Joseph Vafi: Good morning and nice to see that Ex-L&S organic growth. Just wanted to drill down a little bit into this October bookings activity. It seems like a lot and I was just wondering if there’s any read-through there relative to the macro and perhaps all of a sudden clients wanting to sign for next year, or was it really, truly kind of just more company-specific timing with this kind of huge ramp up in award activity? And now I’ll follow-up.
Michael Thomson: Look, I think, one of the things that we’ve learned over the course of the year is that the sales cycle for kind of this, I’ll say the experience offering is about as long as our legacy sales cycles were, we’re running about a year. And so, if you dial back a year and what we’ve done from a market-facing perspective, the continual work we’re doing on the advisor side, Peter just mentioned a whole bunch of those we’re getting invited to a ton more deals in regards to that. They see the value of the solutions that we have got. And I think what you are seeing is really just the output of the timing of the negotiation of those sales cycles, right? So, sitting at about a year, fourth quarter is kind of where they are at.
We are seeing strong activity already. Deb mentioned the signings that we already have in October. Peter talked about those being, greater than from a TCV perspective, the prior three quarters individually, just the first month of October. And we feel really good about the pipeline. It’s grown throughout the year. It is grown in the areas that we wanted to grow in. We are seeing the Next-Gen solutions grow in that pipeline. And I think it is just the natural duration of time, it’s taken to get these into production. So really happy with the progress we are seeing there, really happy with how the market is reacting to the offerings. And again, that’s the basis for the raising the guidance.
Joseph Vafi: Great. That’s good color. Thanks, Mike. Sounds like good progress, and you are seeing the results. And then just back on L&S and the just maybe a quick two parted there, on the consumption volumes, how do those margins look versus kind of the base license sales? And then I know Deb, I think you said that you are seeing a larger contract renewal over longer periods of time. What does that do maybe to evening out or making, perhaps maybe more lumpy the, the license sale part of that segment? Thanks a lot.
Debra McCann: Yes. So, the margin on the consumption is similar to our overall L&S business. So that’s the answer to that. As far as some clients coming to us, saying instead of a one-year GL renewal, over multiyear, that’s just enable, we recognize the revenue, a prime. If there is more consumption built into that, to kind of lessen the impact of the outer years. So, it’s not — in the past, we have seen where a client just renews early. So, they are four-year deal instead of next year is this year. And so, then this year takes away from next year, and it is different than that, when these happen, when it’s just the client wanting to link deals.
Peter Altabef: Yes. I would say, Joe, just to expand on that a little bit, for at least three or four deals over the course of the last 12 months, we have seen extensions of those deals, right? So, for us, it is really solidifying the use of the ClearPath Forward operating system. And the work that we are doing from an application development on top of that system, the map service component of that system. So, it is a really strong belief and I think the efforts that we have put in over course of the last four or five years to really future-proof that operating system and the fact that, folks are signing from three to five or five to seven and extending those deals, I think, is a real testament to, A, the security and processing power of those systems.
And, B, their support in continued utilization of those systems. And we are not really seeing an impact to the overall contract price for the longer duration. It is not like we are sitting here discounting these significantly because they are going for a longer duration. It has been pretty consistent and we have been pretty consistently getting increases in pricing upon renewal. So again, pretty happy with what’s going on in that space.
Joseph Vafi: Great. It sounds like, those platforms are perhaps becoming even more strategic than they were. So great. Thanks very much, guys.
Peter Altabef: You’re welcome, Joe. And this is Peter. Just to follow on in your last comment. I think that’s true. With the current environment, the advent of new technologies here, I’m not just talking about artificial intelligence or generative AI, I’m really talking about the beginning of the quantum era. And then using both of those, historically, you haven’t heard a lot of talk on this call about our enterprise computing solutions segment outside of Clear Path Forward. And that’s for good reason. That represents, it still represents the vast majority of the revenue of that team. It is a very high margin. It is a very high cash flow. We’re very proud of it. But that team, which differentiates itself from most of the rest of the company, because it’s steeped in Unisys proprietary technology and IP, not that the others don’t have that, but that ECS team has more of it proportionally, is kind of having a moment.
When you think about the importance of engineering, when you think about the importance of thinking about quantum, thinking about AI, putting it together, we recently announced a new solution called Unisys Logistics Optimization. We issued a press release about that. I made a reference to it in my opening remarks. It’s in pilot with a client today. We’re very excited about it. That exists because of kind of the combination of our engineering talent, our knowledge of quantum, our knowledge of AI, and really the deep industry knowledge we have in specific industries which travel, and transportation, and logistics is one. So, we expect to talk more about ECS going forward. It’s very nice that it happens to be the highest margin and highest cash flow piece of the business.
But I think that whole team is having a moment for a good reason.
Joseph Vafi: That’s great. Looking forward to more on that subject, as we move forward. Thanks, Peter.
Operator: The next question comes from Arun Seshadri with BNP Paribas. Please go ahead.
Arun Seshadri: Hello, everyone. Thanks for taking my questions. Great performance and good to see. Just wanted to specifically drill down on L&S. Is there any way you could sort of give us in the prior guidance of $350 million for the year, what was the, I guess the quarterly outperformance? Or what is your expected, or I guess what is a quarterly out performance in Q3 and the first half of the year? And then I think typically around this time each year you develop a better view into L&S’s performance for the following year. I don’t know if you could broadly share directionality versus the $420 million expected this year. Do you expect to revert back to something kind of in the mid to high 300s? That’ll be very helpful. Thank you.
Debra McCann: Yes. So as far as the outperformance seven — a big portion about $17 million was in Q3 with that higher consumption, and then for us going forward, that extended contract was one of the ones in October. So, having visibility into that is what allowed us to feel comfortable in raising that. As far as for future years for L&S, we don’t see — we’re kind of staying consistent with what we talked about in investor day, so it won’t change that as far as our expectations for the outer years of L&S, I think is, did that answer your question?
