So ultimately, the back half of the year is about 100 basis points to 150 basis points of growth lower than what is implied by guidance in the first half of the year. On the other hand, going forward again based on what we are seeing today, we believe that we can continue to grow the core business at the kind of rates we talked about last November. So that is still how we are thinking about 2025, and we are thinking about advertising in 2025 as a nice increment of the business but not one that is substantially driving the overall growth rate of the company. It will eventually be contributed to the overall growth rate, but that will be more [‘26, ‘27] (ph).
Omar Dessouky: Thanks. And just one more question for me. So if I just do the quick math on the calendar ’24 top-line guide, it looks like it came down by a little less than $200 million yet the EBITDA margin like-for-like seems not to have changed, and you don’t appear to have lost cost leverage. Has your investment plan changed? Or have you pulled back on your plans to make fixed investments — is that why the EBITDA margin is staying about the same, as you’ve said before?
David Baszucki: So Omar, yes, the top-line guide number is down by about 4%. And you are right, the profitability, EBITDA, cash flow numbers remain unchanged. That is just because we have had operating leverage in the business, and we have had that for a while. If you look at the last four quarters, we’ve been getting leverage on our fixed cost, which is infrastructure, trust and safety as well as on headcount. And we expect to continue to see that by being very careful about what we’re doing but we had already forecasted that we were going to have operating leverage. And then on the free cash flow side, it is because CapEx is coming down, and that is something we talked about last November, and we’re certainly seeing that flow through this year.
So we have said the — unit economics and the cash flow generating ability of the company are very high. And we are in a good place in that, we had enough cushion in the operating expenses and the CapEx to be able to deliver the same amount of cash flow on a forecast or guidance right now that’s about 4% lower.
Omar Dessouky: Okay, thanks guys. I appreciate the response.
David Baszucki : Yeah, no problem. Thanks.
Operator: Your next question is from the line of Cory Carpenter with JPMorgan.
Cory Carpenter: Hi, thank you. I was hoping you could expand a bit on what you think drove the engagement with the clients in 1Q. I know you mentioned potentially low-end Android slowness, but anything else to call out? And as a follow-up for Mike, you mentioned US and Canada bookings north of 20% to start the quarter. I think the 2Q guide implies 13% bookings growth. Could you just help us bridge the gap there? Thank you.
David Baszucki: Yes. I’ll go first on Q1. And — we — just to be clear, we believe this is a combination of several factors that were below the measurement threshold in Q4 and started to show up in Q1. The biggest driver or arguably one of the biggest growth drivers on our platform is raw performance. The time to join and experience, the frame rate of an experience the ability to play for a long time without interruption on our platform, the speed of finding friends. These are all huge growth drivers. And we shipped a lot of stuff in the second half of Q4 or second half of the year. We also started rolling out a lot of stuff. Once again dynamic heads that track the camera, more and more of our users with Avatars with complex collections of layered clothing.
We — more and more of our users are using voice on the platform. And also we’ve arguably tuned one of the best anti-cheat systems with our acquisition of Hyperion over Q4 and the second half of the year in the industry. A lot of our users use high-end devices, but a lot of our users use low-end mobile devices as well. And performance is just critical on all of these things. So we have a large focused effort on perf up and down our stack. It’s been happening in our creator tooling group. It’s been happening in our user client group. It is been happening in our core engine simulation group. We are measuring finer cohorts. We are measuring more specific users, and we believe this has been contributing to the recovery we saw on Q1, at least what I’d say is, the last three weeks being US and Canada go north of 20%.
And Mike, if you could refresh the second half of the question, Mike, you can handle that.
Mike Guthrie: Yes. Great. The activity we are seeing in the last three-plus weeks is obviously encouraging. So the back half of April and what we’ve seen so far in the month of May. Our guidance for the quarter reflects a couple of things. One is you have to take into account the first half of April. So the improvements really did start right around April 15, it was pretty significant in our numbers. So embedding the first half with the second half gives us the April numbers. And then the three weeks that we’ve seen we have to be cautious as we roll those through our forecast for the month of May and the month of June and what that means for the quarter. So in the context of providing guidance for the quarter, Q2 and the growth rates, we felt like it was much more prudent to lower that growth rate and give ourselves some cushion.
And same thing with the back half of the year. Again, it is great to see the last three weeks, but extrapolating that into Q3 and Q4 with no sort of discounting just doesn’t make sense. It is just not prudent to do that. So we are trying to be very thoughtful and rational about it and the overall hit to the full year guidance ends up being at about 4%. Does that make sense?
Cory Carpenter: Yes, that’s helpful. Thank you both.
Mike Guthrie: Okay, thanks.
Operator: Your next question is from the line of Clark Lampen with BTIG.
Clark Lampen: Thanks for taking the question. I have two. David, I wanted to come back to the point around new content. We have got a lot of really good visibility around app payers on the user side of the platform a little bit less so on developers. Was that challenged sort of with new content, a function of both user and developer engagement moderating or maybe more one versus the other — just curious if there was I guess a little bit of that moderation on the developer side, if you would think about addressing it differently than you would users?
