Tim Quillin,Stephens, Inc.
Hey, good afternoon. I just wanted to circle back to the UVI market, and so coming in a little bit lower than you expected and maybe little bit lower than you even thought three months ago and you discussed some of the factors that are limiting the growth in that market at that time. Just wondered if there’s anything additional or if you can kind of run down where you – what the status of that market is, what the barriers are to adoption? Certainly in the press lately there have been some discussion of your phone-based approach versus a dedicated device approach. What are you seeing in that market and how do you think about that as you head into fiscal ’16?
Michael Burdiek
Well, as really was inferred in your question, the market is very immature. A year ago, we were characterizing the market in sort of baseball terminology. And at that time, we talked about sort of being in batting practice before the first game of the season even began. I would say today we are in the first game, maybe even the second game of the first series of the season. I mean it’s very, very early days. There are various business models being tried and tested in the market, some have failed, some have seen marginal success. So you are talking about a very interesting market with very early stage market dynamics.
All of that being said, I pointed out a little bit earlier that the quality of the opportunities we are seeing are higher than let’s say a quarter or two ago because we think we are in a stronger position technologically. We think some of the stumbles that others have experienced in the market as it relates to customer adoption or on-boarding challenges, we think that’s been generally resolved or at least are better understood. And we think that as this market evolves, we are in a very, very good position to be one of the winners whether it’s on the device side only or if it involves other capabilities where we would leverage our software and services kind of core competencies.
Tim Quillin,Stephens, Inc.
Right, and I know you have addressed this before but do you think the market trends towards a phone-based approach or what do you think the pluses and minuses are of phone-based versus a dedicated hardware device on the car?
Michael Burdiek
Well, the phone obviously is – doesn’t involve – probably doesn’t involve much if it involves any incremental capital expenditure on the part of the insurance companies trying to roll out a UBI program. So in that sense, it’s very attractive. However, phone-based solutions are extraordinarily unreliable for any number of reasons. One, if you are trying to assess driver behavior with the phone, the phone could be oriented in any position and in fact, when someone is driving the car, it’s very, very hard to determine whether the person who has got the UBI app running on their phone is really the one in the driver seat or they are a passenger in the vehicle. So certainly using a cell phone or a cell phone app as part of the UBI program probably facilitates customer adoption.
However,it’s extraordinarily unreliable in terms of really assessing the sort of characteristics of risk that insurance companies really ultimately are trying to get to in order to properly price insurance policies to its client base.
Tim Quillin,Stephens, Inc.
Right, yes, that makes sense. And then in terms of Caterpillar, it sounds like it’s ramping up nicely. Can you give us any sense of your expectations for fourth quarter revenue?
