George Wang: Congrats on the quarter. Yes, so, two quick ones. Firstly, just given better-than-expected free cash flow generation, just given kind of you guys started purchasing stocks. Just curious kind of any high-level plan going forward, how to model in terms of the share buyback, just given better free cash profile?
Rukmini Sivaraman: Hi George, thank you for the question. So as I mentioned in my prepared remarks, we did begin repurchasing shares in Q1, under the authorization of — that we had from our — that was approved by our Board in August. And we did that through a 10b5-1 program that we’ve set up. Due to the timing of the authorization, we were only in the market for a portion of Q1. And you’ll see in the financial tables that we put out with the release that we spent about $17.5 million, repurchasing shares, during that time. So for a portion of Q1, we spent $17.5 million. And the timing and amount of the future repurchases will continue to depend on a variety of factors, George, including stock prices, just conditions of the market and so on. And so I won’t get too specific in terms of outlook, but I wanted to give you at least a bit of color on what we did in Q1, acknowledging it was only for a portion of the quarter.
George Wang: Okay, great. Just a quick follow-up, if I can. Just can you kind of comment on backlog? Last quarter, you talked about backlog slightly improved in absolute dollars year-over-year, as you kind of factored into the FY24 guide. Just curious if you have any latest update in terms of the backlog level and any sort of plus and minus, how would that factor into the latest guide?
Rukmini Sivaraman: Yes, happy to give you some color on that. So we used some backlog in Q1, as is seasonally typical for Q1 and expect some backlog to be consumed over the course of this fiscal year, as we talked about before. But as is to be expected in an environment like this, where things remain fairly uncertain from a macro perspective, the range of possible outcomes is wider than usual. And as we continue to grow, the absolute dollar number of backlog would also increase over time. So, a few different factors there. But yes, I think in Q1, we used some backlog as is typical for Q1, and we expect to use some backlog over the course of the year as well.
Operator: Our next question will be coming from Michael Cikos of Needham.
Michael Cikos: Congrats on the strong quarter. I wanted to cycle back to some of the comments when we’re describing the revenue and the ACV billings outperformance, I know that we cited specifically U.S. federal. Can you give us a better sense, as far as what U.S. federal is as far as size or contribution to revenue or ACV billings? Understanding that there’s probably seasonality with their year-end. But would just be good to get a flavor for how big of a component that is to the overall business? And then also, if you could shed some light, I know that you cited the improved linearity during the quarter. Is it — is that improvement linearity tied back to the stronger U.S. federal business, or is it — are those two independent items in your view?
Rajiv Ramaswami: So I can take a first crack at the federal piece, Rukmini you can go for the rest. So what I’d say is, look, largely, we don’t have verticals, but we have two exceptions. And that’s in the U.S., we have federal at vertical, and we have health care as another vertical. So from that perspective, federal is a significant portion of our business. We haven’t broken it out exactly in terms of the percentages. But given the fact that it is 1 of 2 verticals and we have a focused team on it, it is important for us. And of course, there’s also seasonality there, as Rukmini was alluding to here. I mean this quarter typically is strong for federal. So that’s kind of what we have to say about Federal. Rukmini, you can comment on the linearity.
Rukmini Sivaraman: Yes. So on the linearity, Mike, what we mean there is we have some expectations of how much bookings comes in, in month 1, month 2, month 3. And the reason that’s important for free cash flow, right, is because we invoice soon after we get the booking, and we have 30- to 45-day invoice payment terms. And so, what we saw in Q1 is that compared to our expectations going in — so we saw a larger proportion of those bookings come in month 1 and month 2. And you’re right, there’s an outperformance in fed as well, and of course, fed had their year-end, the U.S. federal government has their fiscal year end in September. So that was likely a factor in that. And so what that meant was that given, again, we invoiced right after we get the bookings, we were — we collected more cash from bookings in Q1 than we had previously expected, which was a significant driver of the free cash flow performance in Q1.
Michael Cikos: Understood. Thank you for clearing that up. I guess, the other question that I had, this is more specific to the 2Q guidance that we have here today, Rukmini. But if I could just take a look, I’m happy to see that the revenue is coming in above where the sell side models were, happy to see the strong gross margins and then the operating margin is also coming in ahead of where we had been. But one of the things that I’m looking at is the OpEx. The implied OpEx from Q1 to Q2 has a pretty material pickup after being relatively flat the last couple of quarters. And I just wanted to see what is it that you guys are embedding in that? Is it more maybe targeted go-to-market initiatives? Are you focused on hiring or potentially backfilling open positions? Like, how should we think about that OpEx ramp that you guys are putting now in the 2Q guide?
Rukmini Sivaraman: Yes. So, a few points on Q2 OpEx related to Q1, Mike. The first one is, as we talked about when we laid out sort of our initial full year guide on the last call, we talked about the fact that we plan to continue to invest to drive growth, while continuing to improve the margin profile. And that’s the approach that we’ve taken for this year, and you saw some of that in the last call, but also we touched on this sort of idea at Investor Day as well. And so in general, we’ve started those investments. And as you can imagine, it takes — we’re continuing to hire. And so as you can imagine, that sort of leads to sort of an increase in Q2 as more of the folks come on board. The other piece is this is only for one month of Q2.
But in the calendar year resets, and I alluded to this in my script as well, like payroll taxes and all that reset for calendar year ’24, which means that we have one month of that in January. That also has an effect on the Q2 OpEx. That all said, of course, we were pleased, as you pointed out, to be able to raise both of our top line and bottom line guidance for the full year.
Operator: And the next question will be coming from Erik Suppiger JMP.
