So, that’s probably the biggest impact, which will continue to foster internally how to fit the training and capability of our engineering workforce on the project level, the system level with the clients.
Anil Doradla: Just adding one statement to that, Josh, I think that’s a very key statement that Leonard put, because that’s the leverage in the model going forward, right? We have the resources. We have the capabilities, and as we see some of these demand trends come back, you’ll see all these people put to work and then that will have an impact, a positive impact.
Josh Siegler : Understood. Thank you very much. Appreciate it.
Bin Chiang: Thank you, Josh for your question. Our question comes from Maggie Nolan from William Blair. Your line is open.
Maggie Nolan : Hi, Leonard. Hi, Anil. So, on AI, it’s pretty clear that you have years worth of expertise kind of building up to this moment. Should we expect to see any perceptible pickup in dollar spend or investment in AI or Gen AI, and then what would that look like in terms of magnitude?
Leonard Livschitz: Yeah, so, the magic wand is here, but the crystal ball is not. So, we do have all the tools necessary to scale the business. It’s really how it’s become more as a consultancy, right? Because the ability to build the model, scale the model, creating the predictable recommendation is there. Depending on the business, the financial benefit may vary because it takes some time not only to train the model, but verify the financial impact. Because there are other variances besides just optimization of the forecasting and other stuff. For example, the market trends, the competitive trends for all clients. So, what they try to do, they try to take projects rather than massive transformation at this point, and they want to run those cases, at least what we are involved.
So, there are sizable dollars, but I almost remember when we moved the cloud transformation from on-prem to a private cloud, to hybrid cloud, to the public cloud, now kind of reversing the trend for a lot of those computational capabilities. So, I see that we’re going to have a bit of a step function. Right now, we’re in the early stage where dollars are still limited, but the projects are notable, but I think it’s going to roll up into the sizable part of the business, which means one of the important factors for us, there are many questions I ask, what’s the role of the software engineers? Will the future require less of IT people, and how would those IT people look like? And we would not call Grid Dynamics, IT engineers. We are highly trained, intellectually developed professionals in a data and software development space, in a cloud space, which means that while the industry goes through transformation, we are expanding more and more into meeting the match from the capabilities, and it’s relatively beneficial to us versus some more traditional IT suppliers.
Maggie Nolan : Thanks, Leonard. And Anil, the margins were strong this quarter. I’m wondering, if you can talk a little bit about specific drivers of operating expenses. Is there a possibility that these trend lower over the next couple of quarters?
Anil Doradla: Thanks for the question. Maggie, so, as you saw, this quarter, we had roughly almost 200 bps of expansion on the EBITDA side, right? We saw gross margin expanding, driven by comments that we had in our prepared remarks around greater utilization of engineers. And then also, on the operating front, you saw it go down by about a million dollars, largely driven by the fact that given the environment that we’re in, we’re just prioritizing our investments and spend. Now, as we go into the back half of the year, our approach continues to be cautious on the spending. But that said, certain initiatives and projects that we deem as essential are being prioritized. So, we will see how things play out on the revenue side, on the demand side. Obviously, there’s going to be a lot of leverage there. But, you know, we’ll go one quarter at a time. And the hope and the aspiration is, from a margins point of view, we should see some tailwinds.
