Thomas Blakey: Hi, thanks guys. Thanks for taking my questions here. Just wanted to take on some of these macro questions, dive a little bit deeper on this maintenance to subscription transition. What you kind of saw in the quarter last quarter from a linearity perspective that seemed to have stepped up the transition. I think the subscription, if you kind of take-out Metallic estimations for ARR accelerated just again, just subscription alone ARR, while maintenance continues to decelerate to the downside, but that ratio seem to have gotten better. Just want to know what the impact was from the macro, maybe customers are looking to save money or something. I don’t know how that — I know there was discounting in the past on maintenance — I’m sorry, on non-subscription to maintenance transition. But I just wanted to understand the dynamics there and how that could like lead to continued strength there in the coming quarters in this macro. I have a follow-up.
Gary Merrill: Good morning. It’s Gary. I’ll take this one. So as we’ve talked many times, we have a strategic program that converts and looks to work with our customers that our older perpetual customers and strategically convert them to a subscription-based software. A couple of trends you see. And largely, I would say, unchanged on steady state. And I’ll kind of walk you through maybe the best way to think about it from a financial standpoint. Even within our press release, we disclosed our customer support revenue. Our customer support revenue, which is — it’s mainly the renewals from our perpetual business. That revenue was down 10% year-over-year. Now the biggest driver for that decrease year-over-year is currency. If you strip out currency, on a constant currency basis, our customer support revenue was down 5%.
That’s three quarters in a row. It’s been down 5% year-over-year. So the best way to think about it, it’s kind of trending at similar levels that it’s always had in kind of that mid-single-digit year-over-year decline in that customer support revenue is probably the best way to think about it in a steady state model that we’re working towards.
Thomas Blakey: Okay. So there wasn’t any — just to be direct extra discounting in terms of switching over from maintenance to subscription in the quarter and — okay.
Gary Merrill: No, from a recovery standpoint — jump in from a recovery standpoint. So you did mention that in the initial part of the question, recovery standpoint, we were right on target.
Thomas Blakey: Got it. Got it. Thank you. And then on Metallic, first of all, congrats on getting in the crosshairs that $100 million ARR that’s kind of in line with our model here for next quarter, possibly. The parsing out the revenue piece there, so the decline of about 110 basis points in the services gross margin. pressured by Metallic. Can you just remind us where we are in terms of that transition with regard to Metallic as it grows nicely here again, smaller revenue, much larger ARR and where you expect those gross margins to be with revenue levels in the future? Thank you.
Gary Merrill: Yes, Tom, for sure. So we’re pleased with where we’re at. We’re on track from a margin perspective with Metallic. To get to more of the best-in-class SaaS margins, we’re still 12 to 24 months out, right? We’re on that trajectory. If you look at other companies that have gone through this transition, we’re all in the same line, the same line of trajectory. So we’re pleased as we work towards getting through this fiscal quarter and into next fiscal year, there’s more detail that we will share as it relates to the Metallic business and Metallic margins. On a consolidated basis, we do have a little bit of a headwind, as I mentioned in the prepared remarks, on the acceleration of Metallic revenue relative to the outlook we gave for software. So there is some margin compression on a consolidated basis. But we view that as partly as a positive because that means we’re seeing Metallic accelerate at a very fast clip.
