Arsenije Matovic: Got it. Thanks for that. And then given the traction you’re seeing in DGM, is the 2.5 percentage point starting point for the contribution to ACV that you expected for growth conservative? Can that be a stronger contribution to growth? And then just very briefly on the renewal impact, what was the specific impact to free cash flow in the quarter from the renewal? Thank you.
Antonio Pietri: Let me first address the question on DGM, and then I’ll have Chris talk about that impact, but if any. Look, 2.5 points is the goal. 2.5 points of growth contribution is the goal for DGM. Hopefully, we’ll exceed it, but we’ll keep that as the goal for the moment. The pipeline looks solid, but let’s see what we get to at the end of Q4.
Chris Stagno: Yes. And then as it relates to free cash flow, there was an impact as it related to that renewal being pushed out. It was the ACV amount that we quoted of about $5.4 million. We do expect that, like Antonio said, the deal will close in the third quarter, and then we’d collect that in the second half of the year.
Arsenije Matovic: Thank you.
Operator: And thank you. [Operator Instructions] And our next question comes from Clarke Jeffries from Piper Sandler. Your line is now open.
Antonio Pietri: Hi, Clarke.
Clarke Jeffries: Hello, thank you for taking the question. Antonio, it sounds like the growth in the pipeline is broad-based, but I wanted to specifically ask around the sales capacity expansion and the sales capacity that seems to be coming online in the second half. Can you remind us, is that broad-based across the business? Is that weighted to DGM? Is that really the primary driver, even in first half, in terms of the pipeline growth? And any assumptions around close rates based off of that expansion of capacity coming on in the second half? Trying to understand if this is a particular product category or all rounds of business getting a capacity increase. Thank you.
Antonio Pietri: Yes. Look, as you would expect, certainly a significant portion of the sales investment went into DGM, the expansion of the sales organization in DGM into other regions, but also in North America. Expansion of the high velocity sales organization are small to medium sales team because we’re seeing accelerated growth in that team, so that team also benefited from an important expansion in the headcount. That team is pursuing mostly engineering business that comes through consulting, engineering consulting companies or companies that are first customers of AspenTech – first-time customers of AspenTech. This is a team that has obtained companies like Tesla, Meta, Google to be customers of AspenTech. So there’s a very active team and a team that has grown materially for us over the last two, three years.
But also we added especially solution consultants in our Heritage AspenTech team as we focus also on driving more enterprise-type deals with our customers in that area, considering the critical mass of business that we already have with some of these customers, we believe there’s an opportunity there for us to do more with those customers. And a little bit of as we reorganize SSE into our head sales organization, we’ve also made a little bit of investments to the SSE team as well.
Clarke Jeffries: Perfect. And just one follow-up on that. At this point, I mean, imagine there’s a lag between the hiring and the actual capacity, the reps being ready. But are you at the point where you’re still on the upswing in terms of hiring ambitions or growing headcount? Or is this all about maturity of kind of previously hired individuals trying to understand if there’s further ramps coming even beyond fiscal 2024?
Antonio Pietri: Yes. Well, I mean, look at the – we’re pretty much done with expansion in fiscal 2024, that, that this investment cycle started in Q4 of fiscal 2023, so last April, nine months ago, we’re done. Most of the sales headcount is in place. It’s been in place for a number of months. So this is why we expect to see – we’re seeing the benefit on the pipeline and we expect to see the benefit on the conversion. Now, having said that, now for fiscal 2025 coming up, we’ll look at what investments we need to make around expanding the DGM sales organization into other parts of the world and what other sort of tweak investments we have to make in other parts of the sales organization. But this was an important ramp up in headcount, and now we also want to see that additional headcount increase in productivity.
So good investment, a little bit more investment in fiscal 2025 around DGM and a few other areas. And look, now that I talked about pipeline and conversion, there was a question just before about the conversion rate for our pipeline. Look, the – we tracked certainly the conversion rate for our pipeline quarter-to-quarter and year-to-year, and we expect that the historical range of conversion that we’ve seen in order to deliver our goals is what we need to have in Q3, Q4 to achieve at least 11.5%. So we do – the team does a good job of tracking the performance against historical and as a forebearer of what’s going to come.
Clarke Jeffries: Really appreciate the color. Thank you very much.
Antonio Pietri: Thank you.
Operator: And thank you. And I’m showing no further questions. I would now like to turn the call back over to CEO, Antonio Pietri.
Antonio Pietri: Thank you, operator, and thank you, everyone, for joining the call today. Over the coming months, we will attend two investor conferences. In February, we’re going to attend the Wolfe Investor Conference, and in March, we will attend the KeyBanc Emerging Technology Summit. So please reach out to our Investor Relations team for more information on these two events, and we look forward to catching up with many of you soon. Thank you, everyone, for joining, and we will see you on the road. Thank you.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
