Jake Morrison: Perfect. Thank you.
Joyce Mullen: Thanks, Jake.
James Morgado: Next question?
Operator: Thank you. Your next question comes from Anthony Lebiedzinski from Sidoti & Company.
Anthony Lebiedzinski: Good morning, and thank you for taking the questions. So, first, I just wanted to follow-up on the last person asking the question about the AI enabled PCs. Is that something that in your conversations with your customers, have they brought up that topic as far as is there actually – do you sense that there’s pent-up demand for that? And do you think that’s part of the reason why you haven’t seen devices come back? It’s just that customers are waiting for those AI enabled PCs.
Joyce Mullen: Anthony, I would not say that. I think we’re at the beginning of the beginning of this Gen AI sort of period. So I think very – customers are very, very interested in understanding what Gen AI can do. They are trying to understand things like security and policy, governance, training, change management, how to make sure their data is set up. There’s lots and lots of questions. We’re spending a lot of time on this with our clients, but I don’t think that is materially impacting spend yet in sort of standard customers. Of course, there’s a lot of people buying chips and a lot of people building data centers and things like that. But in terms of sort of normal enterprises and organizations, I would not say that that is driving it.
I think the caution – the overall macro caution is driving some delay in spending. And lots and lots of our customers are just trying to figure out how their year is going to shake out. And I think that is the big issue. I think there is a forcing function in the back half of the year, primarily around refresh and also around Windows 11, that we’re starting to hear lots of questions about that. And this AIPC I think is going to help us with a certain segment of the customer base as the use cases become clear and the value is becomes more obvious. But I would not call that. I don’t think that’s a driving factor of the caution in the spend on devices.
Anthony Lebiedzinski: Okay. Thanks for that color. Definitely appreciate that. And then also just overall, in terms of thinking about the guidance that you provided for this year for gross profit and operating expense growth, I guess as we move beyond this year, would it be reasonable to assume that your operating expenses would grow at a lower rate than gross profit growth? Just in terms of looking at your 2027 KPIs, I would think that once you get into next year, your operating expenses should grow at a more modest rate than gross profit growth. Is that the right way to think about that?
Joyce Mullen: Absolutely. And that is really driven by the continued growth in cloud and services and software like we’ve been talking about, the fastest growing areas of the market, the areas where our customers need the most help. And also normalizing OpEx as we learn more about how to manage these businesses for sure. That is consistent with our KPIs that we put out in October of 2022.
Anthony Lebiedzinski: Understood. And just a quick balance sheet question. I saw that there was a big spike in long-term accounts receivable and long-term accounts payable. Is this because of SADA or is there something else driving that?
Glynis Bryan: Yes. It’s primarily related to the SADA acquisition in terms of how we reflecting the committed contract terms on our books, can walk you through that in more detail if you’d like, but that’s primarily related to the accounting mechanics of SADA.
Anthony Lebiedzinski: Understood. Okay. Well, thank you very much and best of luck.
Joyce Mullen: Thanks, Anthony. Appreciate it.
Operator: Thank you. We now have the question from the line of Vincent Colicchio from Barrington Research. Please – your line is now open.
Vincent Colicchio: Yes. Question on the pricing and profitability initiatives. Did they perform as expected in the quarter? Are there any areas of pushback?
Joyce Mullen: Yes. I mean, they absolutely performed per our expectations and we’re really pleased with those initiatives and we think they have a lot of staying power. As Glynis said, we have built them into the mechanics of our operating rhythm and we expect to drive continued improvement there.
Vincent Colicchio: And how are you feeling about growth prospects in North America versus EMEA in 2024?
Joyce Mullen: We expect North America to be stronger and we expect every segment in North America to grow, but we also expect EMEA to improve as well.
Vincent Colicchio: You had called out enterprise spend curious on SMB and government. Anything to call out there?
Joyce Mullen: We are seeing sequential improvement in both and we expect both to grow for the year. As I said earlier, SMB spend is usually a good indicator that the other segments will follow. And so we expect that to be true and we’re encouraged by what we’re seeing in the SMB space.
Vincent Colicchio: Thank you.
Joyce Mullen: Thanks, Vince.
Operator: Thank you. We have no further questions on the line. So I’d like to hand it back to the management team for any final remarks.
