Joseph Cardoso: Hey gentlemen, thanks for the question. I guess just first one for me is just another quarter of gross margin expansion. Really impressive. I think it’s seven now in a row on a sequential basis, and that’s despite expectations for mix to be a bit of a headwind. Can you maybe just dig into that a little bit further around the margin outperformance, particularly, like, what was the surprise this quarter? And then as we look forward, particularly with PCs expected to recover, like, how should we think about the potential pressures there on the margin side for the remainder of the year, and, like, what are the potential offsets that maybe we’re not thinking of? And then maybe I’ll just throw in a quick follow-up.
Can we just get an update around the new large customer in Hyve? I think there was a delay last quarter. Just curious in terms of how that ramp is tracking and how we should think about the ramp and magnitude through the course of fiscal ’24. Thanks for the questions. Bye.
Rich Hume: Joe, good morning. Thank you. Thanks for the question or questions. Let me try and unbundle them one at a time. When we think about our margin profile improving as we sort of have moved through time, I’d like to offer a couple of thoughts. So the first one is when we think about our management system, we have the sellers across the organization really sort of aligned on delivering profitability. So our — the sales incentives that we have in place, the systems that we have in place really afford us the opportunity to make sure that the whole organization is focusing on what’s important. The second thought that I would give you and we’ve been transparent and will continue to be so on this fact. As we move through time there, we’re moving more towards products which are netting.
So we get a natural uplift in the margin profile. I think Marshall in his prepared remarks said it was worth 23 basis points this past quarter. So that’s something that exists because of the accounting situation. And it’s another reason why we want everybody to be focused on gross billings as we move through time because we would anticipate that that netting is going to continue moving forward. As you know, we’ve got a big focus on strategic technologies and a good lion’s share of that portfolio gets netted. Then on the customer question that you had overall, let me back up, I missed one on the — on what we should anticipate going forward. Yeah, we’ve had the benefit of a heavier Advanced Solutions. And you can see in the segmented results that we had, the pro forma results that we had included in the financial information that Advanced Solutions has a more attractive gross profit margin.
So we will see a remixing of the portfolio moving through time. And almost by, just the math, it would say that we’ll trade off some margin as we have a heavier weight in the portfolio towards Endpoint Solutions. And obviously the guides that we provide going forward have an expectation relative to what that mix would be. And then lastly, the new customer in Hyve is up and ramping and things are executing as anticipated.
Marshall Witt: Joe, I just add a little bit of color to where we saw some goodness in the quarter. And you’ll see this in our press release where we break down the regional results. Europe had quite a bit of strength in their OI margin and OI profile on a non-GAAP basis. You can see both Americas and Europe on a gross billing perspective were down about 5%. But the margin profile was quite strong. So there were some suppliers and partners that performed or outperformed our expectation. And then strategic technologies in general performed well in the quarter.
Joseph Cardoso: Got it. Thanks, Rich and Marshall. I appreciate you guys tackling all of that.
Operator: Our next question comes from the line of Matt Sheerin with Stifel. Please go ahead.
Matt Sheerin: Yes, thank you and good morning everyone. Rich, I wanted to follow up on the PC commentary. I’m hoping that you can help us understand which end markets are you seeing starting to see year-over-year strength and which ones are lagging. For instance, SMB versus public sector versus enterprise, and how you see that playing out. In the second part on the demand front, on the Advanced Solutions, I know you’re up against tough comps last quarter. This quarter you had a lot of backlog that you worked down. And the concern is that this digestion period we’re going to be in a tougher year-over-year, comes for the next couple of quarters or so. So how do you see that playing out as well? Thank you.
Marshall Witt: I’m going to go first. Hi, this is Marshall, Matt. Thanks for the questions. I’ll handle the second question about demand and let Rich talk about the PC side of things. But on demand, you’re right. We called out that quarter one was going to be a tough year-over-year comparison, specifically in Europe, as there was quite a bit of backlog that did play through. Quarter two, we start to see it lighten up a little bit. I think March might be the last big month, but April, May, I think we’re going to see some better compares. So I think that the backlog is at profile. I think it’s been there for a few months, maybe even a couple of quarters now. So the digestion is through that. And I would say the growth rates and how they manifest themselves going forward probably in Q2 and beyond will be less impacted by backlog.
