Operator: Thank you. One moment for our next question. That will come from the line of Ray McDonough with Guggenheim Partners. Please go ahead.
Ray McDonough: Great. Thanks for taking my questions. This is Ray McDonough on for John DiFucci. Yogesh, maybe to start, you mentioned that business was strong across all business lines, and I was hoping you could parse that out a bit. Was there anything in the portfolio that was a little softer than another? I’m thinking OpenEdge is probably more stable in this environment and maybe you’re seeing more softness or even cracks in something like Chef perhaps. I’m just trying to get a sense for how the portfolio performs relative to each other, if that makes sense.
Yogesh Gupta: Yes. So, thanks for asking, Ray. Actually, if you look at our business – and again, FX makes the – look business look different than really in constant currency it was, I mean, there was a significant amount of outperformance throughout the year. And it did come across pretty much the entire portfolio. I mean, you think about the – whether it is Chef or whether it is OpenEdge or whether it is DataDirect or Sitefinity and DevTools, if there’s one product which I would say didn’t show same level of outperformance, it’s our network management product, WhatsUp Gold. And I think that’s because in 2021, there was significant tailwind in the market because of what had happened to SolarWinds at the end of 2020. And as everybody knows, 2021 was a really turbulent year for SolarWinds and I think a lot of SolarWinds customers went looking for alternatives in 2021, which led to some additional outperformance on our part with WhatsUp Gold.
And I think it’s back to sort of more of its regular cadence that it had before that happened. So, I think that would be the only area where I would say we did not see the level of performance – really outperformance and strength that we saw across everything else.
Ray McDonough: Great. Thanks for the color. And then maybe for Anthony, as I think about you taking on more leverage for MarkLogic, how should we think about the use of capital going forward to either pay down debt? And where – what levels are you comfortable at in terms of your net leverage if you see an attractive M&A opportunity in the next six months to 12 months where you really feel like you should be pulling the trigger, where do you think you feel comfortable bringing that leverage in light of a rising interest rate environment here?
Anthony Folger: Yes. Ray, it’s a good question. And I talked a little bit about the impact of increasing rates on the outlook for the year. But even having said that, I think with what we will draw down or what we anticipate drawing down from MarkLogic, I would expect the leverage levels sort of on a pro forma basis to remain well under three. I would expect that probably debt repayment will come into the calculus on capital allocation during the year. We’ll do some a little bit of calculus on rates and other potential uses of capital. But I suspect we’re going to want to pay down. And like I said, the drawdown is not so much. So, if we were to go up to say 2.5 times leverage on a pro forma basis, you’d probably see that under two as we go into 2024.
So, I would expect that we start to de-lever from this one pretty quickly. And I think we’d be comfortable a bit, to do a deal maybe up at three times net. But, again, that’s at a point in time to get a deal done and similar to what we would do with a deal like MarkLogic, we’d probably look to de-lever in a rate environment like this pretty quickly.
Ray McDonough: Great. That’s helpful. Thanks for taking the questions.
Operator: Thank you. One moment for our next question. That will come from the line of Fatima Boolani with Citi. Please, go ahead.
Fatima Boolani: Hi. Good afternoon. Thank you for taking my questions. And Happy New Year. Yogesh, I’ll start with you. There was a cyber incident at the firm, and I understand you’re taking a couple of charges just with respect to that incident. So, I’m curious if you could just expand upon that a little bit and – to the extent that lead you up and margins maybe creating a little bit more – maybe a little less stability, if you will, in terms of the growth expectations for the non-MarkLogic portfolio. And then I have a follow-up for Anthony, if I could, please.
Yogesh Gupta: So, as you are aware, and I think as we have mentioned before, the investigation into the incident is still open and ongoing. So, we really can’t comment on it any further other than basically we’ve said before, and we can reiterate that we do not expect any material impact to our business, operational, financial results, etc. From a product-specific perspective, I don’t see there – this causing a product-specific impact, otherwise we would have talked about it, right? So, I don’t think that the growth aspects of our projections for FY ’23 are related to that. As Anthony mentioned, right, the – we’re expecting stable revenues this year from the base products. Obviously, 2021 and 2022 saw some phenomenally wonderful demand for us.
And I think the overall macro is slightly different or maybe hugely different depending on what you think, right? And so, we are being very straightforward about the fact that, yes, we expect there to be stability in our business this year rather than significant growth. We do expect ARR to grow, by the way, Fatima, right? So – and we said that we do. And we’ll expect it to grow modestly. And we think that our core business is truly solid across the board.
