Aravinda Galappatthige: Thanks, Mike. Quick follow-up. Proportion of OpEx from headcount, I was wondering — I don’t know if you can disclose that, but I was curious.
Michael Eastwood: Sure. About 65% of our costs are compensation-related, Aravinda. That includes base salary, annual incentive plan, long-term incentive plan commissions, commissions being the variable compensation for our sales force. So about 65% is compensation-related.
Operator: Our second question comes from George Tong from Goldman Sachs.
George Tong: I wanted to dive deeper into factors leading to your updated EBITDA margin guidance and free cash flow guidance. Can you discuss the puts and takes behind the updates there, as well as where, from a segment perspective, the changes are happening and contributing within the year?
Michael Eastwood: Sure. In regards to the EBITDA margin, George, let me address puts and takes. From a tailwind perspective, certainly the Change Program cost savings, we referenced the $540 million of annualized savings through December ’22, is certainly a tailwind. In regards to headwinds, I would mention 3, George. Inflationary cost pressure is number one. Second, investments to drive customer success and to fund the growth initiatives. In regards to customer success, that’s referring to continuing to improve our end-to-end customer experience that will drive higher Net Promoter Scores and then should drive higher retention. As a reminder, George, our retention rate is about 91% for total TR, but it varies by segment. The third headwind in regards to EBITDA margin is the 50 basis points drag that I mentioned from the SurePrep acquisition for calendar year 2023.
So those are the puts and takes for the EBITDA margin. In regards to free cash flow, which are noted on Page 33, I’ll just highlight again the 3 items there. The divestitures that we did in Q4, that’s a reduction of absolute free cash flow of $40 million. And then we are intentionally making investments for the 2 acquisitions we recently completed with SurePrep and ThoughtTrace, which we think is the right thing to do mid to long term. And then lastly, the North America real estate optimization. We own facilities in Minneapolis-St. Paul, in Dallas. We see an opportunity, George, to rightsize those facilities that we own into smaller campuses for us going forward, which would provide a stronger employee experience, a stronger workplace of the future for us.
But those are the thoughts, George, on those questions.
George Tong: Got it. Very helpful. You successfully completed your Change Program in the fourth quarter. Can you discuss key product investment and cost initiatives — cost efficiency initiatives now that you’re done with your Change Program as you look forward to 2023?
Stephen Hasker: Yes, I’ll start, George. It’s Steve. So a couple of things. We’ve — under the leadership of Matt Keen, who was our Interim President at Reuters for a period of time, we’ve launched an ongoing productivity initiative. And this is very much looking for opportunities to improve our speed, our efficiency and our effectiveness across the company, all regions, all products, all segments. And we see that — lots of opportunity there, and we’ll just get better and better at doing that on an ongoing basis. From a product investment standpoint, I’m very pleased with the work that David Wong and Shawn Malhotra and Jason Escaravage have done in terms of getting us focused, not only on the 7 growth initiatives, but particularly on a series of pretty exciting product innovations and launches this year.
So we’ll continue to invest in Westlaw Precision. We’ll migrate HighQ to the cloud. We’re making some investments in our Indirect Tax and our Global Trade areas and the ongoing work that Kirsty Roth has launched in content modernization, we think will lead to a platform around some pretty interesting new launches down the track in things like CLEAR. So it’s a — there’s a focused list of half a dozen or so areas that we’re particularly going to call out through this year, where our customers have told us that there’s demand and there’s interest. And so we’re excited to pursue that.
