John Gallagher: Yes, we do expect acceleration over time, but it’s – we need to see some of the customer end market behavior recover as well. We have – keep in mind, we exited the year at 1.1, where – and in Q3 of last year, we were at 1.1. So we continue to be at 1.1 as a spot that we haven’t yet seen an inflection point in the end market customers.
William Feehery: So Michael, I think you’re talking about software a little bit. So in Q1, our software bookings were a little bit less than we expected because we had some bookings move in April. We did actually get those. So we’re feeling pretty confident that the bookings are appropriate for what we’re giving you in our outlook for the [indiscernible].
Michael Ryskin: Okay, alright. Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from Max Smock at William Blair.
Max Smock: Hi, good afternoon, guys. Thanks for taking our questions. I wanted to follow-up on Lukes question earlier about inorganic bookings. And I might have missed here, but I think you said in total, inorganic bookings are around 2% of total bookings, which implies something about $2 million in total for the quarter here. And coming into this year, you talked about those two recently acquired businesses contributing mid-single digits to growth, which I think implies based on our model around $18 million in revenue in 2024 in total. So I guess my follow-up would be, was it $2 million in bookings from the recent acquisitions in line with your expectations? And then given that small bookings number, are you still as confident in that mid-single-digit organic contribution in 2024 as you were earlier this year?
John Gallagher: Hi, Max, yes. Yes. So we are – the first quarter, to your question, did play out as we expected it to, so not a huge contribution in bookings from the acquired companies from the Q4 closure of the deal. We’d expect that to accelerate as we move the year. So I’d say that Q1 played out as we thought. And we’re still confident in the guidance message that we gave with both the reported and then the organic ranges.
Max Smock: Understood. Thank you. And then maybe one on budget plus here, so last year, you had some clients that came to you had to necessarily cut their budget but hadn’t spent their budget either. So you had some benefit there at the end of the year. Just wondering, based on your conversations so far this year, it sounds like things are getting better but not necessarily translate into orders. How do you think about the potential for that budget flush to occur at the very end of this year, Similar to what you saw last year? And what would that mean for your results relative to the 2024 guide that you’ve reiterated today?
John Gallagher: Well, in our guide, we did anticipate some seasonality, and I think that part of that seasonality is the budget flush dynamic, which typically makes our Q4 stronger on bookings than the other quarters of the year. I’d tell you that as we put together our plan we did anticipate that, that would be the case. We saw that be the case in Q4 of last year as we did in years prior as well. So what’s cooked into the guidance range is the anticipation that we see a somewhat typical tonality that we’ve seen in the business in the past.
Max Smock: Got it. Thank you both again for taking our questions.
John Gallagher: Thanks you, Max.
Operator: Thank you. [Operator Instructions] Our next question comes from Steve Dechert at KeyBanc.
Steve Dechert: Hey, guys. Thanks for taking our questions. With the nice increase in software revenues in the first quarter, was there a certain real you didn’t see more of an expansion in your margins given software is your higher-margin business? And then – can you provide more color on the strength you’re seeing in your software bookings and revenues? Thanks.
John Gallagher: Yes, sure. So we’re pleased. – software growth in the quarter was 19%. The net retention ratio was 114%. So we’re pleased with the continued execution by the software team as we exited last year, we were in a good spot and we saw that continue and accelerate into Q1. As far as the margin is concerned on the quarter, we had a 30.2% adjusted EBITDA margin. And while that margin was below our full year guidance range of 31% to 33% and it was impacted about 200 basis points by the newly acquired companies that we just closed in Q4, including 1 in December. So as we work through that, then we’re expecting some margin lift. But what I’d tell you is the software achievement during the quarter fell through with a typical margin. And then that would have been partially offset by some of the dynamics that I just described.
Operator: [Operator Instructions] Our next question comes from [indiscernible] at UBS.
Unidentified Analyst: Hello. Thank you for taking the question. Maybe if we could dive a little bit more into the margins. It sounded like a lot of the increase in cost was also associated with additional employee expenses. So maybe if you could provide more detail on how we should think about margins playing out throughout the rest of the year, keeping in mind the impact of acquisitions and hiring.
John Gallagher: Right. So full year margin guidance is 31% to 33% on the quarter, as I just mentioned, is 30.2%. So it’s below the full year range, primarily because – well, two things. One, you saw that expenses were up. I’ll come to that in a moment. But two is we’re still integrating the deals that we just closed in Q4. So that pressured the margin a bit in Q1, and we think that will resolve as we continue and finalize integrations there. The other thing, though, is you’re asking about investments or you’re asking about cost increases, what they are as investments. So we laid out our plan around investing in the business during 2024. And of course, we’re executing on that plan. As a reminder, that was centered in two areas.
It was investments in sales and marketing and expanding the sales force and it was investments in R&D which was adding software developers to our team to continue to enhance our software programs, including embedding AI in all of our product offerings. So – that is what you see playing out in the quarter, and you’ll continue to see those investments during the course of the year. You asked about margin progression. We do anticipate, as I mentioned earlier, some dynamic that will drive revenue to be higher in the second half than in the first half, which is typical for the company when you look back at prior year periods. And that will help margin acceleration and accretion to that margin as well as finalizing the integration on the deal.
Unidentified Analyst: Thank you.
Operator: [Operator Instructions] David [indiscernible] at Citizens JMP.
