeffrey Marc Silber: Great. Thank you very much. And just one more follow-up. On the federal government. Heard the comments that there's a little bit of caution factored into the fourth quarter guidance. Was wondering if any of that is just any lingering DOGE stuff or it's mostly just on the government shutdown and the longevity of that. Thank you.
Theodore S. Hanson: Yep. Nothing on the DOGE side. I think it's just around the shutdown. You know, the government shutdown does two things. One is, you know, certain nonessential activities get furloughed, and, you know, as we mentioned in the script, as Marie said, it's really immaterial to us right now at this point. But the other thing it does is slow down the cycle of new awards and the ability to ramp up on awards you've either just won or may win. And so I think all those things put together, you know, while we think it's, you know, not a mid or long-term blip, but could cause some caution here in the near term. So
Jeffrey Marc Silber: Thank you. Thank you.
Operator: Our next question comes from the line of Tobey O'Brien Sommer with Truist Securities. Please proceed with your question.
Tobey O'Brien Sommer: Thank you. Let me start off by following up on that government shutdown question. Do you assume that the shutdown extends through the fourth quarter and, you know, maybe more specifically, how long do you assume it lasts?
Theodore S. Hanson: Well, we didn't really make an assumption on the length of it, Toby. But it did keep us from stretching in the forecast, if you will. So I don't think we, because it's an immaterial impact at this point, we didn't cut numbers, if you will, but we did say this is not a quarter to stretch. So I think that's probably a better context for it.
Tobey O'Brien Sommer: Sure. But immaterial at this point, it's the "at this point" part that we're interested in. Okay. Yeah. Right. Within commercial consulting, which software implementation softwares are you implementing that are experiencing the best demand right now? And where, when you look at your portfolio of services and how you map out against your customers and, frankly, the available software market in terms of implementations, where might you want to add capability to be able to participate in those other areas?
Sadasivam Iyer: Oh, it's a great question. So the areas that, as we called out in the, we're seeing continued demand are in, you know, data and AI. Clearly in things like Snowflake and Databricks, where we're actually actively partnering. We continue to see active demand on some of our enterprise platforms. So you look at Workday with Toplot or even with GlideFast and ServiceNow, we're seeing an uptick in demand in both of those areas. We see continued demand on the cloud side, both from a migration perspective as well as from a custom app development perspective. We continue to ramp up on our Salesforce capabilities because we do see Salesforce as an active player in both the agentic world and also in the experience world. So, Tobey, really, that's where we're seeing continued demand. So I think the partnerships that we've lined up ourselves against are very much in line with where we see our clients continuing to invest in.
Tobey O'Brien Sommer: And then, just to anticipate your investor day but not steal all the thunder, would a feature of the next several years, do you expect commercial IT consulting to continue to be a larger percentage of total company sales and therefore a driver of margin expansion over time?
Theodore S. Hanson: Absolutely. Even if you look at this quarter, I mean, despite, you know, maybe a little contribution, you know, more in federal towards the full quarter than we expected, slightly. We, and still the same state of affairs with high-margin services like perm placement and creative, you saw our sequential margin here increase about 70 basis points, and that's really due to the strength in commercial consulting. And so I think that's been the driver of margin, will continue to be the driver of margin. It's going to be where we're allocating capital. Obviously, we'll talk more about that in the Investor Day. So it's definitely an underlying pillar here of the strategic plan.
Tobey O'Brien Sommer: Thank you.
Sadasivam Iyer: Thank you.
Tobey O'Brien Sommer: Thank you.
Operator: Our next question comes from the line of Jason Daniel Haas with Wells Fargo. Please proceed with your question.
Jason Daniel Haas: Hey. Good afternoon. Thanks for taking my questions. There's been some headlines recently about companies not seeing a great ROI on many of the AI projects that they've undertaken. So I was curious if you could weigh in on that, if that's something you're hearing from your customers. And, you know, where can you help on, if that's the case, where can you help, you know, where's the roadblock? What can you guys do to help companies, you know, see a better ROI on these projects? Thank you.
Sadasivam Iyer: Look. I think there are multiple reasons why the ROI isn't materializing. Right? So I think, let me start by saying that we are hearing that, and clients are doing a lot of proofs of concepts and, you know, pilots around this. You know, almost 70% of what they're trying requires a deeper level of integration into their architectures. That's sort of one. Second, many of them have challenges with the data and the way their data is lining up. Right? The third is it requires integration of these, whatever they're doing, with the workflows that they have, and the logic of these workflows typically sits within enterprise platforms. So our view on this is the fastest path to ROI at the moment, where with agentic AI and agents, is really around harnessing the core capability of those platforms around which those workflows are built. Right? Because, you know, despite all the marketing hype that you hear about, you know, end-to-end process automation and multi-platform AI orchestration, we're simply not seeing the returns on those things. So, really, the challenges are all around, and, of course, that's a big part of it also is technical talent. So the challenge is for technical talent, the complexity of integrating these things into their architectures, data, and then the fourth thing is just the ability to make these work with complex workflows. The logic for which is embedded within the enterprise platform. So that's the fastest path to ROI in our opinion.
Jason Daniel Haas: Hey. Thank you. That's great color. Sounds like a great opportunity. And then as a follow-up, I wanted to switch over to the federal government segment. Sounds like there's some moving pieces there with the shutdown, maybe, you know, potentially turning into a headwind at some point. But I'm curious about the one big beautiful bill. And, you know, to what extent has that started to help the bookings that you're seeing, and over what time frame could you see more benefits, or at what point do those turn into revenue? If you could just give some more color on the timing of how that could help that segment, that'd be really helpful. Thank you.
Theodore S. Hanson: Yeah. Look. I think that in the areas where we play, we're about 75% of our business in defense and intel and national security. Those are the areas that are gonna get the biggest increase from what was passed in the big beautiful bill. Gonna have to get past this shutdown and, you know, subsequent continuing resolution to a final budget, which we hope will happen sooner than later. But once we get to that point, let me, let's just say it's sometime in the early first quarter, end of this year, then those agencies will be funded at these higher levels. So I think really in the first half of next year, you know, subsequent to that, you're gonna see those things begin to get competed, awarded, and out on the street and really contribute to revenues probably the midpoint or second half of next year.
Jason Daniel Haas: That's great. Very helpful. Thank you.
Sadasivam Iyer: Thank you.
Operator: Our next question comes from the line of Surinder Singh Thind with Jefferies. Please proceed with your question.
Surinder Singh Thind: Thank you. A question about the staffing business versus the consulting business. Obviously, we're seeing some good growth on the consulting side on an organic basis. But it seems like there's still some challenges on the staffing side. How would you characterize that in the context of the current environment? Is this a situation where maybe complexity is requiring more outside expertise and maybe less willingness to augment internal staff, or how should we think about that? And is that something that with, you know, increased complexity in the tech stack, that trend just kinda continues from here?
Sadasivam Iyer: Look, Surinder, there are a few things. Right? Let me start by saying that, you know, the staffing business for us as we look at our numbers has been stable. Year on year, obviously, we're declining. But from a sequential basis, you know, our leading indicators are relatively stable. But I think there are multiple dynamics at play here. Right? The first is clients, our customers, are looking to partners to drive to outcomes. And really start to think about how do we drive outcomes, how do we drive deliverables. So the trend is the con that we see a continued shift in buyer behaviors where partners are looked at more to as partners who drive value and outcomes versus simply augmentation. And, you know, from our vantage point, that's a trend that is a benefit for us on the consulting side, and we're obviously, as you can see, benefiting from it. But it creates headwinds on the staffing side. And, you know, Ted can opine on this, but I don't see that buying behavior shifting tremendously.
Theodore S. Hanson: I think especially, Surinder, in today's macroeconomic environment, if the client's really gonna invest in something, they want a short time to value. Meaning they want an outcome. They want it in as soon as they possibly can. They're really focused on total cost of ownership. And, you know, getting to a certain outcome if they're gonna green light something. So I think we see just a higher level of rigor around that from clients than we've ever seen before. And part of that is because of the increasing cost within their IT environments. And part of that is because they're wary around the macroeconomic backdrop here. And concern about where their business may go in the future.
Surinder Singh Thind: That's helpful. On the general side, can you maybe talk about the cost reimbursable contracts? The percentage there continues to trend higher. Back in your peak levels. Can you talk about what's driving the change? And its impact on margins? Because it's interesting when I look at the federal margins, the gross margins, those were up pretty materially quarter over quarter.
Theodore S. Hanson: Yes. So we're really not seeing an impact on margins from that. I think that's just the natural ebb and flow of certain contracts ending and certain contracts being won during the quarter and subsequent quarters. I think overall, the government is gonna be more focused on fixed-price outcome-based work, but, you know, just naturally here, we've seen a slight tick up in the cost plus, and I think that's mostly because of either the prior DOGE activities, which, you know, some of the work that was started was fixed-price work, and also, you know, just the natural ebb and flow of what's won and what's completed.
Marie L. Perry: And Surinder, remember, last quarter we had a surge in license revenue on the federal side. And so we talked about that. And so when you kinda look at Q3 federal margins, they're really back to their kind of more normal state.
Surinder Singh Thind: Got it. Thank you.
Sadasivam Iyer: Thank you.
Operator: Our next question comes from the line of Alexander J. Sinatra with Baird. Please proceed with your question.
Alexander J. Sinatra: Hi. I'm on for Mark Marcon. I was just wondering, you know, you went through a couple of big projects. I was wondering if you could describe who you're competing against to get those big projects and how the competitive dynamics have maybe changed. Things on pricing. And then also on the Toplot and GlideFast side, who do you run into and, you know, is pricing working there as well?
Sadasivam Iyer: Look. I think, you know, it varies by client, but, you know, a lot of these are with our larger clients. And you would find that the people we run into typically are the competitors that you would expect. A combination of Accenture or the Big Four, in some cases, the India-based pure plays. Certain platforms, also smaller competitors we run into. So it's the traditional set that you would expect from these clients. Right? On these clients. And we're seeing pricing both from a GlideFast side and a Toplot side really hold up. We're not seeing pricing pressures on the work that we're doing. Partly because of just the quality of what we're doing. And sort of our approach to how we do these things, which is very much around assets and accelerators that we bring, sort of are truly different from what you would see. So most of the competitors are the standard competitors that you would expect in any of these large clients.
Alexander J. Sinatra: Gotcha. Thank you. And then I was also wondering, on the Mexican facility side, has that been impacted at all by the political climate and just kind of what you're looking at there going into the future?
Sadasivam Iyer: No. Not at all. Not at all. It has no impact.
Alexander J. Sinatra: Alright. Thank you.
Marie L. Perry: Thank you.
Operator: Our next question comes from the line of Maggie Nolan with William Blair. Please proceed with your question.
Maggie Nolan: Thank you. Maybe a slightly different angle on the pricing question. As it pertains to accelerators. As you're incorporating more and more of these into the development process, are there active discussions about changes in pricing related to this? Or if not, do you expect that maybe to be a discussion point in the future?
Sadasivam Iyer: Great question, Maggie. We are exploring those opportunities, but we're not seeing a big uptick today. Right now, these assets and accelerators are really allowing us to deliver work more rapidly, more effectively, as I mentioned in, you know, one of the examples I gave about sort of this whole code legacy code modernization where we're able to do things 25% faster and gives us better quality assurance. Now, as these assets and accelerators evolve and mature, we have the opportunity to position some of these on a more stand-alone basis. I mean, we have some good examples. We have something called Pathfinder, which is an AI-driven cybersecurity product, which we've invested in. Which we are actively engaged in conversations about pricing differently. More, you know, maybe on a product basis. But those are still early days.
Maggie Nolan: Thank you. And then it seems like some momentum is building on the commercial consulting side. Could you maybe comment on whether you think that's sustainable? What are the drivers there? You know, is this more of a point in time or a potential trend on a multi-quarter basis? Thank you.
Sadasivam Iyer: No. We actually see it sustaining and continuing, but I don't wanna make that a broad-based statement. We see that sustaining and continuing in specific areas where we see client investment being directed. So whether it's data and AI, whether it's custom engineering, whether it's some of the platforms that I alluded to. Right? So and we've been very, very thoughtful and focused on those areas where we see the growth and the market opportunity happening. Right? So I think that's how I would characterize it, Maggie. We do see continued momentum in that space. Because, you know, all the work that's happening and AI is a big, big tailwind, which is driving a lot of work for us, whether it be data, whether it be cloud, whether it be cybersecurity, whether it be, you know, integration associated with putting them and getting it to work in the environments that our clients have.
Theodore S. Hanson: I would add to that just to even think about a platform like Workday, which is gonna be a leader in agentic AI. I think customers more and more are thinking, hey, you know, I've sat on my legacy systems here for many years, but I'm not gonna get to take advantage of agentic AI if I don't have modern enterprise, you know, platforms in my environment, like a Workday or ServiceNow or Salesforce. Or right on down the list.
Maggie Nolan: That's helpful. Thank you. Thank you.
Sadasivam Iyer: Thank you.
Operator: And, ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the floor back to CEO, Theodore S. Hanson, for closing remarks.
Theodore S. Hanson: Well, thank you for being here this evening to talk about our third-quarter results, and we look forward to speaking with you in the first quarter on our fourth-quarter results. And I will remind you as well that we have our Investor Day on November 20. And so we look forward to being with you if you can be present with us in New York City. Have a great evening.
Operator: Thank you. And this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.