Marshall Witt: Yes, Ruplu, just one other thing to call out. If you think about our quarter one spot. There is a little bit incremental SG&A related to, I’ll call it, reinvestment or continued investment. Specifically in AS. As AS softens, we’re not going to soften our investment. So there could be a little bit of a heavier SG&A in the front half of ’24. So I just wanted to let you know that it may appear as if there’s an imbalance in that relationship of E to R on a gross billing basis, but it’s very well thought out. As we believe as we get into the second half, AS has an opportunity — forecasted opportunity to recover.
Ruplu Bhattacharya: Okay, thank you for all the details. Appreciate it.
Operator: And we will take our next question from Michael Ng with Goldman Sachs. Your line is open.
Michael Ng: Hi, good morning. Thank you very much for the questions. Marshall, maybe just a follow-up on the SG&A point that you just made. Is 2.75% to 3.25% of billings still the right way to think about that? And maybe you could just help us think about how SG&A evolves throughout the year? And then I just have a quick follow-up.
Marshall Witt: Sure. You’re right, Mike. It’s that range of 2.75% to 3.25% in relation to gross billings. We’ll start right around 3% in quarter one, and the expectation has been that structure should help build out the growth in the portfolio and should, we’ll call it ratably or incrementally come down to something below 3%. If I think about a couple of relationships, one is the year-over-year on SG&A for quarter one. There’s two things. One was the AS investment. The other thing, although it’s somewhat subtle, this time last year, we had already started to see the decline in the performance and started to step down some of our provisions around variable pay. This year, the good news is we’re assuming we’re going to hit our number and grow it.
So there’s a little bit of heavier bonus and variable pay associated with quarter one. The other thing is the actual FX itself from a euro perspective is up. So that’s about $10 million to $15 million of headwind on that. And then finally, the SG&A investment that we’ve stated on — on AS is another investment that we believe is important to be made. So we feel that we’re in a strong position. We think that the 3% is probably going to be the top end for fiscal ’24, and we should see that improve as we play it out quarter by quarter.
Michael Ng: Great. Thank you. That’s very clear, Marshall. And it was encouraging to hear about the new segment disclosures by product around billings, revenue and I think you said gross profit as well. I was just wondering if you could give us a little bit of a preview of some of the potential revelations that we may have as you give out those new disclosures. Does the narrative kind of tighten up around the growth and margin outlook for those segments in the near midterm?
Marshall Witt: Yes, Mike, I think for — as a general response to that, Rich and I have spoken to the margin attributes of AS and ES. We’ve spoken about the growth attributes. But it just allows us to be more specific. So I do think that the revelations and the — the clarity that we can speak to the actual performance within the portfolio, I think, just helps drive better understanding of the mix, the profit margins or the gross margin of the business, right? We believe it is an enhancer. We think it is a value contributor. And we do think it will help inform the actual performance for the quarter and what our thoughts are for the upcoming quarter.
Rich Hume: Yes. Just to add to that, I think generally, my point of view is the narrative that we provide in the call is — is fairly directionally correct relative to what I think you’ll see in the segmentation going forward. We always talk about the segments, and you all ask for insights around the segment. But this will put sort of the definitive clarity out there in print. And then the second point that I would make, Michael, is that you guys are pretty good at modeling. Every time we get an insight relative to models, we are impressed relative to how you guys think about the business and how you laid out.
Michael Ng: Great. Well, thank you for the incremental transparency. I appreciate it, Rich and Marshall.
Operator: And we will take our next question from [Alek Valero ] with Loop Capital. Your line is open.
Unidentified Analyst: Hi guys. Subbing in for [indiscernible] today. Thank you for taking my question. So my question is, do you guys believe that Hyve can become involved in gen AI server builds? We’ve heard from our work that they may be?
Rich Hume: I’m sorry, can you repeat that? You broke up a little bit.
Unidentified Analyst: For sure. My question was, do you guys believe that Hyve can become involved in gen AI server builds?
Rich Hume: Yes. If the question is do we believe Hyve will participate in AI server builds, absolutely. Remember that the big segment of Hyve is an ODM type of business. And so we end up building what our customers have interest in. And certainly, we have full expectation that we will be participating in the AI builds moving forward.
Unidentified Analyst: Awesome, awesome. So as a quick follow-up, what are — what key spending areas were softer than you may have anticipated? Or softer than typical seasonality? And maybe if you can touch on what you expect from PC seasonality in February and May quarters?
