If there was one category that I’d call out that might have had some benefit in the quarter in terms of getting more closely aligned to profile, it’d be networking, so that one would stand out; but the rest of them is sort of business as usual profiles at this point.
Marshall Witt: And Matt, just commenting about the question on what the margin profile looks like, if I think about pricing, it remains competitive but not irrational, so I don’t think that’s really changed. I know from quarter to quarter, that can change a little bit based on just the competitive landscape. From an overall rebate and program perspective, again competitive but we continue to earn our fair share of back end margins, so op margin is structurally sound for us. We think that there’s good upside as we think about being on [indiscernible] platforms, specifically within the Americas we move forward into ’24, and that should help with operating margins as well.
Matt Sheerin: Okay, just as a follow-up, though, if the mix shift changes and client devices, endpoint solutions grows at a faster pace, would you see some gross margin pressure? I guess my point is, on the operating line, would you be able to make that up with lower expenses or other things?
Marshall Witt: Yes, I think if you–you know, typically in Q4 we have a normal balance. ES plays a little bit heavier, so we see the gross margin profile come down more towards, call it a 6.5%. But Matt, you’re correct – we tend to see less SG&A required for that endpoint solution as AS, so the operating margin profile still kind of holds in check, and it’s a regional difference. Americas have a different overall operating margin performance for AS and ES than Europe, so it does kind of depend on the region itself. But I don’t think that that necessarily plays to a decrease or a structural decline in the operating margins based on the mix shift.
Matt Sheerin: Understood, thanks a lot.
Operator: Your next question comes from the line of Ruplu Bhattacharya of Bank of America. Your line is open.
Ruplu Bhattacharya : Hi, good morning. Thanks for taking my questions. Can you talk about the pricing environment in both advanced solutions and endpoint solutions? If the macro is weak in a deflationary cost environment, do you think pricing sustains? As part of that, are you seeing any benefit from AI-based higher configurations in either PCs or servers, if you can touch on that?
Rich Hume: Yes, so Ruplu, what I would tell you is, as Marshall stated earlier, there is nothing that would say that there is a major trend in pricing within the market. If I were to maybe point to one area where we’d cite a bit more of aggression is within Europe, perhaps because of the fact that the pie is smaller, so as everybody fights for the smaller pie, they tend to get a bit more aggressive. I would state that that would be within the endpoint segment and sort of isolated, if you will, to a couple of markets over there. From an advanced solutions perspective, really nothing to report. It feels like as usual competitive pricing, but business is normal. Then as it relates to AI, my view is that in order to have a material impact, it’s way early in the game.
We really haven’t seen on the endpoint side AI-enabled offerings that make up any meaningful percentage of the shipments, and I think that as we think about the data center category, maybe this is just my point of view but obviously AI has been around for a long time, and the hype has sort of peaked with ChatGPT. I’m sure that many of the vendors have the opportunity of classifying now AI machines, which are being shipped, and maybe even classifying some of what has historically been in the sales motion because it’s not a new category. There’s many, many years’ worth of machine learning shipments, etc., so therefore I would say that the opportunity for AI remains in front of us, as opposed to emerging in the existing quarter. Maybe as you get into very, very large enterprises, there are sort of firsts of a kind, but that falls outside of our segment and the customers that we serve.
Ruplu Bhattacharya: Okay, thanks for all the details there, Rich. For a follow-up, can I ask about the ERP integration? Since it’s complete in North America, are you now seeing meaningful revenue synergies? If you look back in history, Synnex had significant revenue synergies in its acquisitions a couple years into them. I know Europe is not going through an ERP integration, but do you think there could be revenue synergies there, what would drive that, and how should we think about these revenue synergies progressing in the fourth quarter and beyond? Thank you.
Rich Hume: Yes, so first, you are correct – the major milestones of our ERP implementation have been achieved. As I had commented on previous calls, there is a low percent of the business which has a longer tail, which we’ll proceed carefully with. It really doesn’t create any material cost overhang to have that wind down occurring. Interesting that you talked about revenue synergies with Europe. In fact, we do believe that the merger has had a positive effect on our global business, even outside of the Americas. We had the opportunity of seeing some signings, bringing on some vendors in Europe that had taken place that we believe were supplemented or complemented by the merge occurring. Then as it relates to the Americas and the revenue synergies, we absolutely know that we are selling, you know, allow me to use legacy tech data line card into Synnex accounts, and the reverse is true.
It’s starting to ramp, but it’s not to the point where it’s meaningful. I suspect we’ll start to measure it more carefully moving forward. Then of course when the market is a little bit soft, as it is today, it’s a little bit harder to see it in the totals given the overlying market environment, so we’ll start to, as I said, I think see more focus on that moving forward.
Operator: Your next question comes from the line of George Wang of Barclays. Your line is open.
George Wang: Hey guys, thanks again for taking my questions. I just have a question on the Hyve – maybe you can double-click on the Hyve. You talked about performed better than expected just versus last quarter. You talked about revenue declining due to tougher year-over-year compares, so can you give more color just in terms of the [indiscernible] growth rate you are seeing right now and how you think of this segment going forward?
Marshall Witt: Hi George, it’s Marshall. Thanks for the question. Yes, we did speak to the tough compare that Hyve presented itself, given the strong H2 of 2022, and that’s still the case. The comments around Q3, doing better with that, it was better than what we had expected but still Hyve was down for quarter three, and we expect it to be down for quarter four. The actual revenue attributes, the revenue profiles and where we’re getting the revenue from continues to be well balanced. The margin profile is structurally sound, and what I’d say is that we’re really optimistic about where Hyve is going as an organization. There’s a new customer that we’re ramping in Q4 that we’ve been building for quite some time, so excited about that, and then going into ’24, we would expect to see some expanded or new product lines with existing customers.
