So, expect that Q1 free cash flow will therefore be somewhat lower. But, similarly, as I said in SAM, we expect it to be in-line with net earnings and continue to see those fluctuations around working capital throughout the remaining quarters.
Amit Daryani: Perfect. Thank you very much.
Operator: Your next question comes from the line of Krish Sankar from TD Cowen. Please go ahead.
Krish Sankar: Yeah, hi. Thanks for taking my question. Enrique, I had a question on the PC side. You said you’re expecting modest growth next year. I’m kind of curious, is there a way to quantify it? And how much is AI driving it? And also, when it comes to AI PC, how much kind of an uplift in ASP do you expect versus regular PC? Thank you.
Enrique Lores: So, let me start by saying that we are really excited about the impact that AI PCs are going to have in the overall PC category. As we have shared before, we think that they will drive — they will double the expected growth from ’24 to ’26. So, it’s really going to have significant impact. If we talk about ’24, we think the impact will be smaller just because of: first, timing, the first AI PC will be introduced in the second half; and second, because of penetration, when we launch a new category, we know also it takes time for the category to penetrate. Our expectation is that in three years, 40% to 60% of the PCs will be AI PC, but it’s going to be a gradual penetration of the category. But again, we are really excited, not only because of the impact that it will have on the business, but also because of the value — additional value this is going to bring to our customers.
Krish Sankar: Can you really quantify the ASP uplift?
Enrique Lores: Thank you. Yes. So, what we had said before, and we haven’t changed our projection is, average selling price for PCs will increase between 5% and 10%, as a consequence of the penetration of AI PC. Thank you.
Krish Sankar: Thank you.
Operator: Your next question comes from the line of Toni Sacconaghi from Bernstein. Please go ahead.
Toni Sacconaghi: Yes, thank you. I was wondering if you could comment on supplies growth in the quarter. It was up sequentially. That hasn’t happened in — at any point in the last 10 years on an organic basis. So, what was driving the non-seasonal growth in supplies? Did you change prices and people bought in before? Or was there some channel fill? And then, could you also just comment on — you talked a lot about Future Ready and the strength. I think you’ve taken out maybe run rate about $600 million worth of costs. But OpEx is essentially identical to the first quarter of this year. So, when we think about Future Ready, should we actually think about OpEx going down in fiscal ’24? Or we won’t see the impact of Future Ready on OpEx? Thank you.
Marie Myers: Yeah. Hi, Toni. Good afternoon. So, let me just start out with the question on Future Ready. So first of all, obviously, really pleased with the performance, I think, as I mentioned in my prepared remarks, for ’23. And then, going into ’24, as you know, we raised our target to $1.6 million in SAM. So, very much on track. And I think as we’ve discussed at SAM, Future Ready is a combination of both OpEx and cost of sales. So, some of those savings, we’re reinvesting back in growth and in people to help us manage through some of the volatility, but we do also drop that through to the bottom-line. And frankly, Toni, you can see that in the rates that we even delivered in this last quarter and also in terms of how we’re guiding the rates going forward in terms of solidly in the range for the year and really at the high-end of the range for both businesses in Q1.
Now, OpEx will be up year-on-year, and it’s driven by exactly those factors I mentioned earlier, the investments in our growth, the investments in our people. And I would just sort of add as a sort of closing comment around this is, if you look at the geography of the P&L, you could see in our gross margins that we’re shifting out now to higher gross margins, and that’s been partially offset by operating expenses. So, hopefully, that gives you a little bit more context around how to think about Future Ready. And I’ll turn it back to Enrique on supplies. I’ll just add on the supplies’ ecosystem, we’re in good shape, Toni. From a multi-tier perspective, we ended the quarter in good shape.
Enrique Lores: Yeah. So, let me complement that. So, I think there are multiple factors that drove the good performance of supplies in Q4. As I have said many times though, when we look at year-on-year compares, it’s not the best way to look at the performance in a quarter because there are many adjustments that are done every quarter, and then comparisons can all — can distort the overall perspective. We are driving many positive actions on supplies. We continue to grow share overall, which is something that we have been doing already for several quarters. We have increased prices to reflect the value that we bring. So, the combination of all these things help us to grow supplies quarter-on-quarter. And again, we are pleased with the performance. But in the long term, we continue to expect the supplies to decline low- to mid-single digits. We are not changing our projections for supplies in the future.
