Operator: And our next question will be coming from Kyle Voigt of KBW.
Kyle Voigt: Maybe just a question for Sara on the margin commentary and expecting less margin expansion in ’24 versus ’23. Just given the start to the year that you’ve seen, it seems difficult to get the numbers to work out to lower margin expansion that you saw in 2023, even towards the higher end of the expense guidance range. So I’m just wondering if you kind of help frame where you’d expect expenses to come in relative to that guidance range you laid out, if we see revenue growth for the full year persist at similar levels to January’s 20% rate. And are there scenarios where you’d expect to come in above the high end or below the low end of the range, depending on the revenue environment?
Sara Furber: Got it, Kyle, thanks for the question. Look, we put some thought into this range. Just kind of a reiteration to everyone’s benefit. At the midpoint of the range, we’re talking about 12% expense growth, which includes the acquisitions that now are closed. Excluding the acquisitions, that midpoint is about 10%, which is pretty much in line if you looked at any sort of track record of the expense growth we’ve put up historically. When you think about how we think about margin expansion, there’s really been no change in our philosophy there. We’re constantly trying to balance investment through the cycle to make sure that we feel like we are putting the right bets on the table to invest in durable revenue growth. And I think 2023, if I were to play back the year, is kind of like that’s the proof in the pudding.
We had an environment in the first part of the year where the revenue environment was more challenging for a lot of macro reasons. We were able to deliver margin expansion in that environment. And then, equally as importantly, particularly towards the back half of the year when the environment really became much more favorable and we were seeing very strong revenues in line with kind of what you’re seeing for January, you saw us also be able to accelerate some of those investments. And so still delivering margin expansion, but obviously, pacing expense growth in line with revenues. This is an environment that we like. Billy just talked about it. This is an environment that we want to invest in through the long term. We do care about margin expansion.
We talked, I think, in the prepared remarks about delivering expansion, we’re comfortable on either end of that guidance, but kind of cherry picking exactly where you land. It’s a combination of sort of what’s the environment and where things land. And obviously, if you look at any trend we’ve talked about, as revenues grow, our expenses grow. We have performance incentive compensation. We have variable fees, which is about 30% and so those correlate with revenue. So generally, as revenue environment improves, you’re going to see us have expenses that kind of trend in that direction, too. Hopefully, that gives you a little bit of color. But obviously, we have the acquisitions, too, which we could spend time on either now or later. But big picture, does that help give you a frame?
Kyle Voigt: Yes, it’s good.
Operator: Thank you. And that concludes today’s Q&A session. I would like to turn the call back over to Billy Hult for closing remarks. Please go ahead.
Billy Hult: Everyone, thank you very much for joining us this morning. If you have any follow-up questions, obviously, feel free to reach out to Ashley, Samir and the team. Everyone, have a great day, and thank you so much for your time.
Operator: This concludes today’s conference. You may all disconnect.
