Kevin Kumar: Thanks for taking my question. Now Appian has an expanded set of AI-related features and capabilities that is going to be released, I think, later this year. Are these features being released across all on-premise and cloud customers? And do you think AI could potentially catalyze more customers to migrate towards cloud over time?
Matt Calkins: I think AI will catalyze more customers to move to cloud. We are focusing on cloud as the primary AI environment. We will deliver more AI functionality faster in the cloud. And yes, I do believe that, that will be an incentive for customers to choose it. I want to be careful not to say that it will be an incentive for customers to migrate to it, because I’m not convinced that the customers who aren’t — who have not yet migrated by cloud will be motivated by any new feature set.
Kevin Kumar: Okay. That’s helpful. And then maybe one on margins. Operating expenses, I think, excluding certain one-time items has been relatively flat the last three quarters. Obviously, I know there’s a focus on expanding margins, particularly in the second half of the year. So just curious, Mark, how you’re thinking about resource allocation and how much is maybe new headcount in international regions, such as India helping with some of that operating leverage? Thanks.
Mark Matheos: Yeah, sure. Thanks for that question. I mean there’s definitely a focus on extracting operating leverage from our R&D center in India. But it’s also just making sure we’re investing in growth or accounts, right? And so — we’re not looking to make any operating expense reductions in areas that might impact our growth rate or our expansion. And it’s really just some OpEx initiatives around scrutiny items that have led to some tightening of the ship, if you will and then some operating expense moderation in all areas across the board. But we definitely have a as all in mind that we shared in the past and that I’ve spoken to in my prepared remarks with operating expenses, and I think we’re continuing to see through that plan.
Kevin Kumar: Thank you, both.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Terry Tillman from Truist Securities.
Joe Meares: This is Joe Meares on for Terry. I’m just curious, Cloud stub NRR is remaining steady at 115%. I’m just curious, are there any moving pieces under the hood as far as better than it charge results from up-sells or low base?
Matt Calkins: I mean this — it’s pretty consistent, to be honest. If anything, expansion is slightly healthier. I mean, our GRR is so strong that it’s hard for it to be any stronger — and — but overall, I would say it’s been more the same than different.
Joe Meares: Well, that’s helpful. Just on the margin question. I understand that, you’re investing where accounts and maybe doing some moderation in other areas. But I think you had said that you expect to be EBITDA breakeven next year. Are there going to have to be like larger cuts to operating expenses in order to get there in the medium term, or is it just going to be a factor of revenue leverage? Thank you very much.
Mark Matheos: Yeah, I’ll take it. You can add in, Matt, if you want. It’s the latter. It’s really — we’re not going to cut our way to an EBITDA breakeven point — and just to clarify, we’re saying we’re going to reach a breakeven point next year. It’s not at least the full breakeven. But yeah, that is going to come through the growth and the natural growth of our revenue streams and not through some concerted effort to cut out costs.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Derek Wood from TD Cowen.
Andrew Sherman: Great. Thanks. It’s Andrew on for Derek. Matt, I just wanted to come back to the federal business. How did federal bookings compared to less software bookings compared to last quarter and heading into the big September quarter. Can you give us a sense for how pipelines are tracking how they compare versus last year this time? And can that new GAM solution are you expecting pretty good upsell this year?
Matt Calkins: All right. First of all, let me just second what Mark said a moment ago about growing our way to breakeven. That’s the plan for next year. We’re not going to cut our way there. We’re going to grow our way there. Secondly, with regards to the performance of public sector and the pipeline, specifically heading into the big Q3, we feel good about the pipeline, the — it shows real strength. I’m pleased with public sector’s progress so far this year. And I think we have momentum and reason to believe that we can do well in quarters ahead.
Andrew Sherman: Great. And I think last quarter, you talked about Appian World prospects or leads being up 2x year-over-year. Maybe just talk about how those leads are moving through the pipeline and your ability to convert and close some of those deals in the second half?
