So those are the big areas where we’re seeing a step up. I think another aspect is there is definitely some supplier consolidation going on in the market. And we are being a beneficiary of that in seeing some of that consolidation come our way. That’s probably a new thing for us. That didn’t really occur for us pre-COVID. Just weren’t at the scale where we were picking up that sort of step-up. But we’ve seen quite a lot of activity with clients where they’re consolidating and we’re benefiting from it.
Zack Ajzenman: Got it. And shifting to margins, so it looks like there were some upsides in the quarter. What were the drivers here? And how does it inform your view over the coming quarters?
Mark Thurston: Yes, so the gross margin was basically the driver of it. So we had slightly better revenue that fell through to the bottom line. The gross margin was better than anticipated. Utilization was slightly up, so gross margin was better than anticipated. And we spent marginally less on SG&A as well. So the EPS against the guide was up quite significantly, but the main drivers being sort of gross margin to do that. But having said that, given the guide for Q2, we do see further gross margin compression, which is what we guided at the end of our fiscal ‘23 back in September. So it is anticipated that we get that and basically that is further sort of bench that we’re carrying and investing in as we get ready for the pick-up in demand that we see in the second-half.
And we continue to invest as well in SG&A, mainly in our sales and marketing area, but also in our integration work that we’re doing in Asia Pacific with our newly acquired businesses. So there’s no real change in the margin profile that we outlined at the time of giving guide to Q1.
Zack Ajzenman: Got it, thank you.
Operator: The next question is from Maggie Nolan of William Blair. Please go ahead.
Maggie Nolan: Hi, thank you. Maybe just to build on that margin question a little bit, as you’re starting to think about some signs of stabilization or improvement and you think about maybe beyond the quarter that you just commented on, what are some of the levers that you’re going to start to push on to drive those margins back up to your long-term levels, and do you think margin will recover in conjunction with, kind of, demand and revenue recovery, or do you expect a lag a s you start to see that demand?
Mark Thurston: I’ll start and then John can comment. I mean, I think things are stabilizing, despite there being some unstable times. But the recent history in terms of our rate per day has been new to, we haven’t seen much weakness in it. It’s a mixed picture at the moment. But it’s basically sort of stable. And part of the recovery that we see, and it’s probably beyond this fiscal, will be the pick-up in the day rate as demand sort of recovers. But whilst we’re waiting for that to come through more strongly, it’s looking at the cost of the business, mainly through delivery and the wage costs that we have in the business. So we have to make sure that we balance the demand that we see and affordability in the marketplace with the levels of pay awards that we’re making.
So we’re going to be vigilant on that. And again, we are going to play close attention to SG&A. We are investing at the moment basically in our sales activities to grow us for when the recovery comes. But we will continue to watch that. So I think as we grow out of this fiscal year, and particularly get back to normal sort of run rates or more normal by Q4, that we will build a gross margin back to the levels that we’ve seen historically, which is high-30s, and then get that leverage over SG&A.
John Cotterell: Yes, I think the big step up from where we are now into the second-half will be as we drive utilization higher. We’re carrying a substantial bench, compared to our historic levels, which we’ve hung onto on the basis of the work that we see coming through. And as we deploy those people, we’ll see the gross margin move back up as Mark has outlined and then cascade through to sort of the EBITDA levels that we’ve had historically.
Maggie Nolan: That’s helpful. Thank you. And then I know you commented on FIS and MasterCard specifically, but could you talk a little bit more broadly about spending and demand trends at your payments and FinTech clients, any differences that you’re seeing between the U.K. and Europe and the U.S. And what expectations for these groups you’ve factored into the full-year guidance?
Mark Thurston: In terms of, there’s little change from the initial guidance actually. I mean, payments is going to be a tough year for us. So, year-on-year, we’ll see a decline of something like 14% we think. But that hasn’t changed from the outlook from Q1. Again, I think the banking capital markets will be sort of stable. Again, we haven’t seen any sort of change from that outlook. But insurance actually looks like a relative sort of bright spot. TMT is slightly weaker than anticipated, but it’s just at the margins. And that is actually across most of the geos, whether it’s North America, U.K. and Europe. And again, we’re not really seeing much change in terms of the geo outlook. I think North America will start to recover more strongly than the U.K., actually if you look at it quarter-on-quarter, but it will still not be a sort of strong year for North America in terms of year-on-year growth.
