Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to Softchoice Q3 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session for analysts. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you. I would now like to turn the conference over to Mr. Tim Foran, Investor Relations. Please go ahead, sir. Thank you, Lara, and good morning, everyone. Welcome to Softchoice's Q3 2023 conference call for the period ended September 30, 2023. A reminder for the purpose of the recording, today is Thursday, November 9, 2023. I'm joined today by Andrew Caprara, Softchoice's CEO, and Jonathan Roiter, CFO. Andrew will provide highlights of the quarter, an update on the demand environment, and speak to our execution and our strategic focus areas. And then Jonathan will do a deeper dive on our financial performance, and we'll end with Q&A. The company will make forward-looking statements on our call today that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. The company undertakes no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our earnings press release today, as well as in our filings with Canadian securities and regulatory authorities. Also, our commentary today will include adjusted financial measures, which are non-IFRS measures. These should be considered as a supplement to and not a substitute for IFRS financial measures. Reconciliations between the two and relevant disclaimers can be found in the company's MD&A, which is available on our investors' website. Unless otherwise noted, percentage growth rates that we refer to today are for the identified period ending September 30th, 2023, compared to the same period ending September 30th, 2022. Finally, please note that because the company reports in U.S. dollars, all amounts discussed today are in U.S. dollars, unless otherwise indicated. With that, I will now turn the call over to Andrew. Thank you, Tim. Welcome, everybody. In Q3, we continued to show solid execution and demonstrated continued resiliency of our software and cloud solutions-led business. Our Q3 financial performance was highlighted first by continued double-digit constant currency growth in software and cloud, and a strong quarter for services. These drove growth and gross profit, our measurement for top-line sales, reflecting healthy demand from mid-market customers for our mission-critical digital workplace, cloud, and security solutions. Second, our gross profit growth drove a strong increase in EBITDA, bottom line profit, and margin expansion because of the natural operating leverage in our financial model and our prudent cost containment efforts. Third, we ended the quarter in a robust financial position. Our net leverage was at 1.1 turns, a full turn less than the 2.1 we were at last year. We have tremendous flexibility to continue our balanced allocation of capital to internal investments that will drive growth while returning significant capital to shareholders. In terms of operational highlights, we continued to execute successfully on our growth strategy. We increased the size of our customer base by 108 customers in Q3 and 220 over the prior year, which is a 5% increase. This growth is attributable primarily to the 10% growth of our frontline sales force over the last 12 months, along with increased overall sales tenure and retention. A secondary but still notable driver of this growth was our success in the public sector, where winning a procurement vehicle will result in the acquisition of several customers. For example, we recently became one of only four providers authorized to sell Microsoft into the state of Texas and its agencies. In Q3, we also increased our average LTM gross profit per customer by supporting our expanded sales force with advanced technical and specialty sales expertise to help drive deeper engagements with customers and deliver higher margin and stickier IT solutions. Turning to slide 5. In terms of the demand environment, Q3 trends were similar to what we've seen through the year so far. Specifically, accelerating growth in our strategic focus areas, temporarily impacted by the industry-wide postponement of hardware devices such as laptops. On a year-to-date basis in constant currency, software and cloud gross profit has increased 14% and services 19%, both higher than their average historical growth rates. Combined, these two solution types have comprised approximately 77% of our gross profit over the past year, compared to 69% in 2017. The strength in our core solutions is what gives us the conviction that our strategy is working, and we have solutions that our customers value in this environment. We're taking share and can continue to invest in future growth ahead of lapping the hardware weakness that we've seen this year. In hardware, which was 23% of our gross profit over the last 12 months, has declined 17% due to that industry-wide reduction in discretionary purchases. Some of this decline reflects the decline in server purchasing as more customers move to the cloud, a trend that we expect will continue and which ultimately benefits our software and cloud-first approach. However, the vast majority for us has been in laptops and other peripheral devices. As organizations will not be able to postpone refresh cycles indefinitely, we expect to lap this temporary weakness sometime in 2024. And for context, if hardware was even flat in 2023, our overall gross profit would have increased 11% year to date in constant currency. While devices have been a modest drag on our results this year, it's been more than offset by demand in our strategic focus areas, which is what drives our excitement about future growth. We outlined these on slide 6. In terms of software asset management, we continue to successfully leverage our capabilities in this area to lead our Reduce, Optimize, Innovate, or ROI, go-to-market approach. For example, we're gonna save one new customer in the legal industry more than $32,000 per month on costs across two cloud providers by helping them manage their consumption. This reflects the value we create for customers when we mobilize our tenured account executives and our technical experts to help them solve a critical problem for customers. It's that reduced motion that helps our customers free up resources to engage us on further projects, creating value for them and for us. The cost optimization of public cloud spend remains a priority for customers. It's an area where we deliver quantifiable results through our multi-cloud FinOps and cloud governance practices. As customers pursue application and data modernization programs, they want financial planning and reporting built in, so that they can accurately forecast and account for the value that cloud consumption is driving back to the business. Our skill set in this area aligns with what we've already been doing in recent years, helping customers navigate the change to subscription software models by helping them adapt the way they assess, analyze, transact, and manage software spend. However, it's not just cost optimization opportunities driving growth. Building or refactoring applications using cloud native tools has also been a growth driver for us. This is the result of significant investments in data and application development capabilities that we've made over the last several years to support our customers more deeply on their cloud journeys. Additionally, within public cloud, one of the trends that has been fueling our strong growth is the pace of new public cloud logos. We've been discussing this all year, and we still expect it to accelerate because customers are more often adopting multiple cloud environments to solve discrete needs, versus using one cloud environment to solve all the needs of the business. This makes their environments more complex to build and manage, and so they need our expertise. Our continued success here is due to our ability to map those unique business needs to the solutions available across Azure, AWS, and Google Cloud, as well as our ability to enable customer adoption of a single operating model across these multiple cloud environments. These new logos provide an important pipeline for our future growth. New cloud logos typically are of low consumption value when we first win them, but they grow over time under our management. One of our aims is to drive that by attaching services that will accelerate the time to value for our customers and correspondingly, the pace of consumption. Now looking at our digital workplace and collaboration strategic focus area, we continue to see sustained momentum in our Microsoft E5 business and within our Cisco and Adobe portfolios. This has been driven by demand for software solutions that enable more agile and secure collaboration while remaining flexible to shifts in workplace policies regarding remote and hybrid work arrangements. Within security, which underpins all of our solutions, we're seeing increased demand for modern security solutions with the continued adoption of the Microsoft M365 E5 solution set. The security tools generate a wealth of signals that can be used to better predict and detect security risks. Now, those signals require the tools and processes to properly collect, analyze, and manage them, which is driving customer demand in this area. Azure Sentinel is a primary solution to solve this, and we're also seeing the entire ecosystem of threat detection response players rise with this trend. Also within security, there's been an increasing demand for managed security services because many customers can't manage the threat data and response on their own, and the risk of not doing this right is increasing every day. We have a portfolio of managed service partners designed to cover the different security platforms our customers are using. Therefore, we've been able to capture a broad amount of demand for this in our customer base. Turning to slide seven, we're taking an early leadership position in the enterprise adoption of AI. We have all the core attributes that a customer needs in their AI journey, including expertise and experience in design thinking, consulting methodology, application and data modernization capabilities, data security and governance services, and the end user adoption, planning, and support to make sure that people know how to use these effectively. This is converting into a strategy for us with three key elements. One, our own internal adoption of AI. We're already testing a broad range of use cases with tools like Copilot for M365. So we're one of the handful of large-scale partners invited to participate in Microsoft's Early Access program. We're also evaluating and building generative AI use cases on Azure, AWS, and Google Cloud. The aim here is to create competitive advantages in how we accelerate the time and value of functions across our own business, while enabling the hands-on experience we need to take this to our customers. Second, the existing services that we already deliver are being adapted to include AI opportunities, such as generative AI-enabled automation in application development services. And third, new services are being developed across each of our solution areas. For example, in Workplace, we've seen great interest in our Microsoft 365 Copilot Readiness services, which enable customers to perform use case identification, data planning, system integration, and end user adoption planning, all in preparation for the launch of Copilot. We're also seeing equal interest in more customized generative AI solutions built on Azure, Google, and AWS. Each of these solutions are front-ended with consulting workshops, where we bring together IT with lines of business to align use case planning and outcomes before selecting the language models and compute platforms best suited for those outcomes. We expect to see more customer demand beginning in Q4, coinciding with the rollout by Microsoft of M365 Copilot to enterprise customers on November 1st, and Google's rollout of Duet AI on Workspace. It's too early to provide anticipated financial contribution to our business, but we believe it will be a material, material contributor over the medium term. With that, I'll turn it over to Jonathan. Thanks, thanks, Andrew. I'll start on slide 8 with a look at the top-line metric, gross profit. Gross profit increased 4% on a constant currency basis and 3% on a reported basis, due to the impact of currency fluctuation on our reported results. This was an encouraging result as Q3 2022 was a difficult comparator period, as it benefited from some large software and cloud and hardware orders in the commercial and enterprise channels, as we outlined last year. On an LTM basis, gross profit increased 5% in constant currency. Growth in Q3 and LTM was driven by an increase in margin on gross sales across all 3 IT solution types, which is why gross profit growth outpaced gross sales. Constant currency growth and gross profit was driven by 10% growth in core focus areas of software and cloud, and which on an LTM basis, has grown by 12%. The increase in software and cloud gross profit in both Q3 and on an LTM basis, was driven by both an increase in gross sales volumes and an increase in margin and gross sales. Services gross profit in Q3 increased 51% in constant currency. This was driven by a healthy 9% increase in gross sales, and last year having an atypical low margin on gross sales in Q3 2022 of 20.3%. On an LTM basis, services gross profit increased 27%, driven by an increase in gross sales volume and an increase in margin on gross sales. In terms of hardware, we saw a decline across all channels, reflecting the industry trend Andrew outlined, with hardware declining 20% in a constant currency in Q3 and 16% on an LTM basis, driven by decreases in gross sales, partially offset by higher gross profit margins on those gross sales. In terms of sales channels, SMB and commercial increases were driven by double-digit increases in software and cloud and services, partially offset by hardware declines. Enterprise decline was driven by the decline in hardware and large software and hardware orders received last year. The continued double-digit growth in our core focus areas, notably within our SMB and commercial sales channels, is what has given us confidence to ramp up investments in Q4 to accelerate future growth. Now turning to our operating expenses on slide 9. Our headcount, which comprises the vast majority of our cost structure, was stable year-over-year. However, adjusted personnel expenses, personnel expenses decreased by $4 million, driven by lower variable costs. I'll note that this was in part due to short-term incentive bonuses accruals that was recorded in Q3 2022 for the year-to-date period, which was inflated OpEx to an extent last year. This accrual was essentially reversed in Q4 2022, which resulted in low reported OpEx in that quarter. As I noted last quarter, we have accelerated investments in our sales capacity and continued investments in our sales support resources and technical capabilities. In terms of AEs, a number have completed our training academy and joined our sales force in October. We are now targeting to end 2023 with a bit higher than the 6% increase we outlined as our intention in August, notably in the SMB and commercial channels, including public sector. Now turning to page 10, slide 10. Adjusted EBITDA in Q3 increased 49%, with margin expanding to 29%, driven by the combination of gross profit growth, our natural operating leverage, and cost containment. Year-over-year growth also benefited from the impact of the bonus accrual of OpEx last year, as I previously noted. IFRS operating profit increased by approximately $12 million, driven by a $7.5 million increase in adjusted EBITDA, combined with a reduction of $2.6 million in amortization expenses, as certain intangible assets became fully amortized. In terms of the bottom line, this translates to net income per share on a diluted basis increased to $0.14 from a loss of $0.14 in the prior year, and adjusted EPS from a diluted basis increase to $0.23 from $0.14 in Q3 2022, primarily due to the increase in adjusted EBITDA. Turning to slide 11. Stripping out the impact of non-cash operating working capital, in which Q3 is typically an outflow period, we recorded strong cash flow from operations before working capital of $17 million in Q3, compared to $3 million in Q3 2022. On an LTM basis, cash flow from operating activities was $96 million. Adjusted free cash flow on an LTM basis increased 24% to $85 million, or 90% of adjusted EBITDA, driven by the increase in adjusted EBITDA and stable maintenance CapEx, as well as lease payments as a result of our capital-light business model. Adjusted free cash flow was used as follows: approximately 21% was used to pay dividends to our shareholders, 25% was used for share buybacks under our NCIB, 25% was used for cash taxes and interest payments, and the remainder was primarily used to reduce debt. As it relates to long-term capital allocation expectations, our priorities remain on, one, the internal growth investments that I've outlined, which are paid from our operating expenses. Two, our dividend. Three, our discretionary cash-... Third, with our discretionary cash, we would expect to see a combination of net debt reduction and/or share buybacks, with a combination quantum dependent on the working capital, as Q4 in recent years has typically seen a working capital cash inflow. Looking ahead to Q4, based on current trends, we anticipate a similar year-over-year percentage growth in gross profit as we recorded in Q3. Adjusted EBITDA margins is anticipated to be in the low 30s, as it was in Q4 2021, rather than the 37% recorded last year, which is atypical because of the low OpEx in that quarter related to the bonus accrual reversal. Adjusted CapEx, cash OpEx in Q4 2023 is anticipated to be higher than Q3 of this year due to the investments that we outlined we are making in the quarter, and we anticipate increase in variable compensation, and is expected to be above $60 million. It should rise on a run rate basis in 2024 as we count for a full year of these investments. Now I'll turn it over to Andrew for some final remarks before opening it up to Q&A. Andrew? Great. Thanks, Jonathan. And to sum it up, before we get to the Q&A, in 2023, the resiliency of our software, cloud, and services-focused business model has proven itself. So we've more than offset the large industry-wide decline in hardware purchasing while driving strong profit growth, margin expansion, and free cash flow. We see an opportunity for accelerated top-line growth, profit growth in future years due to the demand we're seeing within our mid-market customer base for our offerings and our expertise in our strategic focus areas, combined with lapping that hardware weakness. We're investing now to increase our selling capacity and skill set to meet that customer demand. For us, the rationale is clear: We continue to see strong demand for our core solutions. Internal investments historically generate attractive returns, as has been evident by our past results over the last several years, and we're in a financial position to try to attack market share expansion, notably as some competitors may be hurting more than us by the decline in hardware sales. With that, I'll turn it over to the operator for Q&A. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift your handset before pressing any keys. In the interest of time, we ask that you limit yourself to one question and one follow-up. We have our first question coming from the line of Scott Fletcher from CIBC. Please go ahead. Lara, I can't see Scott in the queue. Can you check and see or move on, Scott, if you're there, if you can re-queue? Oh, apologies, sir. Apologies. Mr. Fletcher's line disappeared from the queue. We now have Mr. David Kwan from TD Securities. Please go ahead. Hey, guys. Congrats on the quarter. Nice to see the much better than expected adjusted EBITDA on the margins and the jump in the margins, which is a nice surprise. I think you kind of touched about in the commentary. You know, sounds like obviously some of the reversals in the variable comp and also some of the investments that you're planning to make. So just trying to get an understanding of how you see the margin performance going forward. I know I think in the past you've talked about, on average, you know, somewhere close to 100 basis points of margin expansion a year. But wondering how you're looking at that in light of these dynamics. Good morning, David. Thank you for the question. We, you know, on average, ultimately year-over-year, we see that 100 basis points. But, you know, I think we stated that it's not always linear. This will be a year where most likely it's not linear, right? We finished last year at about 26.2% leverage. We should operating leverage, we should finish more than 100 basis points when you extrapolate that out for Q4 this year. That doesn't mean that the next year there's a full 100 basis points that goes off of that. We're benefiting this year with, you know, as you highlighted, we've grown, you know... We're pleased with the growth that we see on GP this quarter in light of the hardware challenges that are industry-wide. We're effectively managing our cost base, and so, but not at the expense of not adding selling capacity. And so you're seeing, you know, an increase in our AE headcount that we expect to see by the end of the year. So all that to say, David, there's certainly this year will be a higher than the 100 basis point year-over-year improvement from Adjusted EBITDA to GP. It's based on those, you know, levers that we've been discussing over the last few quarters. And then as we head into 2024, it may not be a linear, another 100 basis points that comes off of that. No, I appreciate that. Just good color, Jonathan. Maybe one for Andrew. Appreciate the color on the GenAI work that you guys are doing. Can you maybe talk about how long you think it's gonna take for you to help customers get ready to deploy some of these GenAI solutions like Copilot? And, you know, maybe when you expect to start generating some material revenues from the sale of these types of solutions. Yeah. Thanks, David. We think this is a really amazing opportunity for us. The timing is one where everybody wants to talk about it right now, but everybody's feeling it out and trying to figure out what that right use case is and how they can get started. So I'll tell you, we're already starting to deliver, not just see, but we're delivering these readiness assessments for customers today, which is where we go in and we help them identify those use cases or help them identify how to prepare for something like M365 Copilot. And so now the question is: how quickly does that move from, you know, getting folks ready to actually adopting and using these generative AI tools? I think we all expect that to be impactful sometime in 2024, but there's a lot of people spending time getting ready right now, and not quite yet at the mode of full speed ahead on the adoption of these tools. So I'd anticipate we probably still have a, you know, a few quarters of people doing the preparatory work to get their systems and environments ready to fully leverage these tools before we start to see that really come to fruition. But, you know, I would tell you there's a lot of interest, and so we're preparing ourselves should that happen faster. Just a quick follow-up. I guess it probably should show up more in the services line first before we see it in, say, software and cloud. It depends on what takes off first, David. So what I mean by that is, if the adoption of M365 Copilot skyrockets, and comes out of the gates really fast, everybody says, "We need to have this, we're gonna go right away," then we'll actually see the product number probably go first, and then the services will follow on. Because these readiness assessments would be small in comparison to the announced rate, $30 a user a month for the licenses for that. Should it be more focused on building and leveraging generative AI capabilities like Google Vertex or Azure OpenAI to build into the applications, then you would see services first, for sure, because we've got to help customers actually build those tools into their applications. So I think it'll be interesting to watch over the next little while, what that adoption curve looks like in these various tools. But that depending on which, which one sort of pops first, that would be where you'd see the jump come from, either product first or services first. I appreciate it. Thanks, guys. Thanks, David. We have our next question coming from the line of Scott Fletcher from CIBC. Please go ahead, sir. Hi. Good morning. Can you guys hear me now? Just making sure. We can, Scott. All right, perfect. I was gonna ask a question on the GenAI, so, I will try and narrow the focus here. Do you think that initially or over the longer term, the bigger opportunity in GenAI is in the sort of SMB and commercial side of the market rather than the enterprise? Just curious what your initial thoughts on where you might see the demand from. Just, Scott, just to clarify, do you mean in terms of how it's going to impact us specifically, financially, or- Yeah ... more around industry adoption? Yeah. Yeah. No, sorry, I'm from a Softchoice lens. Yeah. So I, I think so, because, you know, in those customers, that, that sort of commercial size, mid-market customer, those are the ones that have really complex needs for technology, but often don't have all the skills in-house to do it, versus maybe a large enterprise that, that is probably starting to amass a, a large team of AI-skilled professionals right away. And so I think that's where the real opportunity comes for us to show the value of being able to offer a complete and integrated solution for those kinds of customers who would otherwise not be able to do it themselves. And so I do think the largest opportunity for us will be in that sweet spot of customers from us. And, and remember, 90% of our customer base is SMB and commercial-sized customers. So, we are sort of preparing ourselves for that. Now, sometimes I would say there's an opportunity for us to continue to serve the enterprise segment with these in these areas as well. Because there's areas like AI governance, and sort of preparing and managing the licensing that goes associated with these AI tools, that many of these organizations are not gonna wanna spend time and resources on, right? They're gonna want their folks focused on developing AI capabilities on their internal and customer-facing applications, not on the mundane sort of management. And so we do quite a lot in the cloud world already in helping with FinOps and cloud governance in the enterprise segment, because often, you know, that's where you can find $ millions in cost containment and cost savings if you do those things appropriately, because their spend is so large. I think the nature of what we do will differ by customer segment, but the full kind of services and solutions side would be really geared to that mid-market. Okay. That's, that's really helpful color. I will- I'll pass the line there. Thanks. Thank you. We have our next question coming from the line of John Shao from National Bank. Please go ahead. Hey, good morning, guys. Thanks for taking my question. Could you maybe just expand your discussion regarding your growth investment and talk about, you know, some of the measures on how you're gonna drive the IT sales capacity increase? ... Morning, John. So the question is on our selling capacity and the increase that we see over the coming 12 months. Is that essentially the question? Yes, that's right. Yeah. Yeah, so, you know, we, as Andrew laid out, we've already increased our selling capacity by, I think, around 10%, year-over-year, if we look at the LTM. Last time we spoke last quarter, we identified that we really like the trends that we're seeing in our software and cloud and services, which side of the business, which is our focus areas, as you know, and, you know, as Andrew laid out, is almost 80%, just under 80% of our overall business. So with that in mind, we're continuing to make investments in adding capacity. So we're raising our view in terms of how we'll finish the year in terms of sales, you know, AE headcount out-meeting customers January 1st. We're raising that, our view on that. So we'll be over the 6% that we laid out in Q2, probably in that 6%-9% range. Now, in terms of, you know, the payback and the return that we get, why we're doing it now, as opposed to, say, you know, next year, is ultimately, as we've kind of laid out a couple of times, is that the payback for the new sales team happens within, you know, month six, seven, or eight, is where we start getting the positive return, if you will, of GP versus their cost. And then we get the full payback of all their costs in, you know, month 11, 12, or 13. So we're constantly adding capacity in advance of where we see the market going. You know, a little bit like, if we use the hockey analogy, where the puck is going, we're making sure our skaters are there. And so we're pretty bullish as we look into next year around our software and cloud and services. And we think that ultimately the hardware side of the business, you know, can't continue the declines that we've seen. And as Andrew laid out, if it's just flat, our business is running at about 11% year-over-year growth. So we're continuously adding capacity to ensure that we are able to service our customers next year. Okay, that's very helpful. Appreciate the colors. And for your new customer addition that mentioned in the prepared remarks, could you maybe just talk about their size and verticals, and in terms of their, you know, current spending with Softchoice, how is that looking relative to the wallet share potential? Yeah, John, I think the growth has actually been pretty diverse across all three of our segments in SMB, commercial, and even in the enterprise segment. What happens, though, when you win a new customer is typically we try to win that big anchor software or cloud subscription agreement that then allows us to show our value to that customer, help them better manage, organize, and hopefully, you know, reduce, optimize, and innovate the spend in their, and the setup of their environment. And so when you look at our average gross profit per customer, I think you'll know that new customers would come in far below that in their first year with us. But over time, we add more titles, we add services, and we move them up the stack with us to add more and more and to provide that value. So you're gonna see that they're not... You know, they're contributing in year, but the real opportunity for us is the scaling and the growth of them in the coming years. So we've got good performance across all segments, and you're gonna see that help us. And that's why we continue to invest in new account acquisition to fuel growth for future years. And to tie into what Jonathan was just describing, the way that we create all those new territories for our AEs is by that peel and grow strategy, right? Where we peel off some of the accounts from our existing reps that aren't getting as much penetration or attention, and we give them to the new people who can focus even more on them and show them the value that Softchoice can offer. And so that becomes a nice fuel for our AE acquisition and growth in coming years. Thank you. I'll pass the line. Our next question comes from the line of Paul Treiber from RBC Capital Markets. Please go ahead. Thanks so much. Good morning. Just, you know, a question on the market and in macro. So obviously, since you're adding sales capacity, you feel good about demand. But has there been, you know, underneath the headline numbers, have you seen any change in either, like, decision making or procurement? Or in other words, you know, do you think growth, your software growth, would have been stronger if there wasn't macro uncertainty? I think to a certain extent, Paul, it could be even stronger without macro uncertainty. I think it's been well discussed in many parts of the industry that especially in large customers and enterprise organizations purchase decisions have been elongated and scrutinized more for the financial returns. And so you are seeing things drag out a little bit. And we've mentioned it several times on our calls that that is happening in the enterprise business. And we believe that, you know, we are able to get through that, and our team is doing a great job working with those customers. And we've got a really resilient business in software where, you know, customers just need those mission-critical applications, and so the resiliency of the business is there. But could we grow faster without that? I do think we could. And, you know, the good thing for us is, as we've talked about, we still haven't seen that really trickle down in a significant way into the SMB and commercial spaces, and we've still seen very strong demand there. So as we look to add AEs, and the conversation that Jonathan just had- ... You can imagine a lot of the AE ads are going to be more towards the SMB and commercial side, where our market opportunity is still unbelievable. You know, we've seen that there are over 200,000 prospects out there that have yet to experience what Softchoice can bring to them. And so the opportunity for us to go and win those customers and continue to take share in this environment is still really strong. That's helpful to understand. The other thing I wanted to dig into and try to better understand is, just with, you know, work from home, you know, obviously it led to a pull forward in a lot of hardware. But then as employees are returning to offices, are you seeing any churn of work from home-related software? Anything like, you know, video conferencing is a good example, you know, VPNs. Are you seeing any reduced utilization, or is that customers are just continuing to maintain their licenses and spending there? It's maintained, and the reason is because nobody—I shouldn't say nobody. Most companies are not going back to five days a week, nobody remote. At least at this point, the primary mode would be some form of hybrid. And whether you're working remotely one day a week or five days a week, it really doesn't change the needs for the technology, and the applications and the security that's associated with people being there. So for as long as we're gonna continue to operate in a remote environment, these organizations are gonna need to continue that spend. Thanks for taking the questions. Our next question comes from the line of Martin Toner from ATB Capital Markets. Please go ahead. Thank you very much for taking my question. I'd like to hear a little bit about the sequential drop in revenue retention. I mean, was it all enterprise hardware? Were there other parts of the enterprise? Are there any other areas of weakness? And maybe talk a little bit to strengths in other areas. Sure. Thank you, Martin. Thank you for the question. So I mean, you've essentially answered my question by posing it. The weakness that we're seeing, or you know, the softness that we're seeing in revenue retention is 100% driven by the hardware story that we've been talking about, and it's really an enterprise focus. So SMB and commercial, which you know, as Andrew laid out, is really the growth engine of Softchoice. And there's you know, plus 200,000 prospects out there for us. We continue to have above 100% revenue retention. And so when we think about when we add a new customer, going back to one of Andrew's earlier comments, we add a customer, they stay with us, they see the value creation that we can bring to them, and they keep on adding, you know, more value. They keep on asking us to play a bigger role in their IT spend. And that's why we see that +100% in SMB and commercial. And ultimately, the enterprise number is really a hardware story, which, you know, we've been talking about for a couple of quarters now. And we know it's an industry-wide, and I think we're pretty pleased with how our numbers are shaking out. We also had last year, our enterprise business in Q3 had a massive gross sales jump because they had a few really large, low-margin software contracts, and so they also had the negative impact of lapping those this year. So if you actually... You know, we do revenue retention based on that gross sales number. If you actually just did it on gross profit, the retention would be around 100% still. So it's a bit of a timing thing, but we'll, you know, we're lapping that big gross sales jump in enterprise last year, Q3. So overall, as Jonathan said, SMB commercial, we're still seeing really strong revenue retention, and we think this is more tied to the hardware and just a bit of timing on enterprise. But overall, it's still strong. That's great color. Thanks so much. What does enterprise software and services look like from a gross profit growth perspective? Sorry, what's the question again? Enterprise software and cloud- Software and services at... Yeah. Oh, okay. I see what you're saying. We don't break it out by lines, but essentially the decline in enterprise is driven by hardware and the large software and cloud orders that took place in Q3 2022. That makes a difficult comp for Q3 2023 for enterprise. Perfect. Thank you. And is it possible that as enterprise recovers, there will be a, Just, I mean, given the migration to the cloud, that there'll be a lot less hardware revenue in this coming upcycle? And what are the implications for you there if that, if that occurs? Yeah, Martin, we, most of our decline in hardware is actually on laptops and peripheral devices, not on the data center side of it. So we believe that that is less likely, just because people need, will need new laptops. So had the decline been much more towards the data center side, the servers and storage, I think your comment would be a concern for us, but at this point, most of it is just laptop refresh cycle. Understood. Okay, thanks. That's it for me. Thanks. There are no further questions at this time. I'd now like to turn the call back over to Mr. Andrew Caprara for final closing comments. Great. Well, thank you, and thank you everybody who listened and joined us today. We look forward to updating you on our continued progress in our Q4 call next year. So have a great rest of your day and a great weekend, everybody. Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.