Peter Heckmann: Got it. Okay. That’s helpful. And then just how are you thinking about free cash flow for the year versus your annual EBITDA guidance? Can you talk a little bit about how you’re thinking about that?
Kevin Rhodes: Well, I mean, we had a better quarter in Q1 versus the prior year. I think $7 million this quarter and $25 million negative cash flow quarter. And if you look at the last two quarters prior to that, we were generating somewhere around $15-or-so million each quarter. So, we’re not going to guide. We can’t guide and we’re not guiding on free cash flow going to the year because you never know what changes in working capital will cause that change. But I’m pretty pleased what happened in Q1, and I feel like we will be positive for the year, certainly from a free cash flow perspective for the full year. I can probably give you that.
Operator: Our next question comes from the line of Rishi Jaluria of RBC.
Rishi Jaluria: Wonderful. Thanks so much for taking my questions. First, I want to drill a little bit on migrations. It sounds like you’re getting some solid momentum there. To what extent is that a function of you as a company focusing more on it versus maybe providing additional incentives versus just the market and customers being more ready for that? And then, I’ve got a follow-up.
Mike Jackowski: Rishi, I would say it’s all of the above. But there is no question that it was a really big event when we had our formation event last year and we went through our overall plans, our road maps, where we’re investing in our products. And I think our customers now really understand that all of the innovation that we’re really driving is in our cloud product today. And we’re being a lot more transparent on our road maps, and we’re walking through in terms of all of our plans in terms of the investments that we are making in the product. So, that’s creating some energy. At the same time, I think most insurers know that they have to have — CIOs of insurers know they have to have a cloud strategy of some sort. Data centers are starting to age.
Servers are starting to age out and need to be replaced, and I think that’s causing more interest as well. And then finally, when I just go look at the backdrop of our customer base and us talking with them and focusing in on some sales motions, where we’re having road map sessions with them and actively selling to them and then talking about the merits of making the upgrade go away and not spending all your resources on upgrading, I think that’s triggering more interest as we have the sales motion. And then time to time, we’ll work with customers and make some investment in the account, if there’s some technical data or some inhibitor for them to do a contract. But anything that we can do to kind of move a deal along and have a win-win for both of us is what we’re focused on.
Rishi Jaluria: Got it. Thanks. That’s helpful. And then when I just think about some of the momentum that you’re seeing in Distribution Management, Reinsurance Management, at least preliminarily, what does that uplift for a deal look like? In other words, if you had a customer that was maybe $5 million in SaaS ARR and then you were able to cross-sell DM and RM to them, what would that uplift look like? Thanks.
Mike Jackowski: Yes. When we look at those assets for a like-for-like carrier, obviously, anytime we do a core deal, we’re typically talking about low-single-digit millions of ARR contribution, sometimes mid-single-digits in a single transaction, somewhere in that neighborhood. When we’re selling RM or DM, it’s typically in the hundreds of thousands, sometimes in the mid- to high hundreds of thousands. And we’re getting some deals that are encroaching upon a 6-figure deal. So, it depends on the size of the carrier, the global scope of what they’re looking at, sometimes we’ll transact our way up to those amounts. But we are seeing some very meaningful size deals that are out there. But broadly, think of our core transactions of being millions of dollars of ARR contributors, RM and DM independently, high hundreds of thousands of dollars or mid-hundreds of thousands of dollars contributors.
Operator: Our next question comes from the line of Alex Sklar of Raymond James.
Alex Sklar: Thanks. Mike, I kind of want to go back to your macro commentary tonight, especially kind of related to how it was last quarter. It sounds like you’re still baking some caution to the outlook. But given Q1 is not really a seasonally big quarter, what do you think changed intra-quarter that drove the higher ARR results? And was there any pull-forward of pipeline that you thought was going to close in the second quarter?
Mike Jackowski: Yes. Alex, we were pleased with our bookings and what we got done in Q4 and what we got done in Q1, right? So I won’t say that, that ARR, I mean, we anticipated that we would do pretty well so that’s not a surprise and we’re pleased by it. I’m not going to suggest that the environment has changed tremendously from last quarter. I think we’ve adapted to the environment quite well. And then, we also have been working on some deals that are coming through the pipeline that we see and gives us confidence for the remainder of the year. But I also think, as we set out for even the full year with our overall plan, we adjusted for the current market conditions. I think it’s unfolding as we expected. We are seeing carriers again take rates.
And they are doing deals. Now, on the Tier 1 side, we have seen the deal size, the initial deal size come down a little bit from what we historically saw, call, 24 months ago. But I think — so we could still see that the buying behaviors are a little bit different and there’s a little bit of delay in the time frame. So I think, again, we’ve adjusted to it. So, we haven’t seen it deteriorate more at all and we think it’s improved moderately. So again, we’re still a bit cautious and we’re watching it closely. But, it feels better today than it did 12 months ago, that’s for sure.
Alex Sklar: Okay, great color. And Kevin, on the subscription growth guidance for second quarter, I know there’s less days in the quarter. I think we usually see a bit more of a step-up versus Q1. Is there anything onetime that was in the Q1 subscription number or that might be reversing, or any known churn or kind of renegotiations in the second quarter to be aware of?
Kevin Rhodes: No, I can’t call out anything that I would say is different or seasonally changing from the first quarter into the second quarter. The only thing I would say is the comparable from last year, and I put this in my commentary. So I want to make sure you got it. Last year, the year-ago quarter, we had that $2 million kind of onetime contract buyout. So, the comparable year-over-year is going to be slightly more difficult in the second quarter of this year. But other than that, thinking back a year ago, that’s it.
