Economics have changed a little bit, macroeconomic environment. And so, our initiated price increase is not quite as large as it was last year, but it’s a good contribution as we go into next year. 100% renewal on fee this year, yeah, reflective of a very good renewal rate in comparison to the renewal on accounts, which is and always is lower. The accounts that closed out and did not renew were all relatively small accounts, so their impact on fees was marginal. And the price increase came in and basically on a renewal on fees calculation offset those few accounts that did not bring in. Hope that answers the aspects of your question there, Dave.
David Larsen: It does. Thanks very much. Can you just remind me, with regards to seasonality, what causes the uptick in Software revenue from fiscal 1Q to fiscal 2Q? Thanks.
Shawn O’Connor: Well, it’s just the buying pattern. Keeping in mind that our Software revenues, generally speaking, are in any given quarter 80% renewal, 10% upsells and 10% new logos. So, from a — dating back to our origins when a client signs up, typically their revenue — because it’s all 100% recognized up front in the 12-month license window, forevermore their licensed revenue falls in the quarter in which they initiated that business with us. In the first quarter, typically the quarter ended in November is not a new license window. December picks up as you close off some licenses at the end of our clients’ calendar year. January, February are more active, new budgets allow me to license another [seed] (ph) of the application, and hence the step up from first to second quarter and then more consistency through the remaining quarters of our fiscal year.
David Larsen: Okay, great. And then, just in terms of your own COGS and inflation, in terms of like the price increases that you’re providing to your own scientists, has that level of, I guess, inflation sort of moderated a bit, which would obviously be a benefit to margin?
Shawn O’Connor: Yeah, it’s certainly in comparison to last year, the compensation profile in terms of the marketplace for our scientists have and has settled. It settled early in the last fiscal year. Really our big jump up in terms of compensation packages took place when you looked at our fiscal ’23 versus fiscal ’22, where we had a pretty significant step up that post-COVID timeframe, some remnants of the biotech flurry of funding that led to their hiring, which increased competition in the marketplace for this scarce resource. That’s settled down relatively early in our last fiscal year. And so, as you roll forward from fiscal ’23 to ’24, yeah, no, there is wage inflation that takes place, but not nearly as dramatic as it was ’23 versus ’22.
David Larsen: Okay. And just one more from me. With regards to Immunetrics, if I heard you correctly, the revenue being generated from Immunetrics is expected to gain momentum and continue to increase, and the cross-selling and expansion to your existing books should only grow as we head through ’24 and into fiscal ’25, and that would obviously benefit, I think, the QSP/QST line item for Service. Is that right?
Shawn O’Connor: Yeah, absolutely. Good benefit here already in the first quarter where we saw 100% growth in QSP services revenue. That’s indicative of the contribution of Immunetrics there already. They are working towards an earn out. That earn out is framed in calendar years, not our fiscal year. So, they just recently completed the window of their first earn out. The calculations are being made as to where they fell out there, we’ll know that soon. Momentum is good, and they will contribute to our QSP business unit quite nicely, anticipate, through the end of — through this fiscal year and beyond.
David Larsen: Okay. And just one more for me. I’m sorry. China, up 51%. Anything to highlight there? And can you just remind me what percentage of revenue is coming from China?
Shawn O’Connor: Yeah, it’s a small contributor. Our revenue is about 20% in terms of the Asian market to which we would include Russia in that bucket. So, it’s good growth on a small number. The growth is entirely Software. We don’t have consulting on the ground in that region. And so, yeah, we’ve been pleased. I think this has been a good sequence of two, three, four quarters in that [region for us] (ph).
David Larsen: Okay. I’ll hop back in the queue. Congrats on a good quarter.
Shawn O’Connor: Thanks, David.
Operator: Thank you. Our next question comes from the line of François Brisebois with Oppenheimer. Please proceed with your question.
François Brisebois: Hi, thanks for the question. Congrats on the quarter, too. Do you share what you consider aggressive in terms of price increase percentage-wise, or what you’ve done there, or any color on how — what kind of percentages those are?
Shawn O’Connor: Yeah, I mean, we haven’t gotten to specific there, Frank, but from a ballpark point of view, 5% price increases have been sort of the norm in the industry in this past year that could have doubled. And this year, we’ve turned to historical patterns.
François Brisebois: Okay. And when you say that the space — we’re hoping that it goes back to mid-teens growth in terms of the space here, where would you consider the growth now?
Shawn O’Connor: Where is the growth now? I mean, our guidance of 10% to 15% tells you that my outlook and the growth of the business is in that lower half of the teams as we remain pretty cautious given the sluggishness of the market. In terms of expected long-term growth out of this market segment, that would be in the 15% or above sort of range.
François Brisebois: Okay. I guess what I’m trying to get at is for you to pass — kind of get by the growth of the market, would that — is that doable organically or does that require M&A?
