Marshall Witt: On the revenue synergies, Vince, a few things just to think about. So certainly cross-selling is underway. As you know, the common platform in North America, or in Americas regarding CIS is predominantly completed. So that’s very helpful. It’s difficult for us to quantify this early in the cycle, but certainly we’re seeing TAM associated with the vendors and customers who were complementary to the merge begin to show benefit and gain traction. So we’re seeing a lot of expansion in these complementary vendors, but it’s still somewhat early to isolate and call that out. What we will do is, as we can see, that margin, or — excuse me, that market expansion grow in those vendors, we’ll speak to it where it’s meaningful.
I think the other thing to keep in mind too is with our global footprint, we are starting to see complementary vendors and vendors that were common across both organizations utilize the global footprint to expand beyond what they currently had with the separate entities.
Vincent Colicchio: And then maybe — thanks for that. And maybe one more. How rapidly do you expect the expanded relationship with NVIDIA to ramp?
Rich Hume: It’s really hard to tell. Obviously it’s an area that is very robust in the market. So we would intend, as we always do, to get our fair share, if not more. We’ll feel really good about what we have to offer in terms of our capabilities and our specialization within those spaces. And we’re optimistic that this is going to be a great market for the foreseeable future.
Vincent Colicchio: Thanks, guys.
Operator: Our next question comes from the line of Michael Ng with Goldman Sachs. Please go ahead.
Michael Ng: Hey, good afternoon, Rich and Marshall. Thank you for the time. Just two for me. First, thank you for the new disclosures on Endpoint and Advance. My question was around the gross margins. Are the 5% and 9% a good way to think about the gross margins for those respective categories? Are there certain things that you would call out that might cause that gross margin to deviate? And do you have any qualitative color on the year-over-year performance on gross profit? And then I have a quick follow-up.
Marshall Witt: Hey, Mike, this is Marshall. Yeah, certainly we’re happy to provide these disclosures. Keep in mind that that’s on a net basis. So there’s quite a bit of netting that happens certainly in the AS portfolio. There’s a little bit in the ES. When you think about it on a gross basis, it’s more around 6% gross margin for AS and 4%. We try to show gross relationships from a billing perspective just because it ignores and removes the netting down. As we think about the portfolio and specific into quarter one, we were quite surprised about the strength of our margins on a gross billing perspective, and we talked about some of the reasons why that’s the case. As we go forward and we talked about this in our prepared remarks, as ES continues to show signs of acceleration and expectation that that should continue in Q2 and beyond, that should have some gross margin headwinds or some reductions in the area of, call it, 15 bps, maybe 20 bps, that is on gross margin and also on op margin when you compare it to gross billing.
So I know we’re throwing gross and net around there a lot, but takeaway is that Endpoint Solutions in quarter two probably has a little bit of a mix shift that should dampen some of our gross margin attributes. The last thing I’d say about that, Mike, is that as you know, when we look at our margin profiles, we also look at our return on working capital. And both AS and ES support the investments we make and the returns are quite healthy. They just have different attributes. If you think about AS, it’s a little bit of lighter inventory touch because a lot of it is drop shipped into the end — to the customer site. Endpoint is a little bit heavier on the shelf. So we have to make sure that our working capital dynamics are supportive of that.
Net-net both make sense, but it does play out a little bit to a decline in our margin profile as we head into Q2 and in the second half of the year.
Michael Ng: Great. Thank you, Marshall. That’s very clear. And then as a quick follow-up, I also really appreciate the disclosures around billings by category. Any kind of high-level thoughts around long-term mix or mid-term mix of billings by product category? And just as a point of clarification, does the netting kind of solely fit in software and services or does it come through other categories as well? Thank you.
Marshall Witt: Yeah, I’ll start so, broadly stating across the portfolio circle, everything has a little bit of netting AS corks has more than ES, but even ES has some netting to it. If you think about the categories that we’ve called out, software continues to show, we call it, decent at/or better than growth attributes. Services certainly is growing year-on-year. I’d say the rest of those categories is where we’re seeing the decline. And I’ll call it the supporting of the reduction in the year-on-year decline in revenue growth.
Michael Ng: Great. Thank you so much, Marshall.
Operator: Our next question comes from the line of Ruplu Bhattacharya with Bank of America. Please go ahead.
Ruplu Bhattacharya: Hi, thanks for taking my questions and thank you for the additional disclosures on billings and margins by product category. My first question is on billings. Looks like for Endpoint Solutions, billings were down 7% year-on-year. Was this as per your expectations? If PCs improved, were other items in this category down meaningfully from a billing standpoint? And, Marshall, I think you had expected first half of ’24 billings to be flat year-on-year. Looks like it’s going to be down 1.5% to 2% year-on-year. So the question is, has anything changed on your expectation for full-year billings, and should we still expect netted-down items to impact 25%, 26% for the full year?
