Now that positions us well for the second half. We got very good strategic partnership velocity, we got very good Red Hat book of business growing strong double-digit. But we’re going to continue to monitor this client buying behavior on backlog realization. That’s the critical piece. And by the way, our erosion we have not seen any change or inflection shift in erosion. So we’re positioned well for the second-half and that gave us confidence in our 6% to 8%, maintaining guidance for the year.
Patricia Murphy: Thanks, Amit. Let’s take the next question, please.
Operator: Thank you. Next is Toni Sacconaghi with Bernstein. You may go ahead.
Toni Sacconaghi: Yes. Thank you. I just wanted to clarify, when you talked about feeling comfortable with Q3 estimates was that both the revenue and an EPS statement? And then my question is on software, I think you were looking for 200 basis point margin improvement for the year and now you’re saying 150 to 200. Can you speak to that? And also when we look at the improved software revenue growth, is that just improvement in transaction processing because you’re way above your forecast in Apptio or is there something beyond that? And related to that, are you modeling any substantive revenue from AI and consulting or in software this year? And why would that not impact your outlook if you were? Thank you.
Jim Kavanaugh: Hey, Toni, thank you. I’ll take the first two or three or four of your questions and then I think Arvind can talk about the AI piece overall. But when you look at our software margin overall, first of all, we’re taking our full-year guidance up on revenue to the high-end of our model. So that’s about 1 point raise year-over-year and by the way that’s all-in, as we stated in prepared remarks, including how we’re very excited about the Apptio acquisition, overall. But that raise in guidance I think is a reflection of the pervasive performance we’ve seen in the first-half that we feel pretty confident in. We enter let’s dial back, we entered the year, we said, mid-single-digit, we were coming off of PKLA, we said, we get 5 to 6 points of growth out of annuity, and we would have about a 1 point headwind on transactional.
We had a pretty solid first quarter delivering above our model. We continued and accelerated that in the second quarter. And by the way, it’s both transaction processing, hybrid platform and solution overall. So when you look at it, we see one, yes, Apptio, very excited. It’s a high-growth company, high recurring revenue, and a highly profitable company. And we expect just given normal customary regulations of closing, we probably assume sometime early fourth quarter. So that’s about 0.5 point of that raise. The remaining 0.5 point is going to be solid mid-single-digit growth on TP to my answer to Amit. And then third is we actually exited our first-half with very solid transactional growth, albeit we do understand we’re going to wrap in fourth quarter on a very strong ELA cycle.
But the first-half, we’re seeing very strong clothing upsell that’s in the mid-20% year-over-year on those expiring ELAs through the first-half. So I think it’s all three pieces overall. I think, I covered both the revenue piece on the margin, Toni. That is really just the dilution effect in the first quarter of Apptio. So we called about 200 basis points for the year. Now we’re putting Apptio in. We’re somewhere between 150 basis points and 200 basis points. But I’ll remind you, we expect a very quick accretive business as we go forward just given their profitable overall. So I’ll turn it over to Arvind on the AI.
