Brent Thill: Great, thank you.
Operator: Thank you. One moment for our next question. And that will come from the line of Ray McDonough with Guggenheim. Your line is open.
Ray McDonough: Great. Thanks for taking the question. Anthony, you mentioned billings timing was more back end loaded this quarter. Has that been a trend or was it driven by a few deals in the quarter? And how do you think about that in 2024 as your business becomes more term license related and more dependent on renewal timing?
Anthony Folger: Yes, it’s a good question, Ray. I think it was more a small number of deals. We tend to do — there are lumpy deals in any given quarter and certainly in Q4. I think the Q4 dynamics around the timing of bookings and billings, they usually are different than any other quarter just because it’s — we’ve got sales incentives that are sort of focused around that Q4 time frame and a lot of customers in year-end are at their Q4 and they’re doing a lot of budget work and negotiation around the quarter. So I think Q4 tends to be more challenging just in terms of forecasting the timing of when things are going to come in. And we overachieved on the top line, which we’re thrilled about. It was little bit later in the quarter and so that cash pushes into the following year.
But I think you’re right also that as we go into 2024, there’s more parts of our business now that are on term-based subscriptions to the extent that more multi years come into play or the timing of certain contracts moves from quarter to quarter, it’ll have an impact on revenue. Things maybe lumpy from quarter to quarter. I think it’ll impact cash flow to a lesser extent. We could have a situation like we had in Q4 where there’s a little bit of a timing issue, but I think it’s more of a revenue impact the way I think about it. Some cash flow impact, but probably a little bit less.
Ray McDonough: That makes sense. And then maybe another one for Anthony. And Yogesh, if you want to comment, that would be helpful as well. So, as we think about just kind of where interest rates have gone and where most I think are expecting them to go, which is down next year, you talked a little bit about absent an acquisition. You’ll get your net leverage down to about 1.5 times. What do you view as an appropriate level of leverage if you do find the right business? And I know it might be deal dependent, but just kind of where are your guardrails in this interest rate environment around leverage?
Anthony Folger: Yes, I think the interest rates drive a lot in our model, right? And the leverage levels are sort of the governor in terms of how fast and how big we can go. And so I would say 3.5 times net, we could creep a little bit higher than that to get a deal done. I think we’d be comfortable doing that, 3.5, 4. I don’t think we’d go much above that. And I think if we were to take leverage up that high for the right deal, we would probably — the same as we did for MarkLogic, we’d probably start to delever pretty quickly after the deal closed. If you look back on the MarkLogic deal, we’ve probably taken more than a half a turn off of net leverage this year. And we started paying it back in Q2, right. We closed it in Q1.
We started paying down that revolver in Q2. And by the end of 2024, that revolver would be gone. And I think if we were to take on a little more debt to do our next deal, I think it’d be a similar playbook where we may lever up to that 3.5 times net or a little higher. And once the deal closes and the integration starts, we’d start delevering probably pretty aggressively.
Ray McDonough: Makes sense. Thanks for taking the questions.
Operator: Thank you. I’m showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Yogesh Gupta for any closing remarks.
Yogesh Gupta: Well, thank you, everyone, again for joining us. We look forward to talking to you again soon. Have a wonderful evening. Good night.
Operator: Thank you all for participating. This concludes today’s program. You may now disconnect.
