Joe Ritchie: Hey, good morning, guys and congrats to you both, Janet. I look forward to reconnecting sometime in the near future. Just my first question, maybe just talking on the bolt-ons for a second. So clearly highlighted Syntellis and Replicon today. As you look across your portfolio, where do you see the most opportunity to potentially bolt-on?
Neil Hunn: So we’re in the early stages of doing that, right? So we don’t want what we do not and we will not do is do a center-led process from Sarasota and say to any one of our companies, here’s something you should buy. We’re not going to do that. We will not do that. What we are going to do is we’re asking the vast, vast majority of our businesses as they go through their strategic planning cycle to have both an organic and an inorganic strategy. And so, as we go through that vetting exercise, we’ll build — we’ll understand the strategic areas of expansion and then we’ll have the discussion should it be organic or inorganic. From there, we’ll then forward lean to figure out the inorganic opportunities and then go from there.
So that’s the process. As a general matter, I think, the larger businesses are the most obvious ones. We’ll start Deltek, you know, Frontline, Vertafore, but it’s not limited to the largest one. I mean, Strata was sort of an average or a mean-size business for us, if you will, and there was a very compelling opportunity. I think we’ll ultimately have, if you will, again, the vast majority, maybe as many as 20 of our 27 companies will have some inorganic growth strategy. Whether or not we execute against that, is a whole another thing, but at least we’ll have strategies formed across the vast majority of the portfolio.
Joe Ritchie: Got it. That’s helpful, Neil. And I guess maybe just a follow-on question. As you think about renewal rates, you mentioned Frontline. So I think 3Q tends to be more like a — the typical quarter where you’d see more renewals for Frontline. Across your portfolio, does it tend to be more weighted around like the fourth quarter? Or just any color you can give us on, you know, I guess, the confidence in your retention rate staying very high going into next year?
Neil Hunn: Yeah. Joe, you know, our fourth quarter is a very strong renewal season for us at Deltek, Vertafore, and Aderant. So — but I’d say, you know, it is balanced across the year, but more in the fourth quarter. And obviously with Frontline in the third quarter, that’s changed the dynamic there. But we expect strong renewals. You know, we had our operating calls this quarter and the renewal process has already kicked off for the fourth quarter for these businesses, and you know, we’re hearing positive feedback.
Joe Ritchie: Okay, great. Thanks guys.
Neil Hunn: You’re welcome.
Operator: The next question comes from Brett Linzey with Mizuho. Please go ahead.
Brett Linzey: Hi. Good morning, all. Congrats on a nice quarter.
Neil Hunn: Thank you. Good morning.
Brett Linzey: Hey, just wanted to come back to ConstructConnect. I think in the previous comment you said improving strength. I was just hoping you put a finer point on that improving activity. And just particularly given the — some of the incoming data on construction is a little bit weaker, higher rates and so on. So I’d just be curious what you’re seeing there.
Neil Hunn: Yeah. So just to remind everybody, Construct Connect is the leader in commercial construction informatics. So in this data set is used in the planning stages of construction. So once they shovel goes in the ground, that’s a different part of the industry and one in which we do not compete. So it’s actually — when — so think of it if you’re a contractor or a building product manufacturer and there’s so much work to do that you have a backlog and you’re not responding to RFPs. That’s the environment we’ve been in for the last handful of years. It actually has a dampening demand driver for our business. When business is harder to find, there’s fewer projects than the contractors are having to work harder and find opportunities.
That plays into the strength of ConstructConnect. So, to the first point why we’re seeing some improving strength there is because the market’s coming to us, it tends to have countercyclical demand drivers. But we have to — when we talk about ConstructConnect, we got to talk about the operational improvements that have happened in the business with Matt Strazza and his team at ConstructConnect. They’re doing a tremendous job taking complexity out of this business, having a go-to-market motion that’s more efficient, having a product motion that’s more efficient, having a marketing message that’s more efficient. And so when the market’s coming to us, we are doing a better job capturing that demand. So, it’s a combination of both market and operations.
Brett Linzey: Got it. I appreciate the color. And then just the last question on the margin outlook. Understand you don’t want to give full guidance here in October for next year, but just thinking about the moving pieces, you know, the mixed differences in the business, is there a framework to think about in terms of you know percent margin expansion, incremental margins and particularly within network software, I mean, do we build off these high levels for next year?
Neil Hunn: Yeah, I mean, I think it’s a little early to talk about margins for next year, but I mean, broadly, you know, 45% operating leverage is sort of what our long-term model is, and we’ve been you know, close to that this year. I think you’re probably right, though on network, it’ll be maybe a little bit above that next year, but it’s still too early to tell.
Brett Linzey: Got it. I appreciate the color.
Operator: The next question comes from Brad Hewitt with Wolfe Research. Please go ahead.
Brad Hewitt: Hi. Thanks. Good morning, everyone.
Neil Hunn: Good morning.
Jason Conley: Good morning.
Brad Hewitt: So I noticed that Tim Haddock, your VP of Acquisitions, is on the board of Certinia. Is there anything to read through there in terms of potentially seeing that relationship with Certinia evolve and deepen over time?
Neil Hunn: I wouldn’t read too much into that. We have a board member and a board observer, and part of us delivering our knowledge, if you will, to that enterprise and also learning from the enterprise comes partially through the board interaction. And so I would not read anything into that other than Tim was the one who helped shepherd the process. He had the relationships. Obviously, the MA team leads the Diligence. And so he’s just a name board member. I wouldn’t read anything into that. This is one step into a second-step transaction.
Brad Hewitt: Okay, that’s helpful. And then maybe switching gears. In terms of free cash flow conversion, you guys have typically targeted conversion of about 80% of EBITDA and historically you’ve executed on that. But now, following the Indicor sale, just curious if you guys have kind of reassessed that number and whether there’s scope to kind of outperform on that from a longer-term perspective.
