Peter Smith: Yes. So first, we never thought BEAD was going to impact calendar year 2024. So in our script, we basically said, we think BEAD is still on track. We really believed it was going to have an impact say a year from now. So that’s part one, and then part two, I think rational economics are starting to prevail, right? The whole idea of BEAD is to connect unconnected or underconnected Americans and for certain deployments in less dense areas suburbs and rural developments wireless makes more sense. And so we think that the oversubscription to fiber is starting to rationalize and we think that the opportunity for wireless will be improved. And what I would also talk a little bit more about is the six gigahertz frequency, it that’s been delayed from the summer of 2023.
Now the FCC is saying that that should happen on March 8. And we think that when that comes, that unlicensed broadband service comes in, it will pave the way for more lightweight backhaul and we think that’s going to have a positive effect on both RDOF and BEAD appropriations. That was maybe more than you bargained for in your question, Scott.
Scott Searle: That was perfect. Thanks, Pete. I’ll get back in queue.
Peter Smith: Okay.
Operator: Thank you. One moment please for our next question. And our next question comes from the line of Erik Suppiger with JMP Securities.
Erik Suppiger: Yes. Thanks for taking the question. Congrats. First off, can you explain why the Pasolink revenue ramps up. What are the dynamics that are at play that start off small and then pick up? And can you give us some context in terms of how we should anticipate the contribution in the March quarter?
Peter Smith: Okay. So the reason we are focused on a ramp-up is because we want to where the business is new to us and we want to make sure we set expectations and build into it. So it’s not any seasonality or any customer dynamics. It’s just the way we think it’s going to take us a little time to ramp-up the factory, our order management system, our deliveries, so that’s the way we want to deal with that. And then David, do you want to answer the range for the next quarter’s revenue?
David Gray: Yes, I think the range for next quarter’s revenue should be thought of in the mid-20s kind of a range like Pete said, there will be a ramp up here, and we’re pretty good with that number and we are going to do what we can to get some upside, but I think that’s where you should be.
Peter Smith: And Erik, just while we’re on this, Scott asked about the ramp. You asked about the ramp. So let’s get out the FY ’25 revenue range for modeling purposes ought to be 5.15 to 5.20 for FY ’25, so right and just for everybody who’s on the call, we’re on July 1 through June 30 cycle.
Erik Suppiger: Okay. That’s great. Then last question. You did talk about combining the products as your longer term roadmap. What is the timeframe in terms of getting the products combined?
Peter Smith: I would say that’s after year two, in the third year of ownership, we can start to see the convergence of hardware. And in the prepared remarks, we talked a lot about the software and the Pasolink customers are eager to migrate to the Aviat’s network management software. So that’s our first priority and we would hope that year one, year one and half, we will start to be able to deliver that software to the historical NEC customer base. And then in post year 24 months, we can start to see the convergence of hardware.
Erik Suppiger: Great. Okay, thank you.
Operator: Thank you. One moment please for our next question. Our next question comes from the line of Jaeson Schmidt with Lake Street.
Jaeson Schmidt: Hey guys, thanks for taking my questions. I just want to circle back to the gross margin. I know you laid out 34% to 37%, which seems like a little bit better than that kind of 33% initial number. Just curious what are the dynamics driving that? Is it just feeling better about the mix, whether it’s product or geography in the core Aviat business or the Pasolink business getting margins lifted quicker than expected? Any color there would be helpful.
David Gray: Yes. So the 34% to 37% was a combined number, right. So it’s going to be — we’re assuming that the Pasolink business is going to be around 30% for this fiscal year, and just doing the math, that would indicate that the core Aviat margins are going to be in the 37% range or so. So we feel pretty good about that. And then we’ve got pretty solid synergy roadmap to improve our cost structure there and get the Pasolink margins moving north here in the not too distant future.
Jaeson Schmidt: Got you. And then, Pete, I know in your prepared remarks, you talked about some potential revenue synergies, cross selling opportunities. Those aren’t baked into your targets. But can you just discuss some of the areas or geographies you’re most excited about?
Peter Smith: So we’re most excited about software and that would be every place other than in the U.S. It’s particularly with the Tier 1 customers that came over in from NEC to Aviat and needed, so that would be part one. And then part two is we are very excited about Indonesia. And the reason we’re excited about Indonesia and that was really Smartfren was a representative. So we think that Indonesia is right for private networks, there’s an industrialized nation that has lots of microwave, but there’s the Indonesia Telecom operators typically deliver the private network services, and this is what the Smartfren press release is about where we can go into Tier 1s in emerging economies and bring the Aviat private network offering and deliver to say mining oil and gas, public safety customers where they had principally been riding on the carrier’s backbone and the number one geography for that kind of application is Indonesia.
So to sum up, put it simply, we’re most excited about software synergy sales and the region or the country we’re most excited about is Indonesia.
Jaeson Schmidt: Okay. That’s really helpful. And then just the last one for me, and I’ll jump back into queue. The India rollout, do you still expect that to happen here in the March quarter, and then to ramp again in June?
Peter Smith: So I — we’re pretty confident that it will happen sometime between March 1 and June 30. So there’s the quarterly timing on that. So that’s what I would say, Jaeson. And I don’t — that can drive a little bit of lumpiness between the March and the June quarter. The good news is we’re confident, we’re engaged in the India customer base, and we’re conservative with respect to our timing. So for modeling purposes, put it in the June quarter, but it could happen in the March quarter.
Jaeson Schmidt: Okay. That makes sense. Thanks a lot, guys.
Operator: Thank you. One moment please for our next question. And our next question comes from the line of Dave Kang with B. Riley.
Dave Kang: Thank you. Good afternoon. Going back to Indonesia, so once it gets going, I mean, how big can it get? Can it become like maybe 10%, maybe high single digit?
David Gray: High single digits definitely 10%. We’ll see, but we don’t — we’re not anticipating that at this point.
Peter Smith: High single digits is the right answer, I think, for now.
Dave Kang: Got it. And then, equally on India, how big can they get?
Peter Smith: We would say a little bit lower. Yes, a little bit lower than Indonesia.
Dave Kang: Okay. Got it. And then what about margins from Indonesia and India as well? I mean, are they going below I assume they can be below corporate average?
Peter Smith: So look, India, we’ve said before, is below corporate average. But as we get volume, we think that we can do — we can take cost out. On the look, the Indonesia business is being driven by The Pasolink product, which is below corporate average. And so I would say for now that’s the way to think about it. But we’ve said that we would get the Pasolink gross margins from 30% to 33%. And we’ve also said that when we get to that 33% level, we’ll have another vantage point, and then we’ll start talking about how far we can go beyond the 33% gross margin level. And that is — the Indonesia business is principally, Pasolink and I think that’s the best color we can give from our vantage point today. And ask the same question in a couple of quarters, and hopefully, I’ll be able to give you a more favorable answer, Dave.
