Mike Thomson: Great. Thanks, Peter, and Arun, thanks for the question. I think Peter answered it pretty well, but I’ll maybe just add a little bit of color there. For starters, not necessarily any negative trends that we’re seeing. I do think you’re right, Arun, that there is this a little bit of a pause from a market perspective. I think you’re seeing that in the industry, certainly, what we’re seeing in general. But I think it’s a little bit more to do with the mechanics of the deal signing. The pipeline is extremely encouraging. As we’ve talked about, we have increased significantly our new logo signings year-on-year and sequential. We expect that new logo signing to continue to enhance throughout the year. And that has kind of a knock-on impact, right, because the new logos being at it gives us another opportunity to expand and pick up the new scope.
And we traditionally see that after a new logo signing. So first, it’s the transition time to get to revenue. Typically, if they’re taking all work for incumbents, it’s a three to six months to get to transition into revenue, which is why we’re expecting some of the back half revenue improvements for the new logo signs that we had at the tail end of last year. But again, very encouraged with market reception and looking forward to an accelerated back half both in signings and picking up some growth in the business.
Arun Seshadri: Thanks very much.
Mike Thomson: Thank you.
Operator: Thank you. [Operator Instructions] And the next question comes from Anja Soderstrom with Sidoti.
Anja Soderstrom : Hi. Thanks. Thank you for taking my question. Some of them have been addressed already. But have you given any sort of targets for the gross margins for the new businesses, the workforce solution and CA&I?
Peter Altabef: Anja, thanks. This is Peter. Great question. Again, I’ll defer actually to Deb on this one after I do a little start to that. When we rolled out our multi-year plan last year, one of the things that we stressed and you just hit on it, is really an expansion of gross margin, and that’s really going to come in two ways. One is where we expect the gross margin dollars to expand because we expect growth in, if you will, that Ex-L&S business. And the second because we expect that business to become more profitable. We’re very encouraged by what we saw this quarter with that business becoming more profitable, specifically on the majority of that business, which is in DWS and within CA&I. The second element of that, which is also important, and it’s a little bit like the decreasing amount that we expect on the external legal fees and on the environmental.
Some of this stuff is, again, built into our model, which we showed last year, but relatively automatic. And that — what I mean by that is as that business grows, it has more profit dollars. And as that business becomes more profitable, so they are more profit dollars per revenue, the majority of that revenue is in the U.S. and Canada and in EMEA at least historically. In fact, we have 77% of our revenue in those two areas. And as you look at our tax situation and Deb referred to our tax asset, we have very significant net loss carryforwards in both the U.S. and Canada and in certain countries in EMEA. That is also detailed in a chart in the materials that we provided you. So not only do we expect that profitability of the business increase.
But as we think about modeling, and we do not expect to pay a typical, if you will, cash taxes on that increased profit because of the value of our NOLs. And so we think that — again, it’s relatively automatic because those NOLs exist. And so we expect that to help us as well in the model going forward. Deb, any further comments on that?
Deb McCann: No, I just think — I think Anja, you had asked also about the target, have we given an explicit gross margin target. I think you had maybe mentioned. I think we haven’t given specifically by the segments, but we did say overall, Ex-L&S about 150 basis points to 200 basis points this year is what we’re saying. And I think you’re seeing the progress of that with this quarter, DWS margin up 250 basis points and CA&I at 360 basis points. So all of the cost actions we’re taking within those businesses are definitely taking hold, and we’re showing progress.
Peter Altabef: Yes. Anja, if I could — just to tie on to Deb’s point, if you recall from Investor Day, we had talked about a targeted gross margin in our next-gen solution being in the 25% range. And so, I think if you’re looking from a modeling perspective, of course, we have internal targets for all of our solutions, as we take them to market. But I think that’s probably — well, a, we’ve already given it and b, fairly consistent in that range at approximately 25% gross margin on the next-gen solutions consistent with what we talked about at Investor Day.
Anja Soderstrom: Okay. Thank you. That was some for me.
Peter Altabef: Thank you, Anja.
Operator: Thank you. And this concludes our question-and-answer session. I would like to turn the conference back over to Peter Altabef for any closing comments.
Peter Altabef: Thanks very much, operator. And I’d like to thank everybody for joining us. As I hope that Deb and Mike and I make clear in both the opening remarks that Deb and I gave, and as well as the Q&A responses we are — we thought this was a good quarter. We’re slightly ahead of expectations on revenue and profit. We’re making very substantial headway in new logo TCV, and we are reaffirming our guidance for the year. You will find more information about the company on our investor website. We actively encourage any questions from our investor base. We had a shareholder meeting that was taped a little while ago, and that is available as well for your review, for those of you, who are not able to do it. I did a company report during that of 2023 performance. So with that, I want to thank everyone for joining us and look forward to the next call.
Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
