James DeVries: Yes. Thanks for the question. I’ll make a couple of comments. I think Jeff has some things to share as well. I think most of the challenge in the macro environment, we’re in a position to manage. We’ve managed inflationary pressure, from a wages benefit supply chain perspective. Labor is in great shape. We’re at a five-year low for employee turnover. One area that presents some challenges for us, some headwinds, from a gross adds perspective is fewer relocations. And that’s very real and puts pressure on gross adds. Of course, that’s a positive on the retention front. But I think relocation is probably the most pronounced at least from my perspective, in terms of macro impact on the business.
Jeffrey Likosar: Yes. And I would add in that context, it’s not materially different from what we expected entering the year. Our full year guidance, we noted we expected our SAC spending to be approximately flat, and that goes with an environment where we’re not deploying as much SAC, because of some of those challenging conditions. I’d emphasize that we will remain disciplined in deploying SAC in places, and across opportunities in different channels, and methods of acquiring customers that generate strong economic returns, and that will continue to be our focus. And we’re always seeking to balance all of our objectives, but we’re specifically focused on generating cash, as we laid out in our original guidance, and as we did in the first quarter.
Ronan Kennedy: Got it. Thank you. And then, can I just confirm how the day service – or service discontinuations of the 31 past days are trending?
James DeVries: Yes. So the – I’ll give you a broader picture, Ronan, of attrition overall. So, we ticked up from 12.9% at year-end to 13.1%, March quarter end. We expect April will end at 13%. So coming down just a bit. Year-over-year, we’re a little worse for non-pay in April, essentially flat for relocation and much, much better on voluntary and lost competition. So from a non-pay perspective and from a past due perspective, we’re roughly flat to where we’ve been.
Ronan Kennedy: Thank you Appreciate it. And if I may, could I ask one more just on the Google, and the comments of the utilization of the Google tech platform. I know you have virtual assistance, and I think also the system monitoring and response tech, the smart assessment of alarms. Can you kind of contextualize in terms of the impact of the timing from the additional opportunities, whether it is that call center operations, the call deflection to more of the advanced churn and propensity modeling, that type of thing, timing and impact, please?
James DeVries: Yes. So yes, super excited about – we’ve essentially expanded our partnership with Google beyond the Nest hardware, and into working with Google Cloud and couldn’t be excited – couldn’t be more excited about it. The first two areas, as you mentioned, will be in customer care, deploying AI to drive call deflection. We may see some impact for that late this year. I think most of it starts to become a reality in 2025. And on propensity modeling, churn modeling, I’d generally say the same thing. We’re in the early days of putting the plan together. Both of them, I think, have meaningful upside for us. But if there’s an impact, Ronan, it will be late this year with the real fruits delivered next year.
Ronan Kennedy: Thank you very much. Appreciate it.
Operator: Thank you for your question. [Operator Instructions] Our next question comes from the line of Peter Christiansen with Citi. Your line is now open.
Peter Christiansen: Thank you. And good morning. And Jeff, welcome back to the CFO seat. Great to have you back.
Jeffrey Likosar: Thank you.
Peter Christiansen: Jeff, I’m just curious, as it relates to the State Farm partnership, in the states that you have rolled out, how would you compare, I guess, those market size, growth-wise, versus the rest of your active markets? I’m just trying to get a sense of after you’ve had some good success in testing and get product fit right and sales motions, does that – when you go to newer states, those learnings, are you able to adapt to those pretty quickly in some of your larger markets and accelerate cross-sells even faster? Just curious how you’re thinking about that?
James DeVries: Yes. Absolutely, Pete. And thanks for the question and good morning. So, we made the decision. We’re in 13 states already. And in those 13 states, that represents about 40% – I think, 41% of State Farm policies in force, so it’s a massive TAM. And rather than expand to additional states what we, together with State Farm decided was, given the size of the TAM, let’s get better in these 13 states and execute on our learnings, continue to grow. And as we fine-tune the go-to-market, then begin expanding to states beyond the 13. The single exception to that that I mentioned earlier was in Georgia. The single exception was in Georgia and Washington, where we’re going to be testing DIY in the June time frame.
Peter Christiansen: That’s helpful. Thank you. And then Jeff, I’m just curious with the rising cost of capital, the higher for longer, what have you, in terms of the rate of returns you’re seeing and some of the portfolios, particularly some of the ones that you’ve added on in recent quarters, how are you thinking about those returns? And coincidentally, pricing in general, do you think you have room there, to enhance those portfolio returns over time? Thank you.
