Accenture plc (NYSE:ACN) Q4 2023 Earnings Call Transcript

Accenture plc (NYSE:ACN) Q4 2023 Earnings Call Transcript September 28, 2023

Accenture plc beats earnings expectations. Reported EPS is $2.71, expectations were $2.62.

Operator: Thank you for standing by. Welcome to Accenture’s Fourth Quarter Fiscal 2023 Earnings Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the conference over to our host, Katie O’Conor, Managing Director, Head of Investor Relations. Please go ahead.

Katie O’Conor: Thank you, operator, and thanks everyone for joining us today on our fourth quarter and full fiscal 2023 earnings announcement. As the operator just mentioned, I am Katie O’Conor, Managing Director, Head of Investor Relations. On today’s call, you will hear from Julie Sweet, our Chair and Chief Executive Officer; and KC McClure, our Chief Financial Officer. We hope you’ve had an opportunity to review the news release we issued a short time ago. Let me quickly outline the agenda for today’s call. Julie will begin with an overview of our results; KC will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for both the fourth quarter and full fiscal year.

Julie will then provide a brief update on our market positioning before KC provides our business outlook for the first quarter and full fiscal year 2024. We will then take your questions before Julie provides a wrap up at the end of the call. Some of the matters we will discuss on this call, including our business outlook are forward-looking, and as such, are subject to known and unknown risks and uncertainties, including, but not limited to those factors set forth in today’s news release and discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings. These risks and uncertainties could cause actual results to differ materially from those expressed in this call. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors.

We include reconciliations of non-GAAP financial measures, where appropriate to GAAP in our news release or in the Investor Relations section of our website at accenture.com. As always, Accenture assumes no obligation to update the information presented on this conference call. Now, let me turn the call over to Julie.

Julie Sweet: Thank you, Katie, and everyone joining us. And thank you to the approximately 733,000 Accenture people, who have worked hard to be at the center of our client’s business across our fiscal year ‘23. Our laser focus on creating 360-degree value for our clients and all our stakeholders is reflected in our overall strong results for the year. With record bookings of $72 billion, we had a record 106 clients with quarterly bookings greater than $100 million in FY ‘23, up from 100 last year. We now have 300 Diamond clients, our largest client relationships, an increase of 33 from last year, demonstrating yet again the depth and breadth of our capabilities and the trust our clients have in us. We delivered revenues of $64 billion for the year, representing 8% growth in local currency, while continuing to take market share.

We expanded adjusted operating margin by 20 basis points and delivered adjusted EPS growth of 9%, while continuing to significantly invest in our business and our people with capital deployed of over $2.5 billion across 25 acquisitions, $1.3 billion in R&D assets, platforms, and industry solutions, and $1.1 billion invested in the training and development of our people. And we generated free cash flow of $9 billion, allowing us to return over $7 billion of cash to shareholders. And we are delivering a little ahead of schedule on our business optimization actions we announced in March to reduce structural costs to create greater resilience. We also continue to attract, retain, and inspire outstanding people through our talent strategy. We’re making progress toward our commitment to Net Zero by 2025, and we invested in our communities to help ensure we have vibrant places where we work and live.

I will give more detail a little later in the call. Taking a step back, coming off two fiscal years of double-digit growth and a truly extraordinary FY ‘22, we are very pleased with our FY ‘23 results and the moves we have made to optimize our business. We are also rapidly taking an early leadership position in gen AI, which will be an important part of the reinvention of our clients in the next decade. Last quarter, we shared that we had sold 100 projects with roughly $100 million in sales over the prior four months. Demand accelerated in Q4 with another approximately $200 million in gen AI sales to bring our total to over $300 million for the year. We also are embracing the use of gen AI in our own delivery of services and the way we work across Accenture.

As we reflect on how our market has developed over the last year, we and our clients have had to navigate a macro environment that is tougher than we anticipated at the beginning of FY ‘23. While it’s played out differently across markets and industries, we have seen greater caution globally, with lower discretionary spend, slower decision-making, and in particular for us, a significant impact from the challenges the comm, media, and tech industries have faced. For example, in Q4, where we grew 4% in local currency, if we exclude CMT, we grew 7% globally, 6% in North America, 9% in Europe, and 8% in growth markets. Against that backdrop, as we enter FY ‘24, we remain laser focused on creating value for our clients. While the pace of spending has changed, the fundamentals have not.

All strategies continue to lead to technology. And companies will need to reinvent every part of their enterprise using tech, data, and AI to optimize operations and accelerate growth. To do so, they must build a digital core. We are continuing to see significant demand in areas like cloud migration and modernization, modern ERP and data and AI, and the emergence of gen AI in particular, all of which represent areas of great opportunity. And it’s still early. For example, we estimate that only 40% of workloads are in the cloud today, only one-third of clients have modernized their ERP platforms, and less than 10% have what we define as mature data and AI capabilities. We believe helping build a strong digital core and then using it to reinvent will be the drivers of our growth.

Our ability to advise, shape, and deliver value-led transformation, leveraging the breadth of our services and industry expertise from strategy and consulting, to technology, to our managed services across industries and geographic markets, along with our privileged position with our ecosystem partners, is what makes Accenture unique. And you can see this unique positioning in the number of our Diamond clients, clients who turn to us for large-scale transformation. Over to you, KC.

KC McClure: Thank you, Julie. And thanks to all of you for joining us on today’s call. We were pleased with our results in the fourth quarter, which were within our guided range and aligned to our expectations, completing another strong year for Accenture. Our results reflect the diversity of our business and once again illustrate our ability to run our business with discipline and deliver significant value for our shareholders. So let me begin by summarizing a few highlights for the quarter. Revenues grew 4% local currency, driven by high-single or double-digit growth in five of our 13 industries. As we called out last quarter, we expected increased pressure in our CMT industry group and we saw declines of 12% local currency this quarter.

As Julie mentioned, excluding CMT, our business grew 7% globally. We delivered adjusted EPS in the quarter of $2.71, reflecting 4% growth over EPS last year. Adjusted operating margin was 14.9%, an increase of 20 basis points over Q4 last year, and includes significant — continued significant investments in our people and our business. And finally, we delivered free cash flow of $3.2 billion, driven by very strong DSO management. Now, let me turn to some of the details. New bookings were $16.6 billion for the quarter, a 10% decline in local currency, with an overall book to bill of 1. Consulting bookings were $8.5 billion with a book to bill of 1. Managed services bookings were $8.2 billion with a book to bill of 1. Turning now to revenues, revenues for the quarter were $16 billion, a 4% increase in both US dollar and local currency, representing continued market share gains.

Now, as a reminder, we assessed market growth against our investable basket, which is roughly two dozen of our closest global public company competitors, which represent about a third of our addressable market. We used a consistent methodology to compare our financial results and theirs, adjusted to exclude the impact of significant acquisitions through the data of their last publicly available results on a rolling four quarter basis. Consulting revenues for the quarter were $8.2 billion, a decline of 2% in both U.S. dollar and local currency. Managed services revenues were $7.8 billion, up 10% in both U.S. dollars and local currency. Taking a closer look at our service dimensions, technology services grew mid-single-digits, operations grew high-single-digits, and strategy and consulting declined mid-single-digits.

Turning to our geographic markets. In North America, revenue growth was 1% in local currency, driven by growth in public service, health, and utilities. These increases were partially offset by declines in communications and media, software and platforms, banking and capital markets, and high tech. In Europe, revenues grew 7% in local currency, led by growth in banking and capital markets, industrial and public service. Revenue growth was driven by Germany and France. In growth markets, we delivered 6% revenue growth in local currency, driven by growth in chemicals and natural resources, industrial and energy. Revenue growth was driven by Japan. Moving down the income statement, gross margin for the quarter was 32.4%, compared with 32.1% for the same period last year.

Sales and marketing expense for the quarter was 10.8%, compared with 10.2% for the fourth quarter last year. General and administrative expense was 6.7%, compared to 7.1% for the same quarter last year. Before I continue, I want to note that in Q4, we recorded $472 million in costs associated with our business optimization actions, which decreased operating margin by 290 basis points and EPS by $0.56, and also impacted our tax rates. The following comparisons exclude these impacts and reflect adjusted results. Adjusted operating income was $2.4 billion in the fourth quarter, reflecting a 14.9% adjusted operating margin and an increase of 20 basis points from operating margin in Q4 last year. Our adjusted effective tax rate for the quarter was 27.4%, compared with an effective tax rate of 24.6% for the fourth quarter last year.

Adjusted diluting earnings per share were $2.71, compared with EPS of $2.60 in the fourth quarter last year. Days services outstanding were 42 days, compared to 42 days last quarter, and 43 days in the fourth quarter of last year. Free cash flow for the quarter was $3.2 billion, resulting from cash generated by operating activities of $3.4 billion, net of property and equipment additions of $180 million. Our cash balance at August 31 was $9 billion, compared with $7.9 billion at August 31 last year. With regards to our ongoing objective to return cash to shareholders, in the fourth quarter, we repurchased or redeemed 3.2 million shares for $1 billion, an average price of $312.35 per share. Also in August, we paid our fourth quarterly cash dividend of $1.12 per share for a total of $706 million.

And our Board of Directors declared a quarterly cash dividend of $1.29 per share to be paid on November 15, a 15% increase over last year, and approved $4 billion of additional share repurchase authority. Now, I’d like to take a moment to summarize the year, as we’ve navigated a challenging macro environment and successfully executed our business to deliver or exceed all aspects of our original guidance that we provided last September on an adjusted basis. We delivered $72.2 billion in new bookings, reflecting 5% growth in local currency. Revenue of $64.1 billion for the year, reflecting strong growth of 8% local currency, and reflecting continued market share gains. Before I continue for the full-year, we recorded $1.1 billion in costs associated with business optimization actions, which decreased operating margin by 170 basis points, and EPS by $1.28.

We also recognized a gain on our investment in Duck Creek Technologies, which impacted our tax rate and increased EPS by $0.38. The following comparisons exclude these impacts and reflect adjusted results. Adjusted operating margin of 15.4%, a 20-basis point expansion over FY ‘22. Adjusted earnings per share was $11.67, reflecting 9% growth over FY ‘22 EPS. Free cash flow of $9 billion was significantly above our original guided range, reflecting a very strong free cash flow to net income ratio of 1.3. And with regards to our ongoing objective to return cash to shareholders, we exceeded our original guidance for capital allocation by returning $7.2 billion of cash to shareholders, while investing approximately $2.5 billion across 25 acquisitions.

In closing, we remain committed to delivering on our enduring shareholder value proposition, while creating 360-degree value for all our stakeholders, clients, our people, our shareholders, partners, and our communities. And now let me turn it back to Julie.

Julie Sweet: Thank you, KC. Let me now bring to life for you the demand we saw from our clients this quarter as they build their digital core and reinvent. We saw this demand across markets and industries. Our cloud momentum continued with very strong double-digit growth in Q4, as clients prioritized building a strong and secure foundation for reinvention. We’re partnering with a multinational financial services company on a cloud-based transformation to deliver enhanced, personalized, and secure customer experiences, and to increase employee productivity. Together, we’re developing an integrated hosting strategy that unifies their hybrid multi-cloud landscape and lays the foundation for their digital transformation over the next decade.

This partnership enables innovative solutions across all bank functions and is backed by a trusted and secure foundation that supports advanced workloads and complex AI and data solutions. Working from a compliant cloud platform will safeguard the customer data, privacy, and financial assets, positioning the organization to stand out for its innovation and customer focus. And we are supporting a U.S.-based energy company on a total enterprise reinvention strategy to unify different technologies and business processes around a common digital core. We’ll help leading the deployment of a cloud-based IT platform that integrates customer management, finance, HR, supply chains, asset management, and operations, improving the ability to assess and optimize operational performance.

We also are helping manage and integrate the responsibilities and activities of the vendors involved in the project, standardize data from legacy applications, and enable company employees to understand and manage the new processes and technologies. Data-driven decision-making will be improved, allowing the company to cultivate better collaboration within their business, helping them operate more efficiently and better serve their customers. We are partnering with Coca-Cola Bottlers Japan to accelerate their path to becoming a world-class bottler and data-driven organization. The partnership includes establishing an innovative joint venture of significant scale of approximately 870 people that will accelerate transforming their digital core, optimizing their enterprise operations, leveraging the power of cloud, data, and AI to increase the value delivered from their core business functions.

In support of their broader strategic business plan, Accenture will provide specialized talent, industry expertise, and leading-edge technology automation and managed services to help Coca-Cola Bottlers Japan adopt a strategy of continuous enterprise reinvention. Data and AI are an important part of building the digital core, and we see that work both embedded in our larger transformations, as you just heard, and in work focused on data and AI modernization. Accenture Federal Services is helping the defense health agency operate and enhance the Joint Medical Common Operating Picture platform by implementing data synchronization across multiple network domains and near real-time collaboration and information sharing, we will provide a comprehensive picture into Department of Defense medical assets.

This increases visibility into unit health, equipment, and supplies and allows for faster and more informed decision-making. We are a strategic partner for the Saudi Data and AI Authority to boost the Kingdom’s transformation to a data-driven economy and help the Kingdom become a world leader in generation and deployment of AI technology. We’re working closely with Sadiya to support cutting-edge research, promote digital innovation in public life, and boost national capabilities and talent. We’re especially pleased with the double-digit growth we have in the Middle East, a small, but growing part of our business. Security is essential to a digital core, and we had very strong double-digit growth in our security business in Q4. We’re working with a major energy network in the U.K. on the transformation of its cybersecurity systems.

We will provide an entire managed service for their cybersecurity capability, including migration to a more powerful security platform, continuous and active threat monitoring, and response services, as well as security tools management. Our solutions will help provide improved security, reduce exposure to potential global security threats, and ultimately better safeguard the safe delivery of gas to millions of U.K. homes and businesses. As clients continue to reimagine and prioritize the customer experience, Song delivered strong double-digit growth in Q4. We are helping smart Europe, maker of the next generation of smart vehicles, products, and services of the iconic brand from smart Automobile Company — Co Limited., a joint venture between Mercedes-Benz and Geely.

We are helping them reinvent car shopping by creating an ecosystem that supports a seamless, fully digital-driven buying experience. By putting data at the core, the system allows personalization of the customer journey, makes recommendations based on real-time data, and includes enhanced offerings such as extended insurance coverage. It will help smart Europe reposition its brand and support the launch of its intelligent, fully electrical car lines. We also continue to see demand for our supply chain in Industry X capabilities, the next digital frontier, which grew strong double-digits in Q4. In Industry X, we are partnering with a global chemical and materials company on a digital transformation of their manufacturing core and commercial capabilities.

Through our Industry X capabilities, we have built a unified connected worker platform for operators, maintenance technicians, and job planners, along with a cloud-based data lake to help generate insight from disparate sources of manufacturing data. The program is already live in dozens of manufacturing sites and is expected to create significant revenue growth over the next few years for our clients. And in supply chain, we have partnered with a large global food and beverage conglomerate to strengthen supply chain resilience, so consumers have continued access to their products in stores and online. By creating a digital twin of its supply chain, we will develop stress test models to help identify supply disruptions with the highest risk before they occur.

Across these examples, you can see our unique capabilities of both being a technology powerhouse, along with our industry and functional expertise from strategy and consulting to technology, to managing services — managed services to help our clients reinvent. Now let’s turn to generative AI. As a reminder, last quarter we announced a $3 billion investment in AI. While still in the early stages, gen AI technology is maturing rapidly and we believe it will be a significant source of value for us and our clients over time. We now have about 300 projects and I want to share a little color in how this demand is coming through. We have projects across all our industries with banking, public service, consumer goods, and utilities leading an activity.

Clients are doing a variety of different types of work from strategy and use case implementations to tech enablement, to scaling, to model customization, tuning and training, to talent and responsible AI. For example, we’re working with a multinational telecom company, Telefonica Brazil, also known as Vivo, to deliver a generative AI solution that helps its agents respond quicker to landlords’ queries about property rental for network towers. The application quickly reads landlords’ queries and proposes a set of actions to help fulfill requests, reducing the time it takes agents to respond. It also structures the response with a set of relevant answers to increase the response quality and ensure all queries are answered in a helpful manner.

The solution has already reduced agent response time by 30% and increased the user experience score by 66%. Some of the key ingredients of our success in gen AI are: first, ecosystem partnerships. As always, we are starting with deep relationships and leadership in the ecosystem, from the hyperscalers to the model builders to the startups and academics. It is important to emphasize that we are early in the maturity of gen AI for enterprise, and our depth, experience, and insight on these [plant-forwards] (ph) is essential to guiding our clients. Second, Talent. We start with a deep technical knowledge and understanding of AI and gen AI and blend that with our industry and functional expertise to know how to reinvent across the enterprise, including processes and operating models, bringing together the depth and breadth of our expertise.

And that is where Accenture is different, building the bridge from as is to the future. And we have already trained approximately 600,000 of our people in the fundamentals of AI. Now with generative AI, the pace and impact is growing rapidly. And we are now taking a further step to equip more than 250,000 people and using new AI tools equitably, sustainably and without bias. And with investments in our AI Academy focused on deep AI and gen AI specialization, we are also progressing towards our goal of doubling our deeply skilled data and AI practitioners from 40,000 to 80,000. Third, responsible AI is essential. At Accenture, we have an industry-leading responsible AI compliance program, which is embedded in how we use and deliver AI. And we’re using the experience and lessons learned by us to help our clients build out their own responsible AI program, which is necessary to address the risks and get the full value from AI.

Finally, we are embracing gen AI across our services, developing new cutting-edge tools and solutions, inventing gen AI in the way we work. Our approach takes into account where the technology is today, the need to deploy it responsibly, and the recognition that we do work in highly complex environments. While all companies want to explore and understand gen AI, what we find is that clients who are more mature digitally want to go faster, while others would like to test the waters with proofs of concepts and synthetic data, and others prefer to wait until they have built more of their modern digital core. The extent and pace of this generative AI progression will become more clear over the coming quarters as the technology and the market continue to mature and progress.

Now turning to our people, who have made all of this happen. Core to our success is our ability to attract and retain and inspire our outstanding talent. Essential to our success is our robust talent strategy, and in particular, our ability to attract diverse talent and our Net Better Off approach to retaining our great talent. We continue to lead in our ability to attract people with different backgrounds, different perspectives, and different lived experiences. These differences ensure that we’ve — have and attract the cognitive diversity to deliver a variety of perspectives, observations, and insights, which are critical to drive the innovation needed to reinvent. Our success is reflected in our being the top-scoring company on the Bloomberg Gender Equality Index for the second year in a row, and we also earned the number one position on the Refinitiv Global Diversity and Inclusion Index for the fourth time in six years.

This index ranks over 15,000 organizations globally and identifies the top 100 publicly traded companies with the most diverse and inclusive workplaces. Our talent strategy includes inspiring and retaining our best talent through our Net Better Off approach. We want our people to feel they are Net Better Off for working at Accenture. This strategy has four dimensions, focusing on people feeling healthy and well, physically, emotionally, and financially, feeling connected with a sense of belonging, feeling their work as purpose and filing feeling they are continuing to build market-relevant skills. This year, for example, our people participated in approximately 40 million training hours, and we were a recipient of the Brandon Hall Gold Award for best benefits, wellness, and well-being programs.

Building on our longstanding commitment to the environment, we are pleased to have hit a significant milestone on our path to Net Zero, approaching — seeing 100% renewable electricity across all of our Accenture offices. I will wrap up with a comment on our work and communities. Vibrant communities are important to our business success, and therefore we continue to prioritize creating value in these communities around the world. For example, Accenture is helping to welcome refugees, recognizing how they enrich our communities with their courage, strength, and talent. In June 2023, on World Refugee Day, we committed to partner with organizations to help skill and support an estimated 16,000 refugee job seekers and migrants and to hire 100 refugees in Europe over the next three years.

Back to you, KC.

KC McClure: Thanks, Julie. Now let me turn to our business outlook. For the first quarter of fiscal ’24, we expect revenues to be in the range of $15.85 billion to $16.45 billion. This assumes the impact of FX will be approximately positive 2.5%, compared to the first quarter of fiscal ‘23 and reflects an estimated negative 2% to positive 2% growth in local currency. For the full fiscal year ‘24, based upon how the rates have been trending over the last few weeks, we currently assume the impact of FX on our results in U.S. dollars will be flat compared to fiscal ‘23. For the full fiscal ‘24, we expect our revenue to be in the range of 2% to 5% growth in local currency over fiscal ‘23, which includes an inorganic contribution of about 2%.

We expect business optimization actions to impact fiscal ’24 GAAP operating margin by 70 basis points and EPS by $0.56. The following guidance for full-year fiscal 2024 excludes these impacts. For adjusted operating margin, we expect fiscal year ‘24 to be 15.5% to 15.7%, a 10 basis point to 30 basis point expansion over adjusted fiscal ‘23 results. We expect our annual adjusted effective tax rate to be in the range of 23.5% to 25.5%. This compares to an adjusted effective tax rate of 23.9% in fiscal ‘23. We expect our full-year adjusted earnings per share for fiscal ’24 to be in the range of $11.97 to $12.32 or 3% to 6% growth over adjusted fiscal ‘23 results. For the full fiscal ‘24, we expect operating cash flow to be in the range of $9.3 billion to $9.9 billion, property and equipment additions to be approximately $600 million, and free cash flow to be in the range of $8.7 billion to $9.3 billion.

Our free cash flow guidance reflects a free cash flow to net income ratio of 1.2. Finally, we expect to return at least $7.7 billion through dividends and share repurchases as we remain committed to returning a substantial portion of our cash to our shareholders. And with that, let’s open it up so we can take your questions. Katie?

Katie O’Conor: Thanks, KC. I would ask that you each keep to one question and a follow-up to allow as many participants as possible to ask a question. Operator, would you provide instructions for those on the call?

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question will come from the line of Tien-Tsin Huang of JPMorgan.

Tien-Tsin Huang: Hey, thank you. Good morning, Julie and Casey, I just wanted to dig in first on CMT, if you don’t mind. Just curious there if the challenges are — have changed at all, has it isolated just a few clients or is it more broad-based? And what’s the strategy here to turn demand around? Are you seeing any green shoots there? Thanks.

Julie Sweet: Yes. Great, thanks Tien-Tsin. So it is broad-based, I mean, we have — we’re seeing it broad-based across the globe and across clients. And we continue to see those challenges. So we do think that it’s going to — we do know that it’s going to develop a little bit differently based on markets. The challenges in the U.S. are more difficult. They’re more focused on both technology and the technology companies and comms, whereas Europe, it’s a little different, the complexion. And so, over the course of the year, we expect that the improvement will come at a little different pace depending on the market. And in terms of how we’re addressing it, it’s really two-fold. So first of all, we’re going to continue to pivot within that industry to areas like helping within the confines of how much they are spending, trying to help them cut costs, working on things like customer service investing in more network capabilities.

And what we’re also doing is pivoting our business to the higher areas of growth, and you see that with acquisitions, like we did answer technologies and Industry X in the U.S., we did Flutura in India and data and AI. And so we’ve got a lot of areas of growth and you can see that when you take out CMT with the — how the rest of our business is growing and it’s just going to take a little time to make that pivot and that’s why what you’re seeing in our guidance is that we’re going to build over the year as the actions we’re taking to continue to pivot the business play out.

Tien-Tsin Huang: Understood on that one. Thank you. Just my quick follow-up on gen AI, I know the sales doubled there and you went through a lot of good detail. I’m just curious, is it — are the deal sizes getting larger? Is it pulling through more large projects from what you’ve seen recently? I’m just curious how that might evolve here as we get into the new fiscal year?

Julie Sweet: Sure, so at this point, and remember, when we give you gen AI numbers, we’re being very clear it’s pure gen AI, so we’re not like, you know, sort of talking about data and all of those things. So the real gen AI projects right now are still in that sort of million dollar-ish on average range. And we expect that’s going to continue for a while, right? That’s what we’re seeing because there’s a lot of experimentation. Now what it’s doing though is leading clients to look harder at, well, where do I go faster, right, in terms of the digital core? You know, and so we started seeing a tick up, for example, in data migration, right? But it is still extremely early, but that’s how we think it’s going to, you know, play out over even the coming year, right, as people get more excited about it and it also points out the challenges.

But keep in mind that, you know, implementing gen AI is not like, it’s like, it’s not easy. Entire environments need to be set up. It’s quite complex, actually. So it really plays into our strengths of being able to help them understand what it takes, where their gaps are, and then how to take the next step on the journey to get there, even as we see clients being cautious, they’re really focused on help us save money, so we can take those next steps.