Now that’s not to say if we had great opportunities we wouldn’t deploy capital. But the management system has been very tight. And then, there’s just continued emphasis on the working capital metrics and driving those numbers down. So those are the four main elements of what we think has delivered the progress on free cash flow.
Operator: Your next question comes from the line of Rod Bourgeois with DeepDive. Rod, your line is open.
Rod Bourgeois: I want to talk about the cyclical demand trends and how they’ve affected your business here. When you reported three months ago and updated guidance, your project-based revenues were weak, and that was the case for the industry at large. I think at that time, you would assume that project-based revenues were positioned for some improvement in the second half of the fiscal year. And I think some of that was due to your new operating model showing some benefits. So I just wanted to see if you could share how those project-based revenues are tracking for the second half. Do you see improvement there? And also maybe do you have other sources of revenue upside to offset projects, if the projects were to remain weak due to the cyclical challenges? Thanks.
Mike Salvino: So Rod, I’ll tackle the second one first. Certainly, we do. I mean we’re running an outsourcing business. So basically, that’s still our bread and butter. And converting that stuff from backlog is, quite frankly, something you talk quite a bit about, right, in the industry, meaning taking your pipeline and converting it to revenue. So the reason why we went to this operating model, all right, and I call it basically right model with right leaders, is the fact of can you take the pipeline and convert it to revenue. Now the quickest is the project stuff. And what we’re seeing in terms of the industry is we’re seeing analytics and engineering in a tougher market, all right? But that’s being picked up by insurance, that software business doing better than we expected.
And then, I would say that applications has a chance, all right, with Howard’s leadership, what we see in the industry. One of the comments I made, he’s charged with getting clients ready for AI. That doesn’t mean that he’s implementing AI. That means that clients need to get ready for AI. All right? You got to get ready with your data, you got to get ready for your applications. You got to understand the bias in your data and so forth, and that’s good work for us. So I look at applications in the back half, we think it’s flat, but Howard could potentially do a little bit better. When you look at GIS, we see the cloud infrastructure stuff. I’m very encouraged with how Chris has positioned that business now with the relationship with AWS and also what he’s doing on the margin.
And then look, I have full confidence in Andrew because the best part about Andrew is he used to be our client. And he knows what we do well. He knows where we need to improve. He knows how to sell the stuff, and that’s basically what he did at Accenture. So when I look at the demand, the demand should be getting better in GBS, all right? I don’t see that demand is going to change much in GIS, it will be lumpy, but that’s what we see, Rod. Do you have another question?
Rod Bourgeois: Yes, I do. So thanks to Rob for outlining the free cash flow drivers to get you to the $800 million target. That’s clearly the key metric here. I want to ask another question about free cash flow kind of from a different angle. Clearly, the industry is experiencing the cyclical challenges, and that’s impacting your project-based revenues this year. If you weren’t seeing cyclical challenges in your project-based revenues this year, would you then be in a position for free cash flow north of $800 million? In other words, I’m trying to get a take on to what extent the cyclical demand challenges are impairing your free cash flow power this year?
