Ryan Koontz : On the AI products and your strategy around pricing and maybe your cost advantages you have from bringing that technology in-house considering the different commercial strategies out there on one side, you’ve got Microsoft Co-pilot charging a very hefty premium for their capabilities. You’ve got Zoom who’s essentially giving it away. What’s your approach to your AI feature set with regards to cost and price? Then how do your costs compared to maybe others that are depending on outsourced, using outsourced models?
Shabtai Adlersberg : I’ll tell you, usually, when you go to market, you want to penetrate the market, cost is less important. You drive with let’s call it quick and dirty, using many cloud-based services that may cost a bit. Once you become successful and cost becomes an issue, I think you need to include in your strategy, the ability to move to solution, including generative AI solution that will owned by itself. There’s a huge first running forward an industry that provides a lot of open source solutions for generative AI in our plans for the future. We definitely would like to decrease cost based on our solution developed internally. I would also add that due to the issue of security, you’ll find many large corporation enterprises and entities, government entities, et cetera, that are forbidden from using a cloud solution.
Therefore, mastering those technologies and bringing them into your development team and potentially developing on-prem solution will result both in, obviously, security, but then with substantially lower cost. One needs to navigate among all those options and find out the one that’s best suitable for him.
Operator: Your next question is coming from Samad Samana from Jefferies.
Samad Samana : You guys talked about how leading indicators robust and new business bookings have grown substantially over the last year. Maybe double-clicking and asking another way. You talked about last quarter how bookings experienced a measurable improvement over Q1. In terms of an update on that, how do bookings track over the course of Q3? How did that compare to Q1 and Q2? Follow-up, can you rank order and speak to the products and offerings that are driving that bookings and pipeline activity and maybe the products and offerings that have been maybe a little less successful and potentially a headwind to that activity?
Shabtai Adlersberg : In our conversational AI, I would split the discussion into two. We have currently two lines, which are already up and running and generating revenues and profits but are, I would say, mildly in scope of — and those are the SmartTAP and Voice.AI connect. We do have a major focus and emphasis on two fast developing business lines in this conversational AI. Those would be Voca CIC, a CCaaS platform for Teams. Second one is the Meeting Insight platform for enterprise voice interaction processing. We definitely see maturities driving the evolution of this, obviously, the need in the market. Booking is growing definitely due to the fact that there is increased need in the market for this type of solution. We glad to be among the front runners who can provide it.
Samad Samana : I want to ask Ryan’s question in maybe a different way. How should we think about the sustainability of gross margins over the next, call it, a handful of quarters? Should we expect a lot of quarter-over-quarter variability? Or should we expect that the product mix will be generally similar or potentially improving compared to the Q3, the quarter you just reported in subsequent quarters.
Shabtai Adlersberg : We haven’t done yet a detailed analysis, but I’ll tell you that basically, I think we’ve seen some of the worst in the hardware side of the business, mainly the service provider, the CP and the zones. We do not expect those lines to grow. Therefore, the hardware part of the mix will not affect gross margins. We see growth coming from software and services related business, mainly in Microsoft Teams phone in customer experience and conversational AI, all our majority which is software. I do expect gradual growth going forward. In our long-term financial model, we basically target the range of 65 to 68 or even I would dare to say that in two, three years from today, will reach to 70. We will not see big change in the trend. I think we would see a gradual increase towards the 68 and thereafter. That’s what we plan.
