Pete Godbole: So Pinjalim, this is Pete. So when you think of sales capacity and you think of needing sales capacity, we think of it as we have a pretty well-trained team of sales professionals we’ve hired. We’ve continued to invest in making them capable. That’s the effort we’ve been on for several quarters. We see the first sort of – the first shot as just the capacity and the productivity of those reps improving. That’s the fundamental. Now will we add resources as we enhance the sales process and specific roles? We will. But I don’t think it will be a huge drag on the margin. So as you look at FY ‘25 and you look at margins, we’re not giving guidance on that yet. But the way I would describe it is overall margins, you should see those continue to improve. What slope or gradient that improvement takes will be a function of what growth expectations we have.
Pinjalim Bora: Understood. Very clear. Thank you.
Pete Godbole: You are welcome, Pinjalim.
Operator: We will take the next question from Taylor McGinnis with UBS.
Taylor McGinnis: Hi. Thanks so much for taking my question. Sorry to press on billings again, but just one follow-up to one of the questions that was asked earlier. So Pete, I think you mentioned that there could be quarter variability in timing, which I know we all appreciate in billings. But just given the strength in 3Q, did you see any renewals that pulled forward from 4Q into 3Q? And then maybe you can talk about like the bookings linearity you are seeing so far and if that’s trending to be more back-end loaded and if that – if there is any assumptions of that embedded in the guide.
Pete Godbole: So Taylor, there was nothing unusual in the quarter. Every quarter always has the normal pulls and pushes that happen, but nothing unusual this quarter that played out. I would go back and say we are seeing sort of bookings linearity being very consistent. There is no big trend to report out there. I would say the only delta in bookings that we are seeing, which I called out a little bit, was on the SMB expansion side of it. So, we are seeing some degradation that we had in Q3 on these expansions. And we are extending that trend forward into Q4, the assumption that, that trend continues.
Taylor McGinnis: Got it. That’s really helpful. And one last one for me is, so appreciate that there can be timing and quarterly variability into billings and sometimes that metric can be noisy. But I guess if you look on trailing 12 months, it’s been growing somewhere in the low-20s. But ARR growth has been hanging in there in like the mid-20s, maybe low end of that. So, just as we think about what the underlying business is doing and the momentum you guys are seeing, when we look forward, any thoughts on which is the better leading indicator or how we think about the difference between these two metrics?
Pete Godbole: I think when you think of billings in ARR, I think they both are different, but they both lead you to the same answer when you finish the year. They are pretty close, even if it’s not an identical answer. So, when I am thinking about quarterly changes, I tend to rely more on ARR because it has a better sense of – the timing elements are a little less pronounced. But when you think of the full year, they are both the same.
Taylor McGinnis: Great. Thanks so much.
Pete Godbole: You’re welcome Taylor.
Operator: We will take our next question from Keith Bachman with Bank of Montreal.
Keith Bachman: Hi. Good evening. Thank you. I wanted to ask two things that are related. And Pete, one is on micro and then a bigger picture question. On the micro, when you talk about SMB and you assume the degradation continues. But just to be clear, are you assuming it gets worse or just stays the same? And then for my follow-up question, I will just ask them successfully. When you think about the Gen AI opportunity, and I was out in Seattle for your customer event, seemed like a lot of excitement. Can it contribute to ARR growth and billings growth in what would be fiscal year-end in January ‘25? Do you see that actually being a contributing factor to potential growth, or is it still, you think going to be more discovery at that point?
And Pete, anything else you want us to think about as we are building our models for FY ‘25 from a demand perspective, you already addressed the margins, but anything else you want us to keep in mind in advance of giving the formal guidance? Thank you.
Pete Godbole: So Keith, I will answer your questions as you asked them. First question you had was on SMB expansions, and we are assuming that there is a continued degradation in Q4. So, it – we have assumed it moderately worsens in Q4, taking that trend line. So, that’s the first part of it. The second part of your question on Gen AI opportunity and the ARR assumptions in FY ‘25, it’s a little early to call it out because we have got a few customers sitting within the – in the EAP program. We have got good positive feedback. But I think after we get through another quarter of that feedback and as we get ready to put this into, what I call, GA, I think we will start to get a little bit of a sense of what that looks like. So, I think it’s a little early to call out.
Keith Bachman: Okay. Anything else, Pete, that you want us to think about as we model the demand side in FY ‘25?
Pete Godbole: No, I think it’s a little early to talk through ‘25, but nothing specific to call out at this time.
Keith Bachman: Okay. Many thanks.
Pete Godbole: Thanks Keith.
Operator: We will take our next question from Terry Tillman with Truist.
