Anthony Lebiedzinski: A nice job in the quarter. So just looking at your services gross profit dollars grew 15% in the quarter. Just wondering, was that mostly volume driven? Or were there any pricing benefits? And I guess, given the choppiness in the economy, are you — I guess, based on your guidance, you’re probably not seeing much in terms of pricing pressures. But I mean if — just wondering if you could just address that topic.
Joyce Mullen: So I would start by saying we did see some improvement in services gross profit, and that is a combination of a mix of services and — but some of it was volume-driven, obviously because profit outperforms the top line by a bit. And, I would not attribute it to pricing. I would say we haven’t actually driven a whole bunch of pricing initiatives. Some of it a little bit potentially because the cost of labor certainly did increase during the last year. But I would say that it’s primarily driven by improved execution and focus on making sure that our utilization is improving.
Anthony Lebiedzinski: Got you. Okay. And then we’ve heard a lot of tech companies do a lot of layoffs. And, I just wonder about your own hiring plans. How are you guys thinking about managing that?
Joyce Mullen: Yes. So we’ve been, since the middle of last year, working really, really hard to tighten our hiring processes and make sure that we’re hiring, as I said earlier, for specific sales opportunities and technical expertise opportunities. This is a market where you can acquire terrific talent, so we will continue to do that. And we don’t have any plans to do any mass — at this point, we have no plans to do any major layoffs. We will continue to ensure we’re aligning our utilization rates, with the demand in the market. And of course, we continue to manage performance. But other than that, we don’t have any significant plans.
Anthony Lebiedzinski: Okay. That’s good to hear. And then I think, Glynis, you mentioned that you’re planning a new Texas fulfillment center. Can you go over the timing of that? And how should we think about as far as CapEx spending for that?
Glynis Bryan: Sure, Anthony. So our Texas fulfillment center will be built out this year. I would say primarily, we’re not going to see any benefit from that build-out in 2023. It will be operational very late in the fourth quarter, maybe in December, if not in January of 2024. So we would anticipate going into January 2024, we’ll start to see the benefit of that. It is not a net addition to our portfolio, it is going to be a consolidation. So once that facility is up and running, we’re going to be closing some of our other facilities. So net-net, we will end up with 2 major facilities at the end of this period. I think, the other thing that, I would say, is that this facility allows us to do more advanced configurations around data center very specifically.
As opposed to lab and integration work, et cetera. So that’s one of the reasons for driving this. It also allows us to service the country, North America — the U.S., with 2-day delivery from almost anywhere between the 2 facilities that we don’t have at the end, with regard to how we go through there. And it’s probably just under $30 million associated with that, in our capital expenditure guidance that we gave you of the $25 million to $30 million — sorry, in $55 million to $60 million. Our normal run rate CapEx is in the $25 million to $30 million range.
Joyce Mullen: One more thing, Anthony, it’s also — we are also investing in some automation. We’re really excited about the improvements that we’re going to deliver to our clients in terms of speed and accuracy. .
Operator: Our next question comes from Winston Colicchio from Barrington Research.
Vincent Colicchio: Yes. Joyce, what are you seeing in terms of overall sales cycles? And if you can give some color on any particular areas where there’s any changes sequentially.
Joyce Mullen: Yes. We saw this starting in Q4, and so it really does continue. So for services projects, we are definitely seeing longer sales cycles, more approvals are required, our clients are asking us to figure out how to change the scope of projects to make them smaller, deliver results fast. That actually plays to our strengths. I think, we’re particularly good at that. So deliver an ROI and then earn the right to do the next project, but we are definitely seeing those services projects take a bit longer, and they’re slightly, say, are a bit smaller.
Vincent Colicchio: And one more. Could you comment on the trends you’re seeing in your client set, the enterprises, public sector and SMB?
Joyce Mullen: Yes. So, I think, we’re seeing pretty solid growth across all of those. Obviously, public sector is, for us, it’s a smaller piece of our business, but it’s really — we’re not as focused on the K-12 space there. But we’re seeing some pretty solid growth there, due to the infrastructure bills and the investments in the country, so that’s good. But our commercial and enterprise businesses are holding up really, really well, too. So, we’re seeing strength across the board.
Vincent Colicchio: My other questions were answered.
Operator: We have a follow-up questions from Matt Sheerin from Stifel.
Matthew Sheerin: I just had a follow-up question on your software businesses in North America and Europe, which had a lot of sort of different results here. You had double-digit growth in software in North America, up 18% year-on-year. Whereas, your business in Europe was up just 4%, but I know you also grew gross profit dollars in Europe. So is there a difference in terms of revenue recognition or the types of software or cloud services that you offer?
