Ladies and gentlemen, welcome to the Insight Enterprises Q4 full year 2022 earnings conference call. My name is Glenn, and I'll be the moderator for today's call. If you'd like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I will now hand you over to your host, James Morgado, SVP Finance and CFO in North America to begin. James, please go ahead. Welcome, everyone, thank you for joining the Insight Enterprises earnings conference call. Today, we will be discussing the company's operating results for the quarter and full year ended December 31, 2022. I'm James Morgado, Senior Vice President of Finance and CFO of Insight North America. Joining me is Joyce Mullen, President and Chief Executive Officer, and Glynis Bryan, Chief Financial Officer. If you do not have a copy of the earnings release or the accompanying slide presentation that was posted this morning and filed with the Securities and Exchange Commission on Form 8-K, you'll find it on our website at insight.com under the Investor Relations section. Today's call, including the question-and-answer period, is being webcast live and can also be accessed via the Investor Relations page of our website at insight.com. An archived copy of the conference call will be available approximately two hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, February 9, 2023. This call is the property of Insight Enterprises. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will be referring to non-GAAP financial measures as we discuss the Q4 and full year of 2022 financial results. When discussing non-GAAP measures, we'll refer to them as adjusted. You'll find a reconciliation of these adjusted measures to our actual GAAP results included in both the press release and the accompanied slide presentation issued earlier today. Also, please note that unless highlighted as constant currency, all amounts and growth rates discussed are in U.S. dollar terms. As a reminder, all forward-looking statements that are made during this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our most recently filed periodic reports and subsequent filings with the SEC. All forward-looking statements are made as of the date of this call, and except as required by law, we undertake no obligation to update any forward-looking statement made on this call, whether as a result of new information, future events, or otherwise. With that, I will now turn the call over to Joyce, and if you're following along with the slide presentation, we'll begin on slide four. Joyce? Thank you very much, James. Good morning, everyone. Thank you so much for joining us today. It is my pleasure to report that we ended 2022 with an outstanding Q4 that topped off a record-setting year. For 2022, we delivered record net sales, gross profit, gross margin, adjusted EFO, and adjusted diluted EPS. We ended the year with positive cash flow from operations of $98 million. These are stellar results in a volatile macro environment. For the past year, we have articulated our focus on delivering differentiated value for our clients, improving and scaling our solutions offerings, and enhancing our technical expertise in the areas where we know we excel. While there is no finish line in this race, I feel great about the progress we've made so far. Our clients choose us because we help them improve and transform their businesses and achieve the outcomes they need. This is evident from our record-setting results this year, in fact, we outpaced the global IT market across all categories: software, including cloud, services, and hardware. The foundation of our services business is based upon long-standing relationships and understanding of the outcomes our clients need and what is required to make them successful. We deliver this through our deep technical expertise, which has led to record performance in Insight core services with gross profit growth of 14% for the year. We are still in the early stages of executing against our long-term strategy, the progress we made in 2022 propels us forward in pursuit of becoming the leading solutions integrator. We outlined this strategy at our Investor Day last fall, as a reminder, there are four key pillars underpinning that strategy. First, captivate clients. This is a people and outcome-focused business. We plan to drive continued improvement in Net Promoter Scores by delivering exceptional results. We pride ourselves in earning the right to do more by delivering high quality and outcome-based solutions. Our investments in E-commerce and automation will allow our clients to transact with us even more efficiently via self-service. This creates a seamless customer experience for our clients and frees up our sales teammates to focus on our second pillar, which is selling solutions. We are transforming our sales capabilities and aligning our incentives to focus on our solutions portfolio. We continue to streamline our account coverage to match skills with our clients' need and propensity to buy services. The theme here is really about focus. That is doing a finite number of things and doing them really well. Our third pillar is deliver differentiation. This is all about providing innovative, scalable solutions through reusable IP, exceptional technical talent, and our very compelling solutions portfolio. Again, we are focusing on our strengths that align with the fastest-growing areas of the market and the areas where our clients need the most help: cloud, data, AI, cybersecurity, and edge. The fourth pillar is to champion our culture. This has been a strategic advantage for us, and we will continue to leverage our values of hunger, heart, and harmony to evolve our high-performance culture. This is critical to attracting and retaining such incredible talent. Speaking of incredible talent, I am happy to announce the addition of two new leaders. First, we are pleased to welcome Adrian Gregory as our new President of Europe, the Middle East, and Africa, EMEA. Adrian held various leadership positions at both Atos and HPE, and brings over 27 years of experience in the technology sector. He will lead our EMEA team as we continue to build our services and solutions capabilities in that region. Additionally, Kate Savage joined as an SVP in our solutions segment, where she is focused on all operational aspects of our services business. Kate joins us from Capgemini, where she was Executive Vice President driving operations and people strategies. M&A is also an important part of our strategy and supports the four pillars I outlined above. As we enter 2023, we have nearly $1.5 billion in financing capacity to fuel this strategy. We will be deliberate in our acquisitions to support our solutions business in key growth areas such as cloud, data, AI, and cyber. One such example is our acquisition of Hanu last year. As a reminder, Hanu is a Gartner Magic Quadrant Azure migration company that allows us to scale our cloud business. Hanu also has a robust recruiting and development academy to build more technical expertise in India. To support these changes I outlined above, we stood up a global transformation office to manage the initiatives across the company. As I mentioned earlier, we had a record-setting 2022. Glynis will walk you through our Q4 performance, and I'll highlight some of our full-year results now. Net sales of $10.4 billion, up 11% year-on-year. Cloud gross profit of $340 million, growth of 29% year-on-year. Insight core services gross profit of $253 million, an increase of 14%. Gross profit grew 13%, and gross margin expanded 40 basis points to 15.7%. Adjusted EPS was $9.11 per share and grew by 28%. Adjusted EBITDA margin expanded by 60 basis points to 4.7%. We generated operating cash flows of $304 million in Q4, taking the full year to $98 million. These results demonstrate our team's ability to execute in a challenging environment and the resilience of our business model. We've talked a lot about our ambition to become the leading solutions integrator by combining our strengths in hardware, software, and services to offer comprehensive solutions that drive business outcomes for our clients. I want to share a recent example of this. Vivli is a nonprofit organization whose mission is to facilitate the sharing of clinical research data and to enable their partners to develop treatments for diseases such as Alzheimer's, diabetes, and many others. To do this effectively, they needed an intuitive platform that would provide researchers around the globe with secure access to a vast array of clinical trial data. We worked with Vivli to define this new platform and determined three critical requirements for success. Those were ensure the solution was secure, patient privacy is clearly critical, create a smooth user experience with an intuitive front end, and ensure the platform was scalable and manageable. Our highly experienced technical team developed a solution using the full complement of Azure services, which ultimately drove business efficiency, eliminated manual and redundant processes, and made a significant impact on the research community. For Vivli, success is all about adoption. After delivering this project, Vivli has been pleased with the clinical data growth of 42% year-over-year, and more researchers are using this platform than ever, with user growth of 20% per year. This is a great example of our purpose, accelerating transformation by unlocking the power of people and technology. We love the human aspect of this example and how the solution has not only helped Vivli but has helped potentially thousands of patients at critical moments in their lives. Customer success stories like this reinforce confidence in our strategy. As I mentioned, we see cybersecurity as a major focus for us, and I want to talk through a really meaningful example of our capability in this space as well. When a Fortune 100 insurance and financial services provider needed to modernize security, they turned to Insight. They needed to address a challenge called secret sprawl, or more plainly, a situation that many organizations face when passwords, encryption keys, and other sensitive authentication information is stored in many different locations. Secret sprawl leads to mismatched credentials and creates a risk of security breach. To address this challenge, we implemented HashiCorp's Vault software to consolidate user credentials. We also developed customizable self-service API templates to direct authentication between multiple applications and developed automation to monitor expiration of web security certificates. The solution we deployed is a seamless credential management system with automated compliance. We're really proud of the work done on this project and the value we provided. I think it's a testament to the deep technical talent we have at Insight, and we see that as an important differentiator in the industry. We also earned some tremendous industry recognitions in 2022. You can see the details in the accompanying presentation, so I'll just highlight a few recent recognitions now. We earned three Cisco Partner of the Year recognitions, achieved all of Microsoft's solutions partner designations, earned Microsoft's 2022 Partner of the Year for manufacturing, as well as the 2022 Canada Partner of the Year award. Additionally, as champions of people, leadership, and culture, we strive to be a company where all teammates have the opportunity to reach their full potential. I am proud that Insight was recognized by Forbes as one of the world's top female-friendly companies. Before handing the call over to Glynis, who will share our 2023 outlook, let me briefly touch on the year ahead. As we head into 2023, we expect continued economic uncertainty, and now more than ever, it is critical that we support our clients as we navigate these uncertain times together. We are uniquely positioned with our combination of deep expertise in hardware and software and our portfolio of digital transformation services focused on cloud, data, AI, and cyber to deliver cost-effective technology solutions and business outcomes for our clients. The $4 trillion IT market is growing in the low single digits. However, cloud, data, and AI, cybersecurity, and the edge are expected to grow in double digits, which plays to the strength of our portfolio and our technical talent. We remain focused on our ambition to become the leading solutions integrator, and I look forward to discussing our progress as we continue our journey. With that, I'll turn the call over to Glynis to walk you through the important details of our financial and operating performance in Q4 2022, as well as our outlook for 2023. Glynis? Thank you, Joyce. As Joyce mentioned, we delivered record results for the year as we continued our journey to become the leading solutions integrator despite the challenging macro environment. I'd like to start with some comments on our 2022 performance. Every year does not play out like this one, but 2022 was a year of two halves. The first half had very strong net sales growth of 22%, fueled by exceptionally strong devices growth in the high 30% range against a weaker first half of 2021. In the second half, net sales were essentially flat across better second half 2021 performance, but we achieved higher growth margin and positive cash flow from operations. In the second half of 2022, our operations generated cash flow of $540 million, leading to positive cash flow from operations of $98 million for 2022. As we have discussed previously, when hardware sales decelerate, we spin off significant cash flow. Our performance in the second half of 2022 is an excellent illustration of this. Our net sales performance in 2022 reflect our execution, volatile market conditions, and the easing of supply chain issues that began in 2021. Although we have essentially flushed our device backlog, we still have significant backlog in networking and infrastructure going into 2023. As we have previously discussed, we're on a multiyear journey, and we're in the early stages. In 2022, we started assembling the building blocks around sales transformation, portfolio optimization, our differentiated value proposition related to our offerings and our technical talent, and our profitability initiatives to accelerate gross margin and EBITDA margin expansion. We are not finished with our efforts in these areas, but our performance to date is meeting our expectations. The slide presentation today includes details on our Q4 and full year 2022 performance for the three geographic regions, as well as our consolidated results. I will focus on our consolidated results and on the key highlights from our Q4 performance on this call. You will also find the GAAP equivalents for our adjusted results in our investor slides and a reconciliation to the GAAP amounts in the appendix to the investor slides. In Q4, gross margin was a record 16.8%, an increase of 180 basis points compared to prior year, and reflects the higher mix of cloud, Insight core services, and infrastructure products, all of which transact at higher margins. Our strong performance was driven by 44% cloud gross profit growth and 11% Insight core services gross profit growth. Combined with our operating expense leverage, this resulted in a record adjusted EBITDA margin of 5.4%, up 120 basis points over 2021. For the Q4, adjusted diluted earnings per share was $2.53, up 28% in constant currency and 25% in US dollar terms year-over-year. For the year, adjusted diluted earnings per share was $9.11, a record for us, up 31% in constant currency and 28% in US dollar terms year-over-year. This performance illustrates the resilience of our business model in a declining device market and gives us confidence as we make progress on our solutions integrator strategy. As we previously discussed, with the slower growth in hardware in the Q4, we generated $304 million in cash flow from operations in the quarter. In 2023, we expect our business to generate cash flow from operations in the range of $180 million-$220 million. To update you on our share repurchase program, in Q4, we repurchased 839,000 shares of our stock at an average price of $98.88 per share for a total cost of $83 million. In full year 2022, we repurchased a total of 1.1 million shares at an average price of $97.35 per share for a total cost of $108 million. As of the end of January, we have $196 million remaining under our $300 million share repurchase authorization. We anticipate executing $96 million in our planned share repurchase pending market conditions. In the Q4, our convertible notes exceeded the market price trigger of $88.82 and were convertible at the option of the holders. As a result, the principal amount was reclassified to current liabilities. The $350 million principal amount of the convertible notes will always be settled in cash. In future reporting periods, as our average stock price in any quarter exceeds the warrant price of $103.12, we will include shares in our diluted and adjusted diluted earnings per share calculation for the amount in excess of the warrant price and the average share price throughout the quarter. You will find an illustration of this in the appendix to our investor presentation. We continue to evaluate alternatives relative to the convertible notes as well as the impact of the convertible notes on dilution on our share repurchase strategy. Our current share forecast for 2023 includes the net impact of share repurchases and anticipated dilution, assuming our share price increases throughout 2023. We exited Q4 with approximately $1.5 billion of a $1.8 billion capacity available under our ABL facility, and we have ample capacity to fund our business and capital deployment priorities. Further, we ended the year with adjusted ROIC of 15.9%, an increase of 50 basis points over 2021. Our presentation shows our 2022 performance relative to the metrics that we laid out at our Investor Day in October. 2022 is our baseline year. Moving on to 2023. As we communicated last quarter, we anticipate a modest growth year as the macroeconomic environment remains challenging across the globe given elevated inflation and interest rates. Consistent with the market consensus, we anticipate higher borrowing costs under our ABL, and we also anticipate that foreign exchange rates could create added volatility. In the face of this uncertainty, we are focused on improving cash flow and preserving capital for critical initiatives. We will continue to fund the four critical initiatives Joyce outlined, including the outfitting of a new Texas advanced integration and client fulfillment center, as well as critical initiatives related to sales transformation, digital commerce, and our differentiated value proposition. In addition, the most recent forecast for the IT market is projecting low single-digit growth for 2023, with hardware down and software and select services up in the mid to high single-digit range. The areas of cloud, data and AI, cyber and modern infrastructure are all forecasted to continue to grow at a double-digit pace. This plays to our strengths, and we believe our performance in Q4 confirms the strength of our business model and our ambition to be the leading solutions integrator. As we think about our guidance for the full year of 2023, our expectations remain modest. We expect to deliver gross profit growth in the high single-digit range. We expect adjusted diluted earnings per share for the full year of 2023 to be between $9.90 and $10.10. This outlook assumes interest expense between $48 million and $52 million, an effective tax rate of 25%-26% for the full year, capital expenditures of $55 million-$60 million, and an average share count for the full year of 34.3 million shares after an estimated completion of our current share repurchase program and net of estimated dilution. This outlook excludes acquisition-related intangible amortization expense of approximately $32 million, assumes no acquisition-related or severance and restructuring and transformation expenses, and assumes no significant change in our debt instruments or the macroeconomic outlook. I will now turn the call back to Joyce. Thank you, Glynis. 2022 was a record-setting year, and we are thrilled with our results, and Q4 showed encouraging progress toward our goals. There are significant headwinds driven by the macroeconomic environment, but we believe our broad portfolio of solutions provide us with the resiliency to navigate any economic cycle. We are well-positioned in the fastest-growing areas of the market. We are laser-focused on execution and building momentum towards our ambition to become the leading solutions integrator. We are passionately focused on delivering against our strategic pillars of captivating clients, selling solutions, delivering differentiation, and championing our culture. Our plan is to supplement this strategy with our intentional M&A approach. Our strong results in 2022 position us well to progress toward our long-term growth and profitability targets. All of this propels us towards our ambition to become the leading solutions integrator, defining a new category in our industry. In closing, I want to thank our teammates for their commitment to our clients, partners, and each other, our clients for trusting Insight to help them with their transformational journeys, our partners for their continued collaboration and support in delivering innovative solutions to our clients. This concludes my comments. We'll now open the line for your questions. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure your phone is unmuted locally. We have our first question comes from Matt Sheerin from Stifel. Matt, your line is now open. Yes. Thanks. Good morning, everyone. My first question, Joyce, is just on your outlook for hardware in general and specifically client devices. It sounds like it's been down year-over-year for the last couple of quarters. Any sense of when that bottoms? What are your customers telling you? Thanks, Matt. Again, good morning. You know, we just had a pretty great quarter and a pretty awesome year, it was a pretty great quarter in a period when devices were down. I think first of all, I just wanna say that our combination of services, software, cloud, and hardware, of course, give us confidence that our outlook is pretty solid. Glynis has outlined the numbers, we're confident in that. We see a reasonably good start to the year in that, in that regard. In terms of hardware, we have pretty significant backlogs still, near record high backlog on infrastructure. That's gonna probably not dissipate till the back half of the year or through the summer. From a device point of view, yes, we're like the rest of the industry, expecting devices to be down in the first half with some recovery in the back half of the year, primarily driven by much softer compares. Okay. Thank you. Then, I wanted to talk about the Q4, where you had basically your revenue down, your gross profit was up roughly $21 million, and you basically, your SG&A was flat quarter to quarter, which seems surprising. Could you explain the relationship between the gross profit dollars, particularly in those netted down revenues and the corresponding OpEx? If we look at your guidance for next year, you're looking at really significant gross profit growth on, I guess, low single digit revenue. I'm trying to figure out what that OpEx looks like underneath that model. Sure. Okay, Matt, you're exactly correct. In Q4, software, cloud, and software in particular were strong. You saw that reflected in the growth margin numbers that we posted in Q4. Going into 2022, you're also correct. We do anticipate gross profit dollar growth in the high single-digit range, and revenue growth is gonna be lower than that. That's based on a couple of things still. One, devices are a smaller contributor to the overall hardware in 2023. We're gonna get more from infrastructure, more growth from the infrastructure side of the hardware market that transacts at higher margin. Software and the cloud are also gonna be strong going into 2023. We have core services, which are also gonna be strong going into 2023. In addition, we talked a little bit in our Investor Day about our profitability initiatives with regard to expanding gross margin. When you look at our numbers, gross margin is a huge driver of what we anticipate will be our success in 2023, and we have controlled SG&A in the second half of 2022. That is continuing as we go into 2023. We will continue to fund sales and technical resources as we have done in 2022, we will continue to control our back office and admin resources and leverage low cost locations in terms of how we expand to meet the needs of the business. That is what's driving the improvement that you're seeing in our performance and the guidance we gave for 2023. Okay, just back to the last quarter where your SG&A didn't grow sequentially, and your gross profits grew $21 million. Was that because there were cost cutting or variable expenses that went away with the lower hardware sales? Going forward, if, you know, let's say gross profit margin is up 30 or 60 basis points year-on-year, you know, would SG&A grow at a slower pace than that? If you look at Q4, I'll answer that question first. In Q4, we saw the value and the benefit that we had from the sales transformation initiatives that we put in place, one. Two, from just the cost control that we had around overall GP. You're right, we grew gross margin, but SG&A didn't expand as much. We did actually have the expansion that we normally would see on sales comp associated with the higher gross profit that was generated. That is correct. When you go into 2023, we would anticipate a similar dynamic. We're gonna see gross profit dollars that would generate gross margin expansion, that would generate higher commissions, and we're controlling SG&A around that with regard to getting to the results that we showed you for 2023. Just to supplement that, I mean, we do expect continued leverage on SG&A. As we grow, we get more, we get more leverage out of our SG&A spend. Okay. All right. Thank you very much. Thanks, Matt. Thank you, Matt. We have our next question comes from Adam Tindle from Raymond James. Adam, your line is now open. Okay. Thanks. Good morning. I just wanted to start on 2023 gross profit dollar guidance. Joyce, you mentioned you're obviously finishing a very strong year in 2022, and I think gross profit dollars grew 13% during 2022 after a very, very strong year. As we think about 2023, you're talking about high single digit gross profit dollar growth and called that guidance modest. As I kinda try to square those two, a very strong year up 13%, we're expecting a high single digits next year and calling that modest, there's a little bit of a disconnect. I'm wondering if maybe you could help bridge that, whether it's maybe some sort of backlog expectation that gives you confidence to grow at that level on a difficult comparison. Thanks. First of all, I think, as the top line will grow more slowly in 2023 than it grew in 2022. That's been consistently what Glynis has just been talking about now since Investor Day for sure. And obviously there's some translation into gross profit dollar growth there. And we do certainly expect to see to get some help on our gross profit mix due to flushing in infrastructure backlog in the first half of the year. As Glynis's mentioned, I mean, it's really around the mix of software, cloud, and services overall in the business that are driving the growth margin expansion versus versus sort of our historical rates of gross margin. Adam, if I could just add on to that, what I would say is that if you look in the presentation deck, not right now, but at your leisure, you will see that we gave you a couple of stats about first half of 2022 versus second half of 2022. Part of what drove the gross profit dollar growth was high hardware sales in the Q1 of 2022. We had lower gross margin associated with it. In 2022, on that high gross profit growth that we had in the first half, we actually margin declined by 70 basis points in the first half. We made that up in the second half plus some, primarily because devices were not as strong in the second half of the year as they were in the first half of the year. When you look at the growth that we're seeing in 2023, it is less devices in that growth number, which helps us overall from an overall growth margin perspective. Gives us the confidence with regard to what's happening with infrastructure, our backlog around infrastructure in particular, as well as the performance that we have shown in cloud software and Insight core services that leads to that gross margin expansion number. Shame on us for calling it modest. All right. You got, you got me there, Glynis. Given what you just outlined, is there a way for us to think about seasonality- Adam, it's also organic. Yep. I realize that. Is there a way for us to think about seasonality in 2023 given, you know, kind of these different comparisons on a year-over-year basis, and kind of an odd year last year that we're going off of how to think about seasonality in 2023? Yeah. I think, as Glynis mentioned, I think, you know, I think it's kinda gonna be the inverse of last year. I think the first half of this year is gonna be a little, the growth will be slower than the second half of the year. Last year was the inverse. Primarily around seasonality. That makes sense. Right. Last one for me, I'll pass it on. I do wanna ask Joyce on the sales transformation initiatives. If you could maybe just recap a little bit of more specifics. I understand there's been investments in systems, et cetera, but have you been moving around accounts or geographies? You know, what's been going on with that? What do you think is left to do with the sales transformation? Thanks. Sure. We have spent a lot of time, as we talked about at Investor Day, really trying to think about how to focus on going deeper in our top accounts. We have made changes in coverage to do just that. That means for our top accounts, and top sellers in those accounts, we've reduced the size of their account base or their books, and that is in order to make sure that we're putting our highest propensity sellers or sellers who sell the most services and who have the most services skills aligned with the customers who are most likely to buy our services. The plan is to go deeper in those accounts so we can increase our understanding of their businesses in a very dramatic way and propose solutions that are gonna be most relevant to them to help them deliver the success in their businesses that they're looking for. We've done all of that. You know, you're never done, of course, but we've done that as of the end of the year. That's a pretty big push for us. We've also made some minor changes around how we think about account planning, how we're training our sales execs and things like that. That will continue. That will be an ongoing process. We have now moved from talking about sales transformation to actually growing the business. We believe we're done with the planning phase. We're now into execution. Got it. Thank you very much. Thank you. Thank you. Thank you, Adam. We have our next question comes from Joseph Cardoso from JPMorgan Chase. Joseph, your line is now open. Thanks, thanks for the question. At the Investor Day, you provided a long-term revenue outlook to outperform the underlying market by 200 basis points. How should we think about that level of outperformance relative to 2023? Is that still the benchmark we should align to our models, or are there other factors we should consider this year that might put pressure on that? I think we've always said that we will perform, 200 to 300 basis points ahead of the market. That hasn't changed. Yeah. It's just that we really wanna focus on gross profit dollars because the composition of our revenue, specifically the composition of cloud and in our revenue and the netting that occurs with that makes our revenue metric a little hard to follow, especially when you're following it each quarter. Q2 and Q4 are big cloud quarters, so that's why we gave you the guidance around gross profit. We still anticipate we will grow ahead of the market. Yes. On the revenue line. Yep. Got it. Got it. Appreciate it. Then just relative to cash generation, which is set to improve heading into 2023 based on kind of the commentary you made in your prepared remarks, I guess just can you just remind us what the priorities are? Particularly just given your comments around M&A, like, is that more attractive going into this year? Are you seeing valuations coming down? Are you just more inclined to do some kind of transaction to bolster your portfolio just kind of given what we're seeing in the macro backdrop and simultaneously with cash generation likely to improve? Thanks for the question, guys. Sure. Appreciate it, Joe. First call in Capital will be continuing to invest in our organic business as we have been doing over the past year. It would be M&A, it would be share buybacks, and then paying down debt. Paying down debt is at the bottom primarily because we're in an environment now where debt is 1.2 times or 1.2 times levered, which is low. What I would say is that we continue to look at M&A. We continue to look for tuck-ins of maybe small to medium sizes, if you wanna think about it that way, that we can tuck into the existing business to fill certain capabilities gaps. That hasn't changed. You know, I think that valuations on the smaller end of the market, the non-public end of the market, are finally starting to come down a little bit as companies are out there, and they haven't seen the high prices maybe that they were getting in 2021 and early into 2022. We will continue to be opportunistic in terms of adding to the overall portfolio around the pieces that we talk about, data, AI, cloud, et cetera. Thanks. Appreciate the color. Okay. Thanks, Joe. Thank you, Joe. We have our next question comes from Anthony Lebiedzinski from Sidoti & Company, LLC. Anthony, your line is now open. Good morning, thank you for taking the questions. Nice job in the quarter. You know, just looking at your services, gross profit dollars grew 15% in the quarter. Just wondering, was that mostly volume driven, or were there any pricing benefits? I guess given the choppiness in the economy, I guess based on your guidance, you're probably not seeing much in terms of pricing pressures. I mean, if it, if, you know, just wondering if you could just address that topic. I would start by saying we did see some improvement in services gross profit, and that is a combination of a mix of services. Some of it was volume driven. Obviously, the gross profit outperformed the top line by a bit. I would not attribute it to pricing. I would say we haven't actually driven a whole bunch of pricing initiatives. Some of it a little bit potentially because the cost of labor certainly did increase during the last year. I would say that it's primarily driven by improved execution and focus on making sure that our utilization is improving. Gotcha. Okay. You know, we've heard a lot of, you know, tech companies, do a lot of layoffs and, you know. Just wondering about your own hiring plans. How are you guys thinking about managing that? Yeah. We've been, since the middle of last year, working really, really hard to tighten our hiring processes and make sure that we're hiring, as Glynis said earlier, for specific sales opportunities and technical expertise, opportunities. This is a market where you can acquire terrific talent, we will continue to do that. At this point, we have no plans to do any major layoffs. We will continue to ensure we're aligning our utilization rates with the demand in the market. Of course, we continue to manage performance. Other than that, we don't have any significant plans. Okay. That's good to hear. Then, I think, Glynis, you mentioned that you're planning a new Texas fulfillment center. Can you go over the timing of that? You know, how should we think about as far as CapEx spending for that? Sure. Anthony. Sorry. Our Texas fulfillment center will be built out this year. I would say primarily we're not gonna see any benefit from that build-out in 2023. It will be operational very late in the Q4, maybe in December, if not in January of 2024. We would anticipate going into January 2024, we'll start to see the benefit of that. It is not a net addition to our portfolio. It is gonna be a consolidation. Once that facility is up and running, we're gonna be closing some of our other facilities. Net-net, we will end up with two major facilities at the end of this period. I think the other thing that I would say is that this facility allows us to do more advanced configurations around data center very specifically as opposed to lab and integration work, et cetera. That's one of the reasons for driving this. It also allows us to service the country, the US, with 2-day delivery from almost anywhere between the two facilities that we'll have at the end with regard to how we go through there. It's probably just under $30 million associated with that in our capital expenditure guidance that we gave you of the $25-$30 million. Sorry, $55-$60 million. Our normal run rate CapEx is in the $25-$30 million range. One more thing, Anthony. We are also investing in some automation. We're really excited about. Yes ... improvements that we're gonna deliver to our clients in terms of speed and accuracy. Yes. Got it. Thank you very much, and best of luck. Thank you. Thank you, Anthony. We have our next question comes from Vincent Colicchio from Barrington Research. Vincent, your line is now open. Yeah, Joyce, what are you seeing in terms of overall sales cycles? If you can give some color on any particular areas where there's any changes sequentially? Yeah. We saw this starting in Q4. It really does continue. For services projects, we are definitely seeing longer sales cycles. More approvals are required. Our clients are asking us to figure out how to change the scope of projects to make them smaller, deliver results fast. That actually plays to our strengths. I think we're particularly good at that. Deliver an ROI and then earn the right to do the next project. We are definitely seeing those services projects take a bit longer, and they are a bit smaller. Thanks for that. One more. Could you comment on the trends you're seeing in your client set, the enterprises, public sector, and SMB? Yeah. You know, I think we're seeing pretty solid growth across all of those. Obviously, public sector is for us, it's a smaller piece of our business, and it's really we're not as focused on the K through 12 space there. We're seeing some pretty solid growth there due to the infrastructure bills and the investments in the country. That's good. Our commercial and enterprise businesses are holding up really, really well too. We're seeing strength across the board. Thank you. My other questions were answered. Thanks, Vince. Thank you, Vincent. We have a follow-up questions from Matt Sheerin from Stifel. Matt, your line is now open. Yes. Thank you. Yeah. I just had a follow-up question on your software businesses in North America and Europe, which had, you know, a lot, sort of different results here. You had double digit growth in software in North America, up 18% year-over-year, whereas your business in Europe was up just 4%. I know you also grew your gross profit dollars in Europe. Is there a difference in terms of revenue recognition or the types of software or cloud services that you offer? There isn't any difference in revenue recognition across the regions. We use the same methodology in terms of revenue recognition in all of our regions. I think the business mix in EMEA is a little bit different with regard to the services that they can attach to the software. We have maybe a more sophisticated software and Sorry, cloud attached digital transformation process here or methodology here and offerings here that we can give to our clients. Whereas in EMEA, they don't have that. That actually influences part of the success that we have here in North America with our cloud growth versus EMEA. That would be one of the areas for an M&A opportunity for us as we go forward. Anything else different in terms of the demand environment there? Yeah. I think the demand- In the- Yeah, demand environment is a bit slower. They're a bit more cautious for sure. We've seen that for sure. Inflation rates are higher, costs are higher. Okay. That's it for me. Thanks. Thank you. Thank you. We have no further questions on the line. I'll now thank you for joining today's call. Have a lovely day. Thank you. Thank you.