Arvind Krishna: Yes. Matt, let me take that. So when we look at Red Hat, while there are many products in the portfolio, 3 are the pulps that drive the forward performance. So Red Hat Linux, as we look at the overall usage of Linux, as we look at customers being even more concerned about patching, security and making sure that hackers can’t break into their infrastructure and we look at the share volatility that happens, I’ll call it, in the unfitted open-source world, it drives a lot of demand for Red Hat. And we’re beginning see not just enterprise customers but even many ISVs begin to embrace that. As we look at OpenShift, I go back to a fundamental. I think most of our clients now acknowledge that a hybrid environment is their reality, meaning multiple public clouds and their own data centers are private.
In that environment, OpenShift is the leading platform that gives them the flexibility to take an application and run it across all of those. And in this day and age when people have thousands of applications and the ones they’re ready to deploy without having thousands of people, it has to go give them the platform to go do that. Those three combined roll up into the 17% increase in bookings that Jim referenced on the call. So that’s not a leading indicator that is actually already done. Now with 14% in the previous quarter, that tells us the acceleration happening on that side. And we feel confident given the client conversations that these are all going to lead to Red Hat growth, putting aside the innovation that’s coming from the edge platforms, from embedded Red Hat and from other markets that as the edge opens up or create yet again another additional market that has to come.
So this gives us confidence that Red Hat will grow and provide that 2 to 2.5 points of overall software.
Operator: Thank you. Our last question comes from Brian Essex with JPMorgan. Please state your question.
Brian Essex: Hi. Good afternoon and thank you for taking the question. Maybe for Jim. With regard to acquisitions, could you maybe provide some color or an update on your pipeline and offer maybe an update on your philosophy behind M&A, how you assess transactions with regard to the level of accretion you might require or what they might contribute to top line revenue growth or how they might improve ROIC long-term?
Jim Kavanaugh: Yes, sure. I appreciate that, Brian. Thank you very much. I mean, I think Arvind has been very clear for the last 3.5, 4 years since he’s come on. First of all, let’s talk criteria. We always get asked size this, size that. Size is not a criteria. It is entirely, and I complement him and the entire team, he’s very focused on strategic fit to a hybrid cloud and AI platform-centric company. Those targeted areas are always centered around hybrid cloud, data, automation, security and oh, by the way, both software IP asset and consulting expertise on both sides. So strategic fit. Second, we run this platform-centric model to create a synergistic multiplier effect in our business. So when we look at every single week a set of targeted candidates, we’re looking at the synergistic effect because as a CFO, when we deploy $1, we’re looking for a multiplier of hardware, software services on top of that.
And then third, financial attractiveness. It has to be high growth, recurring revenue, highly profitable and free cash flow accretion in a quick period of time. That will vary based on software, it will vary based on consulting. But I think you’re going to continue to see us be opportunistic in the marketplace. We’ve got the right capital structure. We’ve got the right finflex. We ended with, what, $13.5 billion of cash on the balance sheet. So we feel pretty good about our position, and we will capitalize on that to the extent it hits and fits those criteria. So thank you for the question.
Arvind Krishna: Thanks, Jim. Let me now wrap up the call. In 2023, we executed on our strategy to deliver sustained revenue growth and cash generation. The changes we have made to our business over the last couple of years and our performance reinforce my confidence as we move into 2024. I look forward to continuing this dialogue through the year.
Olympia McNerney: Diego, let me turn it back to you to close out the call.
Operator: Thank you for participating on today’s call. The conference has now ended. You may disconnect at this time.
