Good day, and welcome to the Progress Software Corporation Q4 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Mike Micciche, Senior Vice President of Investor Relations. Please go ahead, sir. Okay. Thank you, Sherry. It's nice to have you with us again. Good afternoon, everybody, and thanks for joining us for Progress Software's fourth fiscal quarter 2023 financial results conference call. On the line with me this afternoon are Yogesh Gupta, President and CEO, and Anthony Folger, our Chief Financial Officer. Before we get started, let's go over our safe harbor statement. During this call, we will discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives, and other information that might be considered forward-looking. Such forward-looking information represents Progress Software's outlook and guidance only as of today and is subject to risks and uncertainties. For a description of the risk factors that may affect our results, please refer to the risk factors in our filings with the Securities and Exchange Commission. Progress Software assumes no obligation to update the forward-looking statements included in this call. Additionally, please note that all the financial figures referenced on this call are non-GAAP measures unless otherwise indicated. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP figures in our financial results press release, which was issued after the market closed today and is on our website. This document contains additional information related to our financial results for the fourth quarter of fiscal 2023, and I recommend that you reference it for specific details. We've also prepared a presentation that contains supplemental data for our fourth quarter 2023 results, providing highlights and additional financial metrics. As I mentioned, both the earnings release and the supplemental presentation are available on the investor relations section of our website at investors.progress.com. Also, today's conference call will be recorded in its entirety and will be available via replay on the investor relations section of our website. So with that out of the way, Yogesh, I'll turn it over to you. Thank you, Mike, and good afternoon, everyone, and thank you for joining our Q4 2023 financial results conference call. Fiscal 2023 was another great year for Progress. I'm extremely proud of everything we accomplished and how all our teams performed. I'll quickly take you through some highlights from the past year and then provide a look at the year to come. The fourth quarter was another strong one, marked by ongoing stable demand for many of our products, especially OpenEdge, DataDirect, and Sitefinity. Top-line revenues of $178 million remained robust. ARR grew 17% year-over-year. Our net retention rate was a solid 100%, and operating margins were well above our expectations. For the year, we generated over $175 million of adjusted free cash flow on revenue of $698 million and finished the full-year with operating margins of 39%. As you recall, we began 2023 with the announcement in January of the MarkLogic acquisition. At that time, we said that the MarkLogic acquisition would add over $100 million in annual revenue and would take about a year to fully integrate. I'm delighted to share that virtually every milestone for the MarkLogic integration was completed before the end of fiscal 2023. This faster integration was a direct result of the continuous improvements we have made in our integration processes. As always, we gained new learnings from the MarkLogic acquisition that will help us further improve for the future. For instance, we had to maintain a separate entity to accommodate the unique requirements of the various U.S. federal agencies who are our customers. Now that we have this entity, we see it as a vehicle not only to serve these existing customers, but to expand our relationships by addressing a wider set of their needs through our broader product portfolio. In addition to our M&A efforts in FY 2023, we also executed well on the other two pillars of our total growth strategy, which are sustained innovation and an unrelenting focus on customer success. Turning to product innovation in FY 2023, we added AI capabilities to our products, improved the time to value for our customers, and made our products even more easy to use. For example, we incorporated Generative AI into our Sitefinity product to enable content creators to rapidly scale content production and to improve targeted marketing by personalizing content to suit the needs of various personas. We delivered AI-powered contextual threat and event analysis in the latest release of our Flowmon product, which provides our customers faster, automatic, meaningful insights into possible malicious network activity. We launched Chef SaaS, which enables DevOps and SecOps to rapidly realize value, and we have received very positive reactions from our early customers. We launched LoadMaster 360, which provides administrators the ability to manage the performance and availability of their entire environment from a single user interface. We released new and updated versions of our DevTools products with a whole host of new capabilities. These include new components to rapidly build embedded data-driven applications and the support for new accessibility standards, among other features. The Semaphore and NoSQL database products we acquired with MarkLogic are leading products for semantic metadata analysis and for making sense out of structured and unstructured data. As organizations embrace all kinds of AI, exponentially expanding the sources and scale of data necessary, Progress is now better positioned to help them develop and deploy their mission-critical applications and experiences, as well as effectively manage their data platforms, cloud, and IT infrastructures. In addition to M&A and innovation, the third pillar of our total growth strategy is an unrelenting focus on customer success. In FY 2023, after a couple of years of slow in-person activities, we hosted numerous live in-person customer events. These included more than 20 local in-region events across the globe for our OpenEdge customers, called the OpenEdge World Tour, where over 3,000 attendees joined us to hear what was new in our portfolio and how the OpenEdge platform and the broader Progress portfolio is continuing to deliver increasing value to help propel their business forward. We also held well-attended conferences for our DevTools and Chef customers, where Progress and the user community shared innovative ideas and best practices in rapidly developing, engaging digital experiences, and efficiently scaling DevOps and SecOps efforts across on-prem, hybrid, and multi-cloud environments. In 2023, we also dealt with the sophisticated multi-stage attack on our customers' MOVEit environments by a cybercriminal group. We issued a patch within 48 hours of discovering the zero-day vulnerability in MOVEit, and proactively engaged with our customers to help them harden their MOVEit environment. We continue to cooperate with regulatory authorities who are investigating the attack, and we'll provide updates regarding the impact of the MOVEit incident on our business and operations in our upcoming Form 10-K. I want to thank the teams across our business for the amazing way they have come together to help our customers and to continue to move our business forward. Because of our employees' hard work and dedication, our customers have remained incredibly loyal and continue to work closely with us. Our employees are at the center of everything we do. They build our products, sell, service, and support our customers, and run our operations. In 2023, we continued to sustain a thriving employee culture, evidenced by our Employee Net Promoter Score, or eNPS, which is in the mid-30s. Oh, by the way, this is in the same league as Microsoft and Google. Once again, employee turnover at Progress was at industry lows, hitting mid-single digits in the second half of the year. Our employees are energized by our mission, vision, and values, and they continue to share that with the world, helping us win numerous awards for being the best place to work. For example, the Boston Globe again selected Progress as one of the top places to work in Massachusetts, this time, third year in a row. We ranked number six for 2023, moving up five spots from 2022, and are the highest-ranking software company on the list. I am delighted that we accomplished all this, continued to improve our internal processes and systems to become even more efficient, integrated our largest acquisition to date, and delivered outstanding results for 2023. Now, looking forward towards FY 2024, I'm incredibly excited about what lies ahead. We foresee sustainable demand for our products in FY 2024, and it will be the first full fiscal year of revenue contribution from MarkLogic. As Anthony will explain in his guidance, we expect it to propel us to over $725 million in revenue and to also help expand our operating margin. We remain focused on our proven total growth strategy to create shareholder value, the same way we have for the last several years. Our capital allocation policy continues to prioritize M&A because we see it as the best way to generate sustained shareholder return for our investors. We are therefore extremely active in the M&A market, and as we have previously noted, market factors continue to shift in our favor. Competitively and financially, we are as well positioned for M&A as we have ever been, and our reputation as an acquirer of choice among the sellers continues to grow. I also want to reiterate that we are unwavering in our strict discipline when it comes to M&A. First, we will continue to pursue companies that are a good fit in terms of technology, size, and culture. We're looking for companies with great products and customers, and high recurring revenues and retention rates. As I like to say, we're not looking for unicorns, we're looking to buy great workforces. Second, we will be extremely disciplined about what we pay for these businesses and how we finance it, to ensure that we create meaningful shareholder value. And lastly, as we have repeatedly demonstrated, we will rapidly integrate acquired companies using the knowledge, experience, and best practices we have accumulated and drive higher margins. During the year, we expect to use excess cash flow to repay debt whenever possible, and we will continue to repurchase shares to offset dilution from our equity programs under our existing share repurchase authorization. In addition to our efforts around M&A, we will also continue to execute on the other two pillars of our total growth strategy, innovation and customer success. Through investment in innovation and customer success, we will continue to drive strong operating margins, higher ARR, and high retention rates. To conclude, I am extremely pleased with our FY 2023 performance, and I'm even more excited about what is to come in FY 2024. With that, I'll turn it over to Anthony to provide additional details around our results and guidance. Anthony? Thanks, Yogesh, and good afternoon, everyone. Thanks for joining our call. As Yogesh mentioned, our fourth quarter results were strong across almost every metric, and we're very pleased to deliver such a strong close to fiscal 2023. Diving right into the numbers, I'd like to start with ARR, which we believe provides the best view into our underlying performance. We closed Q4 with ARR of $574 million, which represents approximately 17% growth on a year-over-year basis and 1% pro forma growth on a year-over-year basis. To be clear, the pro forma results include MarkLogic in both periods. The growth in ARR was driven by multiple products, including OpenEdge, MarkLogic, Sitefinity, our DevTools products, and MOVEit. And ARR was again bolstered by strong net retention rates of 100%. In addition to the strength in ARR, revenue for the quarter of $178 million was just above the high end of the Q4 guidance range we provided back in September and represents approximately 12% growth on a year-over-year basis. Our strong revenue performance in the quarter was driven by multiple products, led by OpenEdge, which continues to outperform our expectations. For the full-year, revenue of $698 million grew by $88 million and represents 14% growth over the prior year. This growth was driven by MarkLogic's top-line contribution, combined with growth across multiple other products, most notably OpenEdge, LoadMaster, Sitefinity, MOVEit, and our DevTools products. With customer retention rates remaining strong throughout 2023, and a strong demand environment fueling growth for a number of our products, we're thrilled with our top-line results for the year. Turning now to expenses. Our total costs and operating expenses were $115 million for the quarter, up 18% over the year-ago quarter, and $428 million for the full-year, up 16% compared to fiscal 2022. The year-over-year increase in expenses for both the quarter and the full-year was driven almost entirely by the addition of MarkLogic to our business. Operating income for the quarter was $63 million, for an operating margin of 35%, handily exceeding our internal expectations. The better-than-expected operating performance was the result of overperforming on the top line while managing our expenses to plan. On the bottom line, our earnings per share of $1.02 for the quarter were $0.09 ahead of the high end of our guidance range. This overperformance relative to expectations was again driven by strong top-line performance, coupled with solid cost management across the business. With virtually all planned synergies achieved on the integration of MarkLogic during fiscal 2023, our Q4 results position us very well for the upcoming year. Moving on to a few balance sheet and cash flow metrics. We ended the quarter with cash, cash equivalents, and short-term investments of $127 million, and debt of $731 million, for a net debt position of $604 million. This represents net leverage of approximately 2.2x on a trailing 12 month EBITDA basis. I'd also like to highlight that during the fourth quarter, we again paid down $30 million against the revolving line of credit that we used to partially fund the acquisition of MarkLogic, bringing the outstanding balance on that revolving line of credit to $110 million at the end of the fiscal year. DSO for the quarter was 62 days, or flat compared to the year-ago quarter. However, it was well above the 49 days we reported in Q3 of 2023. The reason for this sequential increase in DSO is the timing of our bookings and billings in the quarter, with a significant portion coming later in the quarter and pushing the related cash collection into early 2024. Deferred revenue was $295 million at the end of the fourth quarter, up by approximately $15 million on a sequential basis, reflecting our strong top-line performance in the fourth quarter. Adjusted free cash flow was $33 million for the quarter, which was slightly less than we expected, but was entirely driven by the timing of billings, as I mentioned in my discussion on DSO. During the fourth quarter, we repurchased $4 million of Progress stock, bringing our annual total to $34 million and ending our fiscal year with $194 million remaining under our current share repurchase authorization. Okay, now I will turn to the outlook. When considering our outlook for 2024, it's important to keep in mind the following: First, 2023 was a year of top line growth across many of our product lines. In 2024, we expect the demand environment for our products to remain stable. Next, MarkLogic contributed to our 2023 results for approximately 10 months. However, due to the seasonality in the MarkLogic business, that 10-month contribution represented roughly 70% of MarkLogic's annual top line. In 2024, we expect the incremental contribution from MarkLogic, that 30% we didn't see in 2023, to occur in our first fiscal quarter and, to a lesser extent, in our second fiscal quarter. Also, MarkLogic's revenue model is comprised mostly of term-based licenses. When combined with some of our other products, which employ a similar revenue model, most notably Chef and DataDirect, it's fair to say that approximately 1/3 of our product revenue will be recognized under an on-prem, term-based license model. As a result, the timing of contract renewals, especially multiyear contracts, will have a more significant impact on our revenue in any given quarter and could skew results higher or lower. We will therefore continue to focus on ARR as a way to cut through the noise in 2024, and we expect ARR will continue to grow at a level that's generally consistent with 2023. The final point I'd like to highlight is that absent any acquisitions, we anticipate we'll continue to aggressively repay the revolving line of credit that was used to partially finance the MarkLogic acquisition. By the end of fiscal 2024, we expect that we will fully repay that revolving line of credit, driving our net leverage ratio down to approximately 1.5 x. With all that said, for the first quarter of 2024, we expect revenue between $180 million-$184 million, and earnings per share of between $1.12 and $1.16. For the full-year, we expect revenue of between $722 million-$732 million, representing between 3%-5% growth over 2023. We anticipate an operating margin for the year of 39%-40%. We are projecting adjusted free cash flow of between $202 million and $212 million, and we expect earnings per share to be between $4.58 and $4.68. Our guidance for the full-year EPS assumes a tax rate of 20%, the repurchase of $45 million in Progress shares, and approximately 45 million shares outstanding. Our share buyback activity in 2024 is meant to address potential dilution from our equity plans. While we believe that share buybacks and dividends can provide shareholders with a good return, our M&A track record over the past three years has delivered superior returns for our shareholders, and for that reason, disciplined, accretive M&A will continue to be the top capital allocation priority of our total growth strategy. In closing, we're excited to deliver strong financial results across the board in the fourth quarter, a continuation of the trend we saw for all of 2023. We're thrilled with the integration of MarkLogic and how it positions us for the future, and we believe we're on track to deliver a great 2024 and beyond. With that, I'd like to open the call for questions. Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. Please stand by while we compile the Q&A roster. Our first question will come from the line of Pinjalim Bora with JP Morgan. Your line is open. Oh, great. Hey, guys, congrats on the quarter. Thank you, Pinjalim. I want to ask you on MarkLogic. Now that you have integrated MarkLogic, what are you hearing from the MarkLogic customer base in terms of innovation that they would like to see? And I know you don't focus on cross-sell as much, but is there any opportunity for cross-sell that you're seeing in that base? And one for Anthony, what is the dollar contribution from MarkLogic this for the full-year? So, you know, I'll take the first part, and then Anthony can talk about the revenue contribution in FY 2023. So, Pinjalim, a couple of interesting things. One, that has come out loud and clear is that the MarkLogic product and MarkLogic and Semaphore combined, you know, it's really designed as a underlying database system, and it really requires a fair bit of work to start getting value out of it. The time to value is a bit longer than we would like to see. So we've actually been working on throughout this past year, and the team has been, and we've just sort of in the process of coming out with a FastT rack option as an add-on to the product to really accelerate the ability for folks to be able to create data-driven applications, rather than start from scratch. So that's something that we're tremendously excited about in terms of the type of innovation. The other type of innovation, the request that we have gotten, that we've actually already addressed, was how can they use MarkLogic and Semaphore to take their existing data and potentially augment, and to be honest, you know, make the generative AI answers from standard generative AI tools that are out there to be specific to their business? How do they make it without having that data go out of their environment? And so we have created, you know, sort of additional offerings around that to make it easy for folks to leverage their internal data, you know, and therefore create in context, relevant to their business, non-hallucinogenic, ChatGPT type of answers. So that is, those are two of the things that we've already done. In terms of cross-sell, Pinjalim, you know, as you know, when we build our business models for these things, we do not take into account cross-sell because we wanna make sure that the business, you know, we will be able to generate shareholder value without relying on that. That said, we do see cross-sell opportunities, right? I, I think that, you know, our digital experience products can truly help, MarkLogic customers do a better job of, presenting the information and creating data-driven applications much more easily. In fact, our fast track offering leverages some of those. In addition to that, we see opportunities for these environments, which are large scale environments and, and these applications that are complex applications to have, you know, DevOps and SecOps capabilities from products like Chef. We also see, a product like Corticon, which is a decisioning engine, that can also be used, by these companies and these organizations to, you know, further augment the kind of business logic that they need to apply to their MarkLogic data. So there are some opportunities, but, Pinjalim, I wanna sort of be, a bit careful. We are just starting that effort of going out, you know, going into that customer base and offering them those. We're also have just started bringing the value of MarkLogic and Semaphore to our own other customers. I think 2024 will be a year for us to see if those cross-sell opportunities materialize in something that is worth talking about on this call. So, we are early in the timeframe. Yeah, and to take the second question, Pinjalim, when we acquired MarkLogic, we had mentioned that it was, you know, roughly a $100 million business, maybe a little bit more. And we thought they would do probably $70 million for the year in 2023, and the business came in just slightly ahead of that. So just north of $70 million in fiscal 2023 was the number. Got it. Thank you very much. Thank you. One moment for our next question. That will come from the line of Ittai Kidron with Oppenheimer. Your line is open. Thanks, guys. Maybe I'll start with you, Yogesh. Last earnings call, you sounded very upbeat on the potential for M&A. Sounds like that valuations are finally starting to come in the direction you want them to come. We're now literally a year since MarkLogic. Maybe you can give us an update on what you see out there, and how would you rate the odds of another acquisition in 2024? So, you know, Ittai, you're absolutely right. We have been very active in the M&A space. We, you know, we are looking at companies. We are competing for them. We're actually... interestingly enough, we have said no to a lot of them because we felt that they just did not meet our criteria of being really solid businesses that we wanted to own at any price, to be honest. And given where we are and given what we are seeing, I feel truly confident that we will do an acquisition in FY 2024. Now, with that, I also wanna make sure people do understand that, you know, it takes, you know, two to tango, as they say, right? And so the sellers have to align with us as well. But yeah, we feel good. We feel really good about the pipeline. We feel really good about the activity. We feel really good about the conversations we've had over the last second half of FY 2023, to feel that, you know, whenever we have engaged, they have been meaningful and they have been something that, you know, we've been truly in the middle of and thick of things. So, you know, I am confident, Ittai, that we will do something in FY 2024. Okay. And then, on the financial side, you gave a quite interesting review on the enhancements you've made to the portfolio. But tying this to Anthony's comments on the year, it sounds like there's literally zero core growth that you are expecting with the business outside of the incremental contribution from MarkLogic that was not caught in 2023. So the guidance really assumes zero growth in the core. I'm just trying to think why, with all the changes in the portfolio, there's no better opportunities for you to monetize these. Maybe going back to the first question, all the generative AI enhancements, are none of them revenue generating? Are they all just experience enhancing? Is there no better way to squeeze a little bit more out of this? Yeah. Hey, Ittai, it's Anthony. And it's a good question. Part of this really is, and I mentioned a little bit, the timing of contract renewals within the business in 2024. We do have a lot more term-based, you know, sort of the on-prem term-based subscription model. And so the timing of when those contracts renew or when they're set to renew will, will influence the revenue quarter to quarter. But, you know, again, I also allude to the fact that we had pretty good ARR growth last year. Multiple products contributed to that growth, and we expect stability in the demand environment. So, you know, again, quarter to quarter, things may move a little bit, but over the course of the year, I would expect to see ARR growth. You know, that's relatively consistent with 2023. Very good. Thank you. Good luck. Thank you, Ittai. Thank you. One moment for our next question. That will come from the line of Fatima Boolani with Citi. Your line is open. Good evening, gentlemen. Thank you for taking my questions. Either for Anthony or Yogesh, it was interesting for me to hear that MOVEit had a strong performance in the quarter. It was enough for you to call it out in your prepared remarks. And, you know, appreciating that it was an incident for the business, I'm very curious as to how customers have responded. I mean, it seems almost counterintuitive that it was a contributing factor to some of the strength you saw. So I just wanted to unpack that a little bit because it seems sort of counterintuitive on the surface. And then I have a follow-up, please. So, you know, it was good to hear from you, Fatima. You know, I'll, I'll answer part of it. Maybe Anthony can add as well. You know, from my perspective, right, we have actually done everything in our power to help our customers, harden their environment, deal with the incident that they faced, and move forward, and we continue to do so. You know, I am really proud of what the team has done, and, and we're really proud of being able to, you know, keep our customers, and the customers have been loyal to us. And it's been a, it's been a really wonderfully positive set of outcomes. Obviously, huge challenge and, and, you know, still a lot of, you know, unresolved legal issues and regulatory issues. But from a customer perspective, we continue to be very positive about MOVEit. Anthony, you wanna? Yeah. No, I would agree. I think there's, You know, MOVEit performed well, certainly in the first half of 2023, and it held up in the second half of 2023. You know, I would say, we keep an eye on the pipeline, and we wanna make sure that we can continue to close deals. And retention rates have, I think, remained fairly strong. But, you know, we'll measure that over the course of a year, right? We wanna see how the retention plays out over time. So I'll, you know, I'll dial back, Yogesh, a little bit. I'll be the conservative one to say, you know, yes, it was a very good year, and I think we're very pleased with the outcome on the top line, but we're still cautious, and we're still, you know, I would say, very focused on where our customers are at and wanting to understand renewal trends, and also wanting to make sure that we can continue to build the pipeline. So, you know, I think it's held up well. For sure. Yeah. Okay. Okay, that's helpful. And since you brought up retention rates, it's a good segue into my question around what you're thinking about net retention rates underneath the hood, as you tell us and talk to us about consistent ARR growth trends consistent with this year. And the spirit of the question really is, you know, we did see net retention rate this quarter dip about 100 basis points, so it's not dramatic. I think you've been operating in the 101, 102 zip code pretty consistently. So, you know, maybe to ask the prior question, different lens, you expect some of those innovations in the portfolio, you know, pull up the socks, so to speak, on Net Retention Rate or any other commentary you might be able to share as you think about Net Retention Rate trajectory in 2024? Yeah, sure, Fatima, I can take that. I think in the back half of 2023, you know, we do have churn from time to time, and I think Yogesh has mentioned this before. Sometimes it's factors that are outside of our control, like M&A. And so, you know, I think any slight dip we saw in the back half of the year was associated with a very small number of contracts, and one in particular, where there was. You know, two global financial institutions merged, and the party that was using our technology did not come out on top in the integration. And so sometimes those things happen. And we measure net retention rates on a trailing 12-month basis. So, you know, I think as we move through the first half of 2024, we would expect, you know, retention rates to be maintained and then start to sort of normalize and improve in the back half of the year again. I think that would be, you know, a projection on where the estimate would be there. I don't want to guide to a specific number. We still are happy, you know, 100% or better for us is great. You know, I still think for the full-year of 2024, there can be some improvement there. Perfect. Thank you so much. Thank you. One moment for our next question. That will come from the line of Brent Thill with Jefferies. Your line is open. Thanks. Curious if you could just address the demand environment and how you would characterize, you know, how customers are feeling, you know, today versus six months ago, a year ago. What are you seeing in terms of their overall attitude to spend and how you're feeling about the pipeline? So Brent, you know, we continue to see, as we even said in our prepared remarks, right, sort of stable, continued demand. It is a, You know, we have a product portfolio that is very much relevant to the businesses, even more so today than it was a year ago, which was even more relevant than the year before, and so on, right? As we pick up these new products that address, you know, additional areas that we can help them with. So demand remains good. We are not seeing any sort of meaningful change up or down, right? I want to be careful about that, right? I don't think that people are suddenly going, "Oh, you know, maybe there will be no recession, and therefore let's, you know, spend money like drunken sailors." We are not, we're not seeing that. We're not expecting that. I think budgets continue to be watched. I think people are cautious about their spend. But because of our product portfolio, which helps people optimize expenses, run things better, improve efficiency of engineering and development organizations, improve IT operations, improve security, improve the development life cycle, all those things actually play towards that. So I think we see more of the same in 2024 as we did in 2023 at this point. And on M&A, a number of your peers are saying kind of the same things you're saying. I'm curious if, you know, is there one or two points that you would add to what's enabling this M&A environment to pick back up? Is it just more reasonable valuations? Is it, hey, we've had such a stall out for so long that it's just kind of natural pent-up demand? Like, what do you think is causing this now? I think, Brent, it's all of the above. I think that, you know, when you look at. So you know, one of the examples is VC-backed companies, right? If you look at VC-backed companies, their main plan is IPO exits, right? And you look at enterprise software IPO exits over the last 24 months, and boy, it is sparse, right? So if you have a business and you're a VC, and you have a business that is absolutely not a rock star business, you're not thinking IPO in 2024, right? So, so the question is, what do you do? You've had two years behind you, and, you know, 2022 and 2023 were disasters from an IPO perspective. Now, 2024 looks like it's gone for that kind of a business. It's unclear whether a business that is growing, let's say, single digits in revenue is ever gonna be able to IPO. So what do you do? Right. So I think people are beginning to get there. And I think that founders who work with these VCs and these VCs who work with founders are slowly sort of saying: Look, we really don't want to fund your next round. And those businesses that need to raise a round, I think are potentially coming to market, and I think they are an opportunity. So that's one category. And then the other category is, you know, even other businesses that have been owned by sponsors or other entities for a significant period, and they kind of look at it as, "Can we get some liquidity?" So I think it is a time issue for the investors. For VCs, it is a matter of focusing on their winners and not worrying too much about their, you know, also-rans. Whereas in the case of sponsors, it is, you know, some pressure from LPs around liquidity and so on. So I think those are the pressures that are bringing the size of businesses we are looking at, right, into the market. You know, we're not really looking at extremely large businesses. We look at businesses, in general, you know, ±20% of our size, right? We ideally, 15%-25% of our size is the sweet spot. We'll go somewhat smaller, we'll go somewhat bigger, but that's what we like. And so that's, you know, in that range, we are seeing quite a bit of activity. One quick clarification for Anthony. I mean, your margins the last four or five years have been pretty much at cruise altitude, high 30s-low 40s. Is that still kind of the range of how you're thinking about running the business? Not, maybe not too high, so you get growth, but is the high 30-low 40 kind of the right framework to think about for the next couple of years? Yeah, I mean, you know, we're 39%-40% for this coming year. You know, we're not expecting a material change in the margin profile of the business. We've always said, you know, we'll maintain margins better than 35%. You know, I think being in the high 30s is certainly something that is manageable for us, and it's sort of part of our playbook. Great. Thank you. Thank you. One moment for our next question. That will come from the line of Ray McDonough with Guggenheim. Your line is open. Great, thanks for taking the question. Anthony, you mentioned billings timing was more back-end loaded this quarter. Has that been a trend, or, or was it driven by a few deals in the quarter? And how do you think about that, you know, in 2024 as your business becomes more term license related and more dependent on renewal timing? Yeah, it's a good question, Ray. I think it was more a small number of deals. You know, we tend to do. You know, there are lumpy deals in any given quarter, and certainly in Q4. I think the Q4 dynamics around the timing of bookings and billings. They usually are different than any other quarter, just because it's, you know, we've got sales incentives that are sort of focused around that Q4 timeframe, and a lot of customers in year-end are at their Q4, and they're doing, you know, a lot of budget work and negotiation around the quarter. So I think Q4 tends to be more challenging, just in terms of forecasting the timing of when things are gonna come in. And, you know, we overachieved on the top line, which we're thrilled about. It was a little bit later in the quarter, and so that cash pushes into the following year. But I think you're right also that, you know, as we go into 2024, you know, there's more parts of our business now that are on term-based subscriptions. You know, to the extent that more multi-years come into play or the timing of certain contracts moves from quarter to quarter, it'll have an impact on revenue. You know, things may be lumpy from quarter to quarter. I think it'll impact cash flow to a lesser extent. You know, we could have a situation like we had in Q4, where there's a little bit of a timing issue, but I think it's more of a revenue impact, the way I think about it. Some cash flow impact, but probably a little bit less. That makes sense. And then, maybe another one for Anthony, and Yogesh, if you want to comment, that would be helpful as well. So, you know, as we think about just kind of where interest rates have gone and where most, I think, are expecting them to go, which is down next year, you know, you talked a little bit about, you know, absent an acquisition, you'll get your net leverage down to about 1.5 x. You know, what do you view as an appropriate level of leverage if you do find the right business? And I know it might be deal dependent, but just kind of where are your guardrails in this interest rate environment, you know, around leverage? Yeah, you know, I think the interest rates drive a lot in our model, right? And the leverage levels are sort of the governor in terms of, you know, how fast and how big we can go. And so I would say, you know, 3.5x net, you know, we could creep a little bit higher than that to get a deal done. I think we'd be comfortable doing that, 3.5x, 4x, I don't think we'd go much above that. And I think if we were to take leverage up that high for the right deal, you know, we would probably, the same as we did for MarkLogic, we'd probably start to delever pretty quickly after the deal closed. If you look back on the MarkLogic deal, we've probably taken more than half a turn off of net leverage this year, and we started paying it back in Q2, right? We closed it in Q1. We started paying down that revolver in Q2, and by the end of 2024, that revolver would be gone. I think if we were to, you know, take on a little more debt to do our next deal, I think it'd be a similar playbook, where, you know, we may lever up to that 3.5x net or a little higher, and once the deal closes and the integration starts, we'd start delevering, you know, probably pretty aggressively. Makes sense. Thanks for taking the questions. Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Yogesh Gupta for any closing remarks. Well, thank you everyone again for joining us. We look forward to talking to you again soon. Have a wonderful evening. Good night. Thank you all for participating. This concludes today's program. You may now disconnect.