And some impact from smaller initial deployments on deal sizes and that did incrementally worse Q3 and Q2. We also have a bit of FX impact in the quarter, and if you look ahead, we have a further FX impact, if you look at our Q4 guide. It’s about an additional 1 point of pressure on topline. But what I’d say is, you have heard us talk this year about driving efficient growth and we did 300 basis points of expansion in Q3. We are now guiding to a further 350 basis points year-over-year in Q4. And we have really tried to outline for you an accelerated path of getting to that at least 20% OP margin that we alluded to last time we posted earnings. So we have now laid out a target really of about 700 basis points of improvement over, say, eight or so quarters and 2023 will be a further 350 basis points on top of where we ended — where we will end 2022.
So I think really, we are getting the benefits of scale and then we are also looking at all aspects of the business and being super disciplined around those margin levers that I called out in my script, obviously, a lot more efficient around labor spend. You did see that today, we made the extremely difficult decision to let 10% of our full-time headcount go, that obviously will have an impact mainly in Q1 of next year. But we are really being disciplined on all aspects of the P&L. And as we look Q — as we look to 2023, we really expect to see that operational leverage kick in on OP margin, OP growth and also fall to free cash flow as well. So we don’t really see it as a trade-off. We are driving efficient growth and that’s the way forward.
Operator: Our next question will come from Ryan MacWilliams with Barclays. Please go ahead.
Ryan MacWilliams: Thanks for taking the question and I would like to reiterate pleased to see the improving margins. Suddenly, what could the restructuring actions mean from a dollar perspective for next year or how do you think about that? Thanks.
Sonalee Parekh: Yeah. Thanks for the question, Ryan. So I think in my script, I was quite specific about the restructuring charge that we take as a result of the actions, so that’s anywhere between $10 million and $15 million and that will obviously be a GAAP only below the line charge associated with the restructuring. In terms of how to think about the overall impact of the headcount action, we have guided to 350 basis points of margin improvement for next year. And I said just now to Meta that, we will see a significant uptick really in Q1 from those headcount actions. And what I would say is, labor is a fairly strong or fairly big contributor to the overall margin improvement. But we are also going to post improvement in areas like skill and marketing, rationalizing procurement spend.
There’s a list of over 50 initiatives that we are working on now. So the improvement will really be very broad-based across the P&L. But in terms of the headcount action, you should expect $10 million to $15 million of P&L charge, and then obviously, the benefit will go through from Q1 and increasingly throughout the year.
Operator: Our next question will come from Michael Turrin with Wells Fargo. Please go ahead.
Michael Turrin: Hey. Great. Appreciate you taking the questions. Vlad, you have seen cycles before you founded this business in 1999. Can you put some context around how your playbook changes. It looks like there are some quicker actions you are making here. The margin emphasis is clear. But anything else you would point us and investors to that’s informing your decision process here based on prior cycles? Thank you.
